Brains on Fire

In January 2008, Annmarie Neal, the chief talent officer at Cisco Systems Inc., gathered her new team of 20 Cisco facilitators at her mountain home in Silverthorne, Colo. At 9,000 feet, set amid the Gore Range in the majestic Rockies, Silverthorne is a breathtaking landscape of mountains, lakes, running streams, aspen trees and ponderosa pine not far from the Continental Divide. It was an ethereal location for a crucial kickoff meeting for a companywide leadership initiative, and Neal received an unexpected gift: a raging blizzard so intense that the group could not leave the cabin for three days. Warm and well fed and trapped by the storm, the group found its focus quickly and conceptualized what would become Cisco’s innovative Center for Collaborative Leadership.

Neal had been recruited to Cisco two years earlier from the First Data Corporation with a clear mandate: help crystallize CEO John Chambers’ vision for Cisco’s future by developing leaders who could excel in a complex new corporate environment. “They hired me to ‘Fix it!’ ” Neal said. “That meant, we have all of this talent, but we really don’t know what it is and what we should be doing with it.”

No one asked her to create a leadership center. But the self-assured Neal says, “My M.O. is to disrupt the talent management agenda and bring a company several steps forward,” and she believed that nothing less than “disruptive innovation in how talent management was done at the senior level” would be enough. Breaking the rules, stretching the envelope, shaking things up was the agenda for the snowbound crew. “We needed a model to transform the leaders of Cisco in order to transform Cisco, the organization,” she explained.

Such drastic alchemy might seem a bit aggressive, but in fact, Cisco, the networking technology giant, a Wall Street bellwether and widely admired Silicon Valley success story, was — depending on whom you ask — either struggling or in the midst of significant change. The company’s growth had been stunning since Chambers took over as president and CEO in 1995. In his first five years, Cisco’s sales grew an average of 57 percent annually and the share price skyrocketed. During his 16-year tenure, Cisco has grown from $1.2 billion in sales to more than $40 billion, and Chambers has overseen a steady wave of mergers and acquisitions — more than 135 — that transformed Cisco into a global technology juggernaut and a sought-after workplace.

But in 2008, all was not well in San Jose, where Cisco is headquartered. The company’s growth was slowing, and it had begun to display the worrisome symptoms that define many maturing tech giants. Efforts to find new and lucrative markets outside its core routers and switching equipment, particularly in the consumer space, had mixed results. Strong competitors had begun to erode Cisco’s market share and were having a negative impact on its margins. Wall Street’s enthusiasm had cooled, and the share price had hardly moved in eight years. In the meantime, the affable Chambers was growing increasingly concerned about the company’s traditional command-and-control management structure.

Cisco is the largest functionally organized technology company in the world. In an effort to find a more effective way to manage this massive global entity, with 73,000 employees in 83 countries, Chambers decided to abandon Cisco’s traditional top-down leadership structure for a collaborative model built upon a series of boards and councils. These would flatten the organization and, it was hoped, fuel innovation, creativity and growth. The cross-enterprise boards and councils approach was designed to keep Cisco agile and much closer to the market and its customers by bringing together its best people from around the globe to solve key business problems. The company that sold networking solutions with the promise of “changing the way people work, live, play and learn” was going to have to turn the sometimes harsh spotlight onto itself.

The change was not subtle. Senior executives were no longer going to be able to focus solely on their own functional P.&L. They’d have to work collaboratively and in service of the entire organization. As Neal noted, “Competition for power and resources has been replaced by shared responsibility for success.”

Not surprisingly, the new initiative did not go over well with some of Cisco’s top executives, including a handful who had been major contributors to the company’s rise and were considered potential successors to Chambers. Several opted to leave the company. Suddenly, the leadership pipeline had thinned, and Chambers focused on tapping the high-potential talent throughout the company to build a leadership foundation for the future. Just as the worst economic downturn since the Great Depression was getting under way, Cisco was facing the greatest talent management challenge in its history. And Neal’s group, nestled in its snowed-in mountain hideaway, was intent on creating a viable solution.

Tapping High Potential

The first thing one notices about the Center for Collaborative Leadership is that it doesn’t exist, at least not in any physical form. A request to visit the center, à la a trip to G.E.’s famed Crotonville training center, is met with Gertrude Stein’s oft-quoted description of Oakland: “There’s no there there.” The Center for Collaborative Leadership is a virtual entity, created almost entirely upon the company’s innovative collaboration technology and its core networking expertise.

