Please answer the Question No - 2 .

Describe the internal forces for change that seem to be affecting Cisco Systems

Case Forces for Innovation at Cisco Systems Cisco Systems was founded in December 1984 by Len Bosack and Sandy Lerner, two computer scien- tists from Stanford University. It employed two technologists, Greg Satz and Kirk Lougheed and was geared toward enabling disparate computer net- works to communicate with each other and share information. Cisco has grown into the worldwide sales leader of "networking equipment and software technology for routing, switching, and fiber-and In- ternet Protocol (IP)-based solutions" with "more than 35,000 employees in five theaters worldwide." In mid-2004 Cisco's rate of revenue generation was $18.9 billion per annum. Cisco has been recognized by Fortune magazine as one of the "Top 100 Best Companies to Work For" and as number 10 on the list of "Most Admired Companies." Additionally, Mother's Magazine has recognized Cisco as one of the "100 Best Companies for Working Mothers." John Chambers, president and chief executive of- ficer of Cisco Systems, observes: "There are a lot of market transitions going on in the industry, and it is the key to prioritize where we are going to go. It's now about the future. The company that brought you the routers to make the Internet work 20 years ago is now innovating and allowing people to en- able the power of the Internet by a factor of 100, opening up new ideas that were previously unimag- inable. This is truly the end of the beginning." Cisco has helped enable "the Internet to change the way the world works, lives, plays, and learns." After two decades of growth and success, Cisco Systems is seeking to continue its "tradition of innovation, business best practices, and social responsibility." Start-up companies in the networking industry have been able to compete with Cisco, at least tem- porarily, because they introduced their products when Cisco was between product generations. How- ever, over time Cisco has been able to catch up with them because of a constant pace of innovation be- ing injected into its platforms. Cisco's constant pace of product innovation not only enables it to meet competitive threats but also contributes to its efforts to help shape the future of the networking industry. According to one Cisco executive, networking prod- ucts "must be able to transport many different types of information, such as voice, video, and data. The network must be able to extend across a great dis- tance. It needs to support all types users, includ- ing large enterprises, remote branches, and small businesses." While the technology of computer networking and the Internet foster productivity increases for in- dividuals, organizations, and nations, such technol- ogy is nonetheless disruptive. "It's disruptive because it has the potential for being less expensive and more productive while offering more functionality than any of the respective existing networks." John Chambers, Cisco's CEO, expresses the belief that the companies, countries, and governments that bene- fited from technology in the twentieth century have a responsibility to ensure that no one gets left be- hind in the twenty-first century. "When productiv- ity of a country increases at 1% per year, the standard of living doubles every 70 years; at 3% the standard of living doubles every generation; and at 5% the standard of living doubles every 14 years. Technology can help bridge the gap between the world's developed and least-developed countries and raise the standard of living." An ongoing study conducted by the Brookings In- stitution and the University of Califor- nia, Berkley, reports that Internet business solutions will provide European companies with about one- third of their expected future productivity increases and American companies with about one-half of their anticipated productivity increases. Productivity is ob- tained from the Internet in four progressive stages. First, the Internet is used for conveying information. Second, e-commerce and c-service are used to inter- act with customers. Third, Internet technologies are used to to link people together on-line to foster collab- oration. Fourth, the Internet transforms and becomes integral to all business activities. "Cisco focuses its technology on where the mar- ket is going, not where it has been." John Chambers maintains that, "the Internet and education are the two great equalizers in life, leveling the playing field de onomists 632 Case for people, companics, and countries worldwide. By providing greater access to educational opportuni- ties through the Internet, students are able to learn more. Workers have greater access to e-learning op- portunities to enhance and increase their skills. And companies and schools can decrease costs by utiliz- ing technology for greater productivity." 3. Explain the development of Cisco Systems from the perspectives of incremental change, strategic change, and transformational change. SOURCE: This case was written by Michael K. McCuddy, The Louis S. and Mary L. Morgal Chair of Christian Business Ethics and Professor of Management, College of Business Administra tion, Valparaiso University. This case was developed from mate- rial contained on the Cisco Systems Web site at http://www newsroom.cisco.com/, including the following article written by Cisco executives: H.S. Charney, "A Positive Future for the inter- net;" M. Mazzola, "Mario Mazzola Shares His views on the Net- working Challenges and Opportunities that Lie Ahead;" and M. Volpi, "Evolution of the Networking Industry." Discussion Questions 1. Describe the external forces for change that seem to be affecting Cisco Systems. 2. Describe the internal forces for change that seem to be affecting Cisco Systems. 633