Cisco Essay

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Cisco Systems: DEVELOPING A HUMAN CAPITAL STRATEGY Jennifer Chatman Charles O’Reilly Victoria Chang his article considers how organizational leaders can use human capital to gain competitive advantage.1 It also draws on research in strategic implementation and organizational change to illustrate how organizations need to adjust to changed market conditions if they are to continue to grow and be successful over time.2 Cisco is not simply investing in developing the next generation of leaders because it is a nice thing to do, but rather because Cisco’s ability to execute its strategy in a vastly different competitive environment depends critically on developing leaders who have a different skill set and who embrace a different organizational culture than the previous generation.3 Cisco’s experience illustrates the challenges leaders face as organizational life cycles evolve and require managers to develop new capabilities.4 The new competitive environment requires that Cisco learn to leverage scale and efficiency rather than unbridled growth. Although different in specifics, these are the challenges that almost all successful organizations will face in their evolution. The lessons from Cisco provide a template that other leaders can use in managing organizations through various stages of evolution and different types of growth. “Cisco could be a case study of how a sullied high-flyer can use a slump not only to clean house, but also to build a better foundation.” —Peter Burrows, Business Week, November 24, 2003 “In the end, you might just have speed, talent, and branding. Those things may be the only differentiators.”—John Chambers, Business Week, August 28, 2000 T The late 1990s were a boom time for Silicon Valley companies and one of the stars was Cisco Systems—the leader in hardware and software technology for routing traffic on the Internet and on

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