Inside a global giant like Cisco, talent management efforts must encompass a wide array of constituents. The center, for example, does one-on-one coaching and training with all of Cisco’s highest level executives, including Chambers. More than 1,000 leaders are involved in the center’s Leadership Channel, which Neal calls a “brains on fire” technology-enabled experience for senior leaders. In addition, the center’s talent management professionals, who are predominantly master’s degree and Ph.D.-level psychologists, do regular executive assessments and customized development planning with the company’s senior leaders. Having full-time in-house staff with such credentials working in this real-world (versus academic) environment is a key factor in the center’s acceptance and success.

At the outset, Neal enlisted 200 of Cisco’s senior leaders to help develop an executive leadership competency model. What emerged was dubbed C-LEAD — Collaboration, Learn, Execute, Accelerate and Disrupt — which has become the foundation for the entire effort. Because the model was developed internally, and not by an outside consulting firm or academic figure, Cisco’s leadership has embraced it and uses it regularly in talent calibration and performance management.

Neal’s, and the center’s, work is critical to Cisco’s future on many levels. Most of Cisco’s growth and revenues are now generated outside the United States, especially in emerging markets. Over the next five years, she pointed out, leadership talent capable of succeeding in these markets will simply run out if Cisco doesn’t actively develop it internally. Cisco believes that having its businesses run by local talent is essential. “We need people who can actually run multibillion-dollar businesses and not have it be an expat from some developed country doing it,” she said.

Neal’s goal is to force Cisco’s senior executives to move beyond what she calls “the crisis of success,” referring to those skills and behaviors that worked for Cisco when it was a $3 billion company, a scrappy entrepreneurial player where seat-of-the-pants, screw-the-rules thinking and behavior was not just acceptable but desirable. Unlearning old behavior is as important as learning new ways of thinking. “We had to help our executives learn how to run a $40 billion company,” Neal said. “How do you put together process, structure and order so that you get scaled efficiencies without inhibiting entrepreneurship and innovative, creative thinking?”

To that end, Neal aimed to identify the next wave of prospective Cisco leaders. Cisco designates its first-line executives as directors, and those seen as having high potential are tapped to become part of a cohort or team that spends 16 weeks immersed in an intensive leadership experience known as an Executive Action Learning Forum, or EALF. After four weeks of prep work, the EALF team meets in person for a residential week in a Cisco location like San Jose or Singapore or India. That is followed by four weeks of virtual work via Cisco’s TelePresence videoconferencing technology. Next comes a midsession week, again in person at a Cisco locale. Four to six more weeks working virtually culminates with a completed plan for a prospective business opportunity. The cohorts are diverse, with team members coming from a variety of Cisco global locations and functional areas. And each team member is assigned a coach, a Cisco executive who monitors his or her performance and offers specific leadership advice along the way.

“As I have personally seen, the impact of the EALF resulted in substantial changes with some of my direct reports who participated in this program,” said Frank Calderoni, Cisco’s CFO. “They re-engage with more enthusiasm, a better understanding of smart collaborative approaches and a renewed sense of what it takes to be a strategic and innovative thought leader.”

Alan Cohen, vice president of Cisco’s Global Public Sector and Industry Solutions unit, has been an EALF mentor. “It helps me become a better business leader,” Cohen said. “And I use it as a talent factory.” Cohen pointed out that by exposing the leadership team to these kinds of “thought lightning storms,” two things happen. First, Cisco is preparing better collaborative leaders, and, second, because Cisco is an Internet and communications company, it provides a better understanding of the business transformation its customers are experiencing.

But what sets the EALF effort apart from conventional corporate leadership development programs is that it is built upon real business goals and objectives rather than textbook case studies or B-school theory.

“It’s not just an executive development program,” said Cassandra Frangos, the Cisco practice leader in charge of EALF. “It’s an executive development program that looks at leadership and innovation and driving business results all at the same time.”

Thus, these prospective leaders have skin in the game. What they build as a team will be presented in person at the end of the 16 weeks at San Jose headquarters to Cisco’s top executives as a business initiative. They are competing with other teams to get a green light to turn the project into a revenue opportunity for the company. And Neal points out, the center’s teams have already created billions of dollars worth of prospective business opportunities for the company.

“We wanted to engage the business leaders around this work in a way that they’ve never been engaged before,” said Robert Kovach, director of the center’s Executive Leadership Viability practice. “We wanted a track record of tangible business results where the executives would say, ‘This is great stuff.’ ”

In just over three years, nine teams and nearly 600 executives have graduated from the EALF program, and its impact is being felt around Cisco. Rather than seeing an EALF experience as an unwanted burden, aspiring leaders are now actively hoping for spots on a cohort.

