© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 1
Build, Buy or Ally
Growth Strategies
f...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 2
Cisco: A culture of innovation
 Cisco...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 3
John Chambers, President and CEO
“Phil...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 4
“Companies that use both acquisitions ...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 5
Evolution Components of Innovation
Bui...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 6
Why Collaborate : Differentiation
 Po...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 7
Partners who Collaborate with other
Pa...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 8
Why Build: Technology Leadership
 Pio...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 9
Innovation at Cisco
The Cycle of Innov...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 10
Innovation at Cisco
 This study has ...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 11
Why Buy: Core to business
 Core to b...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 12
Internal Venture,
Financial Investmen...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 13
Why Partner: Speed
 Fastest Time to ...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 14
Four Key Dynamics of Alliance Strateg...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 15
Value Migration
We must view Value Mi...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 16
Competitive Scenarios
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 17
Ecosystem Evolution
Development Logis...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 18
Future Sales Goal
Borrow
(Alliances)
...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 19
Every individual alliance goes throug...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 20
Before negotiations begin
 Determine...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 21
Stages of successful negotiation
 Pr...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 22
Delivering results
 Develop operatio...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 23© 2006 Cisco Systems, Inc. All rights ...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 24
Decision Criteria
We need clear reaso...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 25
In conclusion
 Don’t win the negotia...
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 26
© 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 27
Q and A
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Build, Buy or Ally: Joe Deklic, Cisco Canada

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Keynote presentation by Joe Deklic, VP Strategic Investments, Cisco Canada at the Association of Strategic Alliance Professionals (ASAP) Toronto chapter event "Build, Buy or Ally: Partnership Models for Enterprise Growth" on November 12, 2010

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Build, Buy or Ally: Joe Deklic, Cisco Canada

