Cisco Bolstering its Global Strategy, Investments

Wim Elfrink discusses Cisco’s efforts in “globalising the corporate brain”

t’s one thing to talk about the global economy. It’s another to live it. But that’s exactly what Cisco System’s first-ever chief globalisation officer is doing. Wim Elfrink moved to Bangalore, India, at the beginning of this year to help oversee Cisco’s $1.1 billion investment in the country and the construction of the company’s first “globalisation centre.” From India, Elfrink leads Cisco’s efforts to decentralize many of the ways the company conducts business worldwide, what he calls the “globalisation of the corporate brain.”

News@Cisco recently spoke with Elfrink about Cisco’s new approach to its worldwide business operations and the promise of the global economy. The following text is modified from a recent News@Cisco podcast with Elfrink.

What economic and business trends are influencing Cisco’s efforts to extend the company’s global activities?

Wim Elfrink: Well, first, we knew we needed to improve ways we reached other parts of the world beyond the traditional market areas such as Western Europe and Japan. India, China, and other “emerging markets” countries, ranging from Poland to Brazil, are undergoing dramatic change and modernization, especially regarding technology and their workforces. Most of these countries are growing far more quickly than traditional markets. Two hundred million people will be urbanized over the next five years and most of that will take place in emerging markets.

These markets are particularly promising because almost everything is “greenfield”-that is there is very little existing IT infrastructure. For Cisco, this means that these countries need new soup-to-nuts networks to take advantage of Internet communications and the economic and social benefits that come with them. So, having customers without existing systems to integrate is an opportunity for us to co-create new solutions.

But these countries do not just offer promising opportunities. They also provide sources of much needed talent. By investing and setting up more substantial operations in these countries-by moving closer to these areas--we feel we will be in a better position to recruit the best networking talent in the world. And the gap for talent is huge. Just in India, Cisco and other IT companies are planning to hire thousands of workers over the next few years. So competition is fierce for the best of these employees.

What are some of the tangible goals for your group, particularly at the Globalisation Centre in India?

Wim Elfrink: We are basically working off a three-year plan. Now we are in year one. Over the next three to five years we want to have 20 percent of our best talent, or about 10,000 people, here in India at our Globalisation Centre. This is not outsourcing but full company operations, with crucial management and logistical responsibilities. Some employees will come from our existing operations in California or elsewhere but a big chunk of those will be employees recruited locally.

Another important goal for our globalisation plan is to further our government relations. Many emerging countries like to work in private/public partnerships. So it is imperative that we build close relationships with these governments. Along with government relations, we also must build partnerships with businesses.

What are some of the key benefits of physically being in a location such a Bangalore rather than simply managing things from Cisco’s headquarters?

Wim Elfrink: I think of two essential advantages for me or any other manager who is working globally. First, by being here you really live all of the changes taking place in these rapidly evolving markets. Your kids go to school and come home with stories. You go shopping and see what that experience is really like. This direct experience makes it that much easier to understand the country and the market, helping provide insights that can keep your company thriving and ahead of the competition. This, we feel, will help us develop new business models that will be more appropriate for these new markets.

Also, being physically closer just means it is that much easier to develop good relationships with customers. In many countries it is almost unimaginable to do business without first sitting down to dinner. So even with such communication advances like TelePresence, human contact is still crucial for starting relationships in much of the world. Having the Globalisation Centre East in Bangalore means I can reach 70 percent of the world’s population within a five-hour plane ride. So that just makes it much easier to build relationships with these partners, customers, and governments.

Emerging markets are promising opportunities for Cisco, but what do the governments of these emerging markets most want from Cisco?

Wim Elfrink: Initially, they are interested in tapping our brains. They want to know how to make their own country and businesses more competitive. And it’s flattering because they do recognize our expertise and listen to our advice. So we launch our work in emerging countries with a memorandum of understanding of sorts with each government to form public/private partnerships to address their most important issues, such as improving healthcare, education, and economic opportunities. By the way, of course, we would like to sell a network or two. But key to our approach is that we are not looking to just sell Internet gear. It’s a build, operate, and transfer model in which Cisco helps countries reach their own goals through modern communications technologies.

What are some of the key challenges to your globalisation efforts for Cisco?

Wim Elfrink: The most practical challenge is time. In Bangalore, there’s a 12.5-hour time difference with Cisco headquarters in San Jose. So we’ve got all kinds of “business hours” and even different weekends. This makes it hard to get everyone together for a meeting. I really have to give a lot of attention to what are the reasonable times we can have global meetings. Most importantly, I think it has to start with respect for all the employees. One employee or set of employees shouldn’t have to wake up at three in the morning to have a weekly conference call. Employees, no matter where they are, still need their personal lives...and some sleep.

What I am personally experimenting with is what I call time “batches.” It is similar to the old mainframe computer process of “batch processing.” In the same way the computer would download a chunk of data at a time, I am now working in chunks of time rather than in a continuous 9-to-5 mode. I work on a batch early in the morning, and then I spend some time with my family. In the afternoon I work another batch and then spend some time with my family around dinnertime. Finally, I work a batch in the evening. And at some point, I sleep.

What kind of cultural and logistical changes does Cisco’s globalisation strategy require?

Wim Elfrink: Well, culturally, I like to refer to the necessary change as the “globalisation of the corporate brain.” Simply setting up an operation in India is not going to make the difference in how Cisco takes advantage of the global economy. Employees throughout the company have to think differently. Our CEO John Chambers has started some key changes by shifting management from a command-and-control approach to one focused on collaboration and teamwork. That’s certainly not something that changes overnight. Cultural changes always take two or three years. But we can see the effects already. Now, the officers directly under John work together in ways that are tremendously different from how they worked together three or five years ago. Cisco is also developing councils, boards, and collaboration processes to further cross-company functions. This will especially help in keeping all of our operations tied together, no matter how far flung.

Logistically, it’s all about decentralizing so we have more resources closer to these developing markets. We are creating what you might call “thin” sales offices close to customers in new markets. We are also looking at forming knowledge “clusters”-operations that have expertise the company can use worldwide. These knowledge clusters or development centers will be located wherever they make the most sense. A manufacturing knowledge cluster might be in Shanghai or Chicago, while a finance cluster might be in New York, London, or Hong Kong. The point is to not think in terms of the vertical organization of the country but in a more flexible, modular design based on resources for customers...wherever they might be.