Monday, June 19, 2017

Cisco in the light of the "Innovator Dilemma" framework

Identifying and adapting to fundamental technology transitions are not easy tasks for big companies like Cisco.  As per their CEO, the success had been defined by how market transitions are anticipated, captured, and lead through. In the light of the innovator dilemma framework, let's explore how Cisco managed to stay ahead-of-technology-shifts for the last three decades. 

Principle #1: Companies Depend on Customers and Investors for Resources
High performing companies are very good at killing ideas that their customers don’t want.  
As a result, some companies struggle to invest adequate resources in disruptive technologies until customers catch up with trends.
Cisco uses "Spin-in" to stay ahead of the disruptive technology curve. "Spin-in" is being a two step processes:
1.- grouping engineers and developers to work on specific project
2.- moving them out of the company, as if they were at a start-up.

Principle #2: Small Markets Don’t Solve the Growth Needs of Large Companies 
While disruptive technology creates new markets, waiting until those markets are ‘‘large enough to be interesting’’ is the trap to be avoided by big companies. Because, companies loosing the first mover advantage benefits also jeopardize future growth in designated market. 
Cisco has a simple strategy based on acquisitions to match the growth needs created by transitional small market. 174 of those acquisitions have been already recorded.

Principle #3: Markets that Don’t Exist Can’t Be Analyzed 
In dealing with disruptive technologies the domain of unknown is broad: 
- size and growth rates of markets
- trajectories of technological progress
- needs of leading customers
Therefore, management decisions can not depend on sound market researches and executions. I can't establish how well Cisco is doing in dealing with that principle, although its appetite for change shows some departure with regard to conservative analysis.

Principle #4:An Organization’s Capabilities Define Its Disabilities  
As per the HBR "Innovator Dilemma",  an organization’s capabilities reside into:
a) the different methods to transform inputs into outputs of higher value
b) the organization’s values
While Cisco has been doing well in those two fronts,  it should also remember that those same successful processes and values will probably constitute its disabilities. Therefore, a permanent and independent review committee, with mission to assess methods and processes, could be helpful at Cisco.

Principle #5:Technology Supply May Not Equal Market Demand 

By staying engaged and patient with its mainstream customers needs, Cisco got the best of this principle. The anecdote on how Cisco waited for the internet of everything needs to be expressed in a conference of fall of 2013 is a classical act of technological progress and Market Demand matching. Only then, it started to rolled out IoT solutions dated of at least seven years.

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