  1. 1. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 1 Build, Buy or Ally Growth Strategies for Business Joe Deklic Vice President, Strategic Investments Group Cisco Systems Canada Co.
  2. 2. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 2 Cisco: A culture of innovation  Cisco’s corporate culture encourages innovation  Innovation is the engine that drives growth
  3. 3. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 3 John Chambers, President and CEO “Philosophically, I don’t partner and then compete later. I won’t enter into strategic partnerships that I think will not have lasting evolution. … We share what we’re doing with them very closely and they share what they’re doing with us very closely.”
  4. 4. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 4 “Companies that use both acquisitions and alliances grow faster than rivals do – as companies like Cisco have amply demonstrated.”
  5. 5. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 5 Evolution Components of Innovation Build Ally Buy  Cisco’s innovation model has evolved beyond the 3 “Build – Buy – Ally” pillars  Collaboration internally and externally with customers and partners is essential for innovative leadership going forward Collaborate Market Dynamics Portfolio Management
  6. 6. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 6 Why Collaborate : Differentiation  Power of many  Time to execution  Alignment  Multiple competitive scenarios  Customers win
  7. 7. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 7 Partners who Collaborate with other Partners…
  8. 8. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 8 Why Build: Technology Leadership  Pioneer in the field  Patentable technology  Need to own the intellectual property  Core business  Have time or can build in increments  Have in-house expertise
  9. 9. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 9 Innovation at Cisco The Cycle of Innovation Deploy Differentiation at Scale Invent Differentiated Offering Manage Mission-critical Processes at Scale Extract Resources to Reinvest for Core 2. Deploy 1. Invent 3. Manage 4. Offload / Repurpose Advanced Technology Foundation Technology Emerging Technology Reinvent Technology Funding
  10. 10. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 10 Innovation at Cisco  This study has found that Cisco has laid a strong foundation for innovation by organizing its efforts around three elements critical to innovation success: –People and Culture –Process and Organization –Products and Technology  Cisco does not exclusively establish innovation through acquisition but fosters and encourages innovative thinking, development, collaboration, and entrepreneurship throughout its organization. Wharton study 2009
  11. 11. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 11 Why Buy: Core to business  Core to business  Need intellectual property  Time critical  Shortage of in-house expertise  Acquire market leadership
  12. 12. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 12 Internal Venture, Financial Investment Innovation at Cisco ETG Pursues a New Growth Model New Existing Existing New Source: Prof. Ed Roberts, MIT Sloan School Partner, Acquire Develop, Acquire Acquire, Partner ETG Focus Market Technologies
  13. 13. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 13 Why Partner: Speed  Fastest Time to Market  Reduce Risk  Leap Frog Competition  Customize for Specific Markets  Customers buy best of breed
  14. 14. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 14 Four Key Dynamics of Alliance Strategies should be Monitored to understand the Driving Forces in Market Space Value Migration in the Market Space Competitive Scenario Mapping Ecosystem Evolution & our position in the this relative to the Customer Life Cycle Management of each Alliance itself
  15. 15. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 15 Value Migration We must view Value Migration from the Customer’s Perspective Process Migration Design Cycle Time Quality Systems (Six Sigma) Fulfillment (Supplier-Distributor Delivery) Market & Customer Needs Migration Providing route-to-market for sales and service -vertical expertise -solutions integration -unique geographic access Providing complementary hardware and software Providing integrated solutions for products and services
  16. 16. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 16 Competitive Scenarios
  17. 17. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 17 Ecosystem Evolution Development Logistics Distribution Sales Service & Support CISCO Strategic Supplier R&D Outsourced Manufacturer Service & Support Provider Customer Customer Parallel Manufacturer Distributor Competitor Co- Marketing Customer Advertising Agency Where are Our Alliances? Where are the “Points of Power” in the network? Create Competitive Advantage by Optimizing
  18. 18. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 18 Future Sales Goal Borrow (Alliances) Buy (Acquire) Build (internal growth) BU's Current Sales Level Internal Growth $.5B Time Sale s $1.0B Lifecycle Portfolio Management Divestitures Bow-Out (exit)
  19. 19. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 19 Every individual alliance goes through a unique life cycle Evaluate Form Incubate Operate Transition Retire Plan communication Build operations model Business planning Partnering value prop Partner engagement model Announce alliance Alliance solutions & initiatives Field engagement & marketing Secure sponsors Negotiations & agreements New alliance launch marketing Metrics & performance reporting Review strategy & value prop Value curves & trends Update strategy goals Confirm joint commitment Determine future investment Conduct management discussions Determine exit strategy Build exit plans Define activities & timeline Create messaging Structure alliance governance Executive comms & boards Define Cisco strategy Analyze portfolio Evaluate ecosystem Evaluate partner Build business case Intellectual properties
  20. 20. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 20 Before negotiations begin  Determine value proposition  Develop joint win-win  Build solid business plan Evaluate
  21. 21. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 21 Stages of successful negotiation  Pre-negotiation  Problem solving  Decision making – Create mutual benefit  Alignment – Revise and ratify agreement  Implementation Form
  22. 22. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 22 Delivering results  Develop operational dashboard Clear metrics a must  Evaluate long-term returns Variable model Partner-dependent  Adjust resources to match results Know when to call it quits Operate
  23. 23. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 23© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 23 Confirm joint commitment “70% of alliances either fail outright, fall captive to shifting priorities, or achieve only initial goals, and 55% fall apart within three years after they are formed.” The CEO Refresher Vantage Partners Transition
  24. 24. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 24 Decision Criteria We need clear reasons to decide among alternatives IF These Conditions Risk Level Speed of Expansion Required Resource Availability Similarity Change in the Environment Make Low Slow High The Same Slow Buy Low to Moderate Moderate High to Moderate High Similarity Moderate Ally High to Moderate Fast Moderate to Low Different Extensive Internal Growth M&A Alliance THEN
  25. 25. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 25 In conclusion  Don’t win the negotiation and lose the alliance.  Each alliance has its own life cycle . Find it.  Find ways to win together; collaboration. Play for keeps.  Alliances is a learned skill (practice + training). Invest in it.
  26. 26. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 26
  27. 27. © 2009 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 27 Q and A
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