Has Cisco's John Chambers Lost His Mind?

From The Business Insider, Aug. 6, 2009:

Until today, we had nothing but respect and admiration for Cisco CEO John Chambers.  Now we're wondering whether he has gone insane.

Check out Ben Worthen's description of Cisco's new senior management structure:

Mr. Chambers has replaced Cisco's top-down decision making with committees of executives from across the company. Some teams provide strategic advice and evaluate the progress of these projects. In total, Cisco now has 59 internal standing committees...

It is not uncommon for top Cisco executives to serve on 10 or more committees and spend 30% of their time dealing with the issues raised there. Cisco said as it adds more businesses, it plans to expand the number of people who participate in these meetings from 750 senior employees to about 3,000...

Mr. Chambers said part of his goal is to make employees rethink how they work and what they work on. The new management structure "makes everyone uncomfortable, including the CEO," he said.

What happens when decisions get made by committees?  They don't get made.

In late 2007...H-P started promoting a warranty for its switches that provides free upgrades and support. Under Cisco's new structure, a decision about how to respond to H-P's offering was delayed as it worked its way through multiple committees, these people said. Cisco didn't match H-P's promotion until this April [2009], and during that period Cisco's market share fell.

John says the new management structure is necessary if Cisco is to keep growing at an impressive rate (right now, it's shrinking at 17%).  This is also John's justification for moving Cisco into wacky new business lines, like camcorders and giant TVs.

We don't mean to be rude, but these ideas sound awful.  If this is what it takes to keep Cisco growing at an impressive rate, then the hell with growth.

Here's another idea:

Instead of moving Cisco into crazy new consumer business lines and forcing all of its senior managers to waste a third of their time sitting on committees, just break the company up.

Cisco is now a $40 billion company.  It is extremely rare for $40+ billion companies to grow at impressive rates (which is why John has implemented this nutbag new management structure).  But there is no law that says companies have to stay bigger than $40 billion.

The consumer and enterprise businesses are still radically different animals.  Cisco should just bust itself in two, putting all the consumer-y stuff in one business and the enterprise stuff in the other. 

If the enterprise business grows slowly, then so be it.  That business can make acquisitions, throw off oceans of cash, and pay a nice fat dividend.  The consumer business, meanwhile--capitalized with tens of billions from its sugar daddy--can scamper along at a much faster rate.

Why is this a better idea?

Cisco executives can waste less time on committees.  Cisco's brand can continue to stand for what it stands for today (enterprise networking equipment).  And Cisco's shareholders will own both companies!

(In case you think Cisco's new management structure might actually be a smart idea, take a look at Ben Worthen's org chart from the WSJ.  There are probably government agencies that have more streamlined bureaucracies.)

Read Ben's full article from the WSJ here.

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