Cisco: Connectivity and Innovating Customer Relationships- Valutrics

Hyper-competition results in increased complexity and weaker signals for companies.
Strategies that face and embrace complexity are emerging in organizations built around
maximizing interaction value rather than minimizing interaction cost.
Cisco, the worldwide leader in data networking equipment, seems to have made the choice of an
interaction-rich organization, allowing it to accurately listen to its customers and
leverage the resulting complexity. This choice is described in Figure, which compares
Cisco to another major industry player along usual complexity drivers and interaction
topology metrics (average span, internal degree of separation), to which we have
added the distance to customers (degree of separation from customers).

Cisco is able to handle much more complexity (large number of customer accounts,
small size of customer accounts, and large number of products) and is much more
connected both internally and with customers. At Cisco, the degree of separation
from customers is only 1.4 ties (i.e. any employee is on average less than two ties
away from a customer) resulting in better signal transmission.

Many different functions are in touch with a given customer, contrary to the
conventional wisdom that customers want one and only one point of contact with
their supplier. Because these functions interact with one another, they are able to
aggregate the specific knowledge they get on a given customer (each function, e.g.
marketing, key account manager, technology, etc., knows a specific facet of the
customer) so as to collectively obtain a very accurate understanding of the customer
and act upon it. This path-redundancy enhances signal detection and interpretation
and correspondingly increases the signal-to-noise ratios. Cisco leverages its
knowledge in ICTs to support its interaction-rich organization.

Cisco employees have access to one of the most comprehensive Intranet sites. They
spend about half their interactive time asking and answering questions on distribution
lists (e.g., electronic lists of people that share some specific common interest and
interact regularly), as knowledge is more up to date there. The dynamics of these
distribution lists is very different from simple electronic redirection of questions.
Some of Cisco’s competitors have implemented these redirection tools. They com-
plain that the system works well only “when you know who is supposed to answer the
question.” In this simple case, the asker will send the question to the person most
knowledgeable on the topic (also copying management to ensure a proper response).
However, many questions are so new that they “are not well formulated,” which is an
essential characteristic of weak signals. It is difficult for a sales person to formulate a
precise question when it is based on customer “anecdotes and stories,” even though
such anecdotes often result in customer insights and improved sales force effective-
ness. It is even more difficult to figure out who may have the answer to an unclear
question. Cisco provides an interesting solution: the asker sends the question to
several communities that seem close to the subject, and receives responses from the
most relevant people. Interestingly, it is infrequent for answers to be contradictory or
too numerous (in fact they are in the range of 5–10). People who are not know-
ledgeable on the topic will not waste two hours of their time trying to find something
to say about it. Rather, only the most competent ones invest their time to answer the
question.

Indeed, this distribution list connectivity relates to decision-making and innovation
management. Sometimes the question does not even exist; the “asker” simply sends
some “impressions” about the market to the communities. Often, several people
respond with a more clear formulation of the question or pieces of context necessary
to understand the question (effect of the triangulation and path redundancy). A fruit-
ful discussion is started. In many cases, such discussions were followed by the forma-
tion of an exploration team, the creation of a successful product or service idea, and
finally the formalization of a product development project by senior management.
Without such discussion emerging out of weak signals, the idea would have never
been submitted, as its generation required a combination of too much information
from different and unknown sources. Combining them by systematic trial and error,
without using the selective and self-organizing properties of such distribution lists
would be possible, but would take incomparably longer. Using classical sequential
hierarchy-based decision making, given all the attenuation that goes along the links
(such as the regional sales manager who feels the need to discount for the “subjectivity”
of the salesman, or the marketing manager who filtrates for the “commercial bias” of
the regional sales manager, etc.), the initial signal would need to be quite strong to
have a significant SNR left at the deciding end. But then, a strong signal would have
been equally detected by most competitors.

In summary, Cisco case illustrate how companies can embrace complexity.  by leveraging
its ICT expertise, the company has been able to take advantage of weak signals much more
quickly than its competitors. In total, the face
is more appropriate than the avoid strategy when the demand for interaction is high,
e.g., the signals to process by the company are complex. Secondly, interaction costs
are low or can be lowered because of ICT technologies and/or particular features of
inter-individual relationships (e.g., low risk of opportunism among participants, trust,
shared mental models, etc.) Finally, drawbacks of interaction-rich mechanisms, such
as slowness of top-down large-scale moves, are relatively not critical.