In effect, Cisco’s Center for Collaborative Leadership flies in the face of conventional executive education. As it is practiced in most companies, mainstream leadership development emanates from an academic point of view. Aspiring executives are sent to Harvard or Kellogg or Wharton for weeks of intensive leadership training with B-school professors, or consultants are brought into the organization armed with academic research and rubrics. Often, corporate H.R. departments will create jazzy internal efforts that begin with sizzle but quickly fade as the latest program du jour.

“We said, ‘No, that’s the exact wrong way to go about it,’ ” Kovach said. Though the center brought in some academics from Harvard and M.I.T.’s Sloan School for consulting purposes, the curriculum is self-created. “We want to engage our executives in a collaborative relationship in which we are co-creating with them,” he added.
Projects are selected and managed with the specific goal of turning the best of them into business units. “It’s not just make-work, dead cases, theory,” Kovach said. “We’re not using a university to develop our executives; we’re using the business to develop our executives.”

For example, Smart Grid, an emerging Cisco business unit aimed at creating a dynamic electricity-delivery system using intelligent control points throughout the network, was developed by two of the center’s teams in just the past two years. Smart Grid is now a fully functioning business unit and is projected to become a multibillion-dollar revenue generator for Cisco within a couple of years.

The center is not entirely insular. Outside leadership experts are brought in via TelePresence or in person to speak to participants. Duncan Simester, a marketing professor at M.I.T.’s Sloan School of Management, teaches the basic leadership frameworks to the cohorts. Others are asked to speak to the groups in one-off appearances to provide vital truths about general management. When considering Cisco’s future in China, for example, the center brought in Kenneth Lieberthal, President Clinton’s top China adviser, to offer insight. The leadership guru and author Warren Bennis has had lengthy discussions with Neal and Kovach and has been part of a panel discussion for the center.

“They use these conversations as R.&D. and for product development,” Bennis said. “The processes are meant to produce outcomes.” An icon of leadership insight who has consulted with countless companies over several decades, Bennis saw something unique in the center’s efforts.

“They are probably more serious about this and committed, from Chambers on down, than most organizations I know about or have worked with,” he explained. “It’s not just money, effort and time. This is very close to what I’ve always sought. It’s an everyday conversation. If G.E.’s Crotonville people factory was emblematic of leadership development in the 20th century, Cisco might be that for the 21st century. It looks like the exemplary leadership-development model for this century.”

Changing Behavior

Arriving at Cisco’s campus in Boxborough, Mass., 25 miles west of Boston, Shailesh Chandra, a 48-year-old director in Cisco’s Strategic Partner Organization, makes his way through the sparsely populated corporate facility to his little-used work space. Chandra has just returned from India, where he spends nearly half his time as the director of S.P.O.’s India operations. Like many Cisco employees, Chandra racks up a prodigious number of frequent flier miles and makes regular use of Cisco’s TelePresence videoconferencing rooms around the world.

A former Mercer Management consultant, Chandra has spent eight years at Cisco moving up through various business units and impressing his bosses with his business acumen and management abilities. Though Chandra has a tiny office in Boxborough, he is the prototypical Cisco road warrior, spending weeks at a time far from his desk. So virtual is Cisco that the Boxborough facility feels like the corridors of a modern high school. A visitor encounters walls of lockers where employees who visit from Cisco’s global locations can settle in, store their gear and grab an empty desk.

Three years ago, Chandra was tapped by his boss to join a new team entering the Center for Collaborative Leadership’s EALF program. Viewed as a “high potential” director, Chandra was deemed a solid candidate to become part of Cisco’s wave of future leaders. Like the other high achievers selected for the program, Chandra initially saw this as “just another exercise.” He assumed he could participate and continue to devote 110 percent effort to his day job. But after a few weeks in the program, he had an “aha!” moment.

“I realized that this was going to have a bigger impact on the company than I thought; this is a value creation exercise for the company,” he said. “I had to start delegating a lot of my day job to my team because this needs to get done.”

Having earned an M.B.A., Chandra was well-versed in B-school teaching methods, but the center’s program was unlike anything he had experienced. “This is real-time learning,” he said. He was overwhelmed by the scope and influence of the program. Not only did he quickly become part of a cohesive team and form strong relationships with his teammates, but he realized that his team’s project was not just an academic exercise. The project had the potential to earn executive-level support, to provide him and his teammates invaluable face time with Cisco’s top executives, and, most important, to become an actual Cisco business unit. In fact, Chandra’s team came up against the Smart Grid group, which proved to be daunting competition, but his team’s business planning project, which streamlined the internal process for allocating budgets to specific projects, has nonetheless been adopted inside the company.

