Cisco System At The Time example essay topic

The Perceived Cisco Model A number of telecom companies are now scurrying to adopt that which they perceive as the Cisco model. What is the Cisco model? It is little more than that which Cisco happens to have done in recent years, which has caused Cisco to perform exceptionally well. Namely, the Cisco model is perceived to be one where manufacturing capacity is purchased, rather than being owned.

So, Cisco's competitors are hastily ridding themselves of their own manufacturing capacity and desperately seeking suppliers who, so they think, can do for them all that Cisco's suppliers have done for Cisco To understand the insanity of blindly emulating Cisco, consider that company's history, which isn't extensive. Cisco was founded in the midst of the digital revolution. The founders created the first router out of sheer frustration. The husband and wife team, who had log-ins on different Unix machines in separate buildings of the university that employed them, were unable to send electronic mail to each other. Their solution to their frustrating problem became the first router. This event and the midwifery of a few venture capitalists gave birth to Cisco.

When Cisco was in its infancy, as recently as a few years ago, the company had no significant manufacturing capacity. If it was going to make money through the sale of routers, then it would have to acquire manufacturing capacity somehow. The lack of manufacturing capacity was Cisco's constraint. The leadership of Cisco, very intuitively and very correctly, opted for the best short-term solution to their company's constraint. They bought manufacturing capacity.

Why was this the correct solution at the time? The answer to why the purchase of manufacturing capacity was the right option lies in the need for speed. Cisco's leadership knew that speed was critical. They knew that trying to build their own manufacturing capacity made as much sense as designing and building a stove, for the purpose of eating dinner.

If you have no stove, then you outsource the cooking and eat at a restaurant. Cisco's leadership outsourced the manufacture of their product so that they could sell routers immediately, rather than waiting a couple of years. For Cisco, at the time that the company purchased manufacturing capacity, that decision was precisely the right decision. In the future, as Cisco grows and as its constraint shifts to some other part of the Cisco system, it is not likely that the purchasing of manufacturing capacity will be the right decision. I will be very surprised to see Cisco's leadership continuing to employ the so-called Cisco model at that time. So, why are Cisco's competitors blindly emulating Cisco and shedding their own manufacturing capacity?

They are emulating Cisco, because they are neglecting one critical fact. The best direction for any dissipative, real system is very much path dependent. It is a strong function of the history of the system. For the Cisco system, at the time that the decision to outsource manufacturing was made, that was the best direction. However, none of Cisco's competitors shares Cisco's history. Each of them has its own unique history, which has left it in its current unique state and which dictates its own unique direction.

For Cisco's competitors, blindly emulating Cisco and adopting the so-called Cisco model makes as much sense as scheduling gallbladder surgery after learning that your neighbor did well with it. Instead of blindly emulating that which they perceive as the Cisco model, each of Cisco's competitors would do well to seek its own unique solution, designed for its own unique system, with its own unique constraint.