From the article 15% of executives will be laid off, but they refused to specify what fraction of the whole lay-off number that 15% represents.
I am inclined to agree with you that most of those who will loose their jobs are from the the lower echelons on the organizational pyramid.
With most mobile operators moving their core to packet technologies, Cisco should really be doing more to get their products into this sector.
From my experience, this telecoms industry is still largely dominated by Tellabs, Alcatel-Lucent and Huawei.
It is easy to see that there is a cyclical nature to management in big companies. A new manager comes in and says "our numbers are down, we need to diversify". A few years later his successor comes in and says "our numbers are down, we need to concentrate on our core business". This can go on for ever, with a cycle of lay-offs and hirings caused by it.
As around 90% of all new ventures and startups fail, why should we expect a new venture within a big company to fare much better? Most new products are a gamble unless you are just copying and existing best-seller, in which case the gamble is that someone else will not be able to undercut your price.
If you do diversify, you need to have expert understanding of where you are going to. If you concentrate on your core business, you need expert understanding of your existing market. No amount of management consultants make up for understanding what people want to buy.
I favour organic diversification, that is reaching out from your core competencies to areas where they can be newly applied. If that form of diversification did not work, we would all still be breathing with gills!
To top it off, the model above really doesn't work at all for a consumer product. It will take a year to define the spec in Cisco. For a consumer product you have that much time to deliver a manufacture ready system or you miss a full cycle (Christmas/back to school)and your product is irrelevant.
I am sure there are many other smaller factors (old timers that don't contribute, market saturation, short term bean counting, etc...) But end story is the same. You need to innovate or someone else will.
I really thought that Cisco was successful before because they bought many smaller companies that could innovate. The rate at what they have bought good small companies has dropped significantly in the last 6 years. This where they have lost their source of real innovation.
It is ok to take a gamble and some of it might not work (Chamber's method) What is not ok is to ignore your core product along the way.
It is easy to say this was coming, but you had to be in the inside (low level worker) to see it really coming. This is happening in not just Cisco (Most big engineering companies are in a similar boat), but Cisco is one of the worst examples:
- Endless discussions and meetings about what the next product should do (high level people with no real knowledge of how to implement a product)
- Expect an understaffed team to pull a miracle in a short time
- Mid way through a project, the high level people decide to redefine half of the product.
- The implementing team is pressured to deliver by cutting corners
The result is a product that is late, people that are burnt out, products that need to be reworked many times, and the good people that have left.
What is more unique to Cisco in the above is that hardware has been seen as a necessary evil (Cisco is more of a systems and software company) The hardware people are really under pressure to deliver with less resources. This is where the accounting says your hardware R&D costs are up and for short term you should reduce your costs to make the balance sheet look good. Never mind that Cisco box takes 4-5 years to make.
For a while Cisco has tried to reduce their ASIC starts and buy generic chips. This is ok to reduce costs but is makes your product less unique (lower level competition now really eats your lunch since they can buy the same chips)
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