For Chandra, the center was cathartic. “It changed how I lead,” he stated. Just as important, it confirmed his commitment to Cisco. “I am amazed that Cisco actually makes the investment in this type of program. It reaffirmed my belief in the company’s leadership.”

Like his teammates, Chandra was especially affected by the individual coaching effort in the program. The focus, he pointed out, is on a person’s natural strengths and abilities. “Because this is in real time, you finish a meeting and the coach calls you and says, ‘Here are the five things I think you could have done better.’ ”

M.I.T.’s Simester is especially impressed by the coaching aspect of the center’s work. “What’s different about this is the real focus on high quality coaching,” he said. “I’ve seen coaching done but never to this level of intensity.”

Scott Ogrodnik, senior director of sales strategy and planning for Cisco’s Borderless Networks Architecture group, called his EALF experience “intoxicating.” A 12-year Cisco veteran, the 45-year-old Ogrodnik was part of the cohort that developed the Smart Grid concept. Given his role within Cisco’s core business, an $18 billion business unit that sells the company’s routers and switches, Ogrodnik had a decidedly insular view of the business landscape. His EALF experience pulled the blinders off, he said.

“I was learning a ton of things that I’d never had exposure to or had a reason to think about before,” Ogrodnik said. “EALF totally changed the way I looked at the business.” Most important, it provided a general manager skill set that is crucial to the future of the company.

“As we have diversified our portfolio and gone into all these different market adjacencies, it’s clear that the way we’ve traditionally run the business, which was high value around building deep subject matter expertise, is not what is going to get us where we need to or want to be in the future,” he said. “What we need is to develop more leaders at the director level and above who are adaptable to multiple parts of the business.”

To build capacity in existing businesses and go after lucrative new markets, Cisco has had to create a lot of new management capability that it had lacked in the past. “When you get to be of the organizational size we are, especially when you’re a successful company, it’s hard to make decisions to change,” Ogrodnik said. “You have to put yourself in a position where you challenge the core beliefs and culture. If you just get into incremental changes, competitors come in and totally change the game on you. It’s the classic ‘innovator’s dilemma.’ ”

Sandy Hoffman, senior director of Operations, Process and Systems and another 12-year Cisco veteran, found the EALF experience “transformational.” Coming from an operations background, Hoffman was competent but quiet. On her EALF team, she mostly observed as the rash of Type A leaders pushed and pulled until the group was about to implode. They surprised Hoffman by urging her to become the group leader.

“I’m just very process-oriented, and I could see the end-to-end scenario,” she said. “I could connect things in a much different way. They realized we didn’t need a bang-your-chest Type A out there, but someone who could keep everyone focused on what needs to get done.”

At 49, Hoffman feels that she has not only gained new skills and confidence but that she is capable of taking calculated risks in her career because she has a network behind her. More important to Neal and her team, Hoffman has fully embraced the idea of inclusive leadership in which territorial walls and barriers are eliminated. That type of culture, Hoffman said, is crucial to Cisco’s success in the 21st century. “This is really becoming the fabric of how companies and individuals will succeed,” Hoffman said.

Measuring Success

In just three years, Neal’s innovative center has achieved what most talent management programs can only yearn for: enthusiastic acceptance across the organization. For Ogrodnik, the reinforcing feeling of learning in a real-world, real-time environment kicked the entire experience up a notch. “When you are working on something for the business and you are getting coaching on a day-to-day basis, it becomes part of your leadership DNA,” he said. “I have brought it back into the work I’ve been doing ever since.”

Not surprisingly, Neal leaves little to chance, including metrics. “We have a very analytical approach to how we evaluate success,” she said.

Having created several billion dollars in proposed business value already, the center has essentially created a Fortune 400 company for Cisco, Neal said. In addition, Neal created an executive scorecard for each of the company’s executives, where trending data is monitored. For example, in 2008, Cisco spent the equivalent of a few cents per share on accommodating “low capacity” talent. When confronted with that data, executives got very serious about enhancing the organization’s capabilities, Neal said. By showing a cadre of low performers the door, Cisco reduced its poor performance costs substantially, and now the company carries almost nothing on its books.

In addition, Neal’s group qualifies the costs of decisions that executives make and reviews the results of those decisions over time. At one point in time, it cost Cisco $60 million a year on executives who were promoted but required further development. “Today, we’re down to very low numbers relative to that,” Neal said. The center is run with a charge-back model for all its products and services. This has provided it with credibility. “We would not be in existence today if our executives were not paying for the products and services we offer,” Neal said.

------------------

Glenn Rifkin has written for The New York Times, Fast Company, Strategy + Business, and many other publications.