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Build, Buy or Ally: Joe Deklic, Cisco Canada
The document outlines Cisco's growth strategies, emphasizing the importance of innovation through building, buying, and forming alliances. It highlights collaboration as a vital component for achieving competitive advantage, reinforcing the idea that those who engage in both acquisition and partnership grow faster. Additionally, it discusses the life cycle of alliances and the necessity for clear metrics to ensure successful negotiations and sustained partnerships.
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Introduction to Cisco's growth strategies framed by Joe Deklic, emphasizing the choices of building, buying or forming alliances for business expansion.
Cisco's corporate culture promotes innovation as the driving force for growth, fostering a creative work environment.
John Chambers discusses the importance of enduring partnerships rather than competitive agreements to ensure mutual success.
Highlighting that companies employing both acquisitions and alliances generally experience faster growth, as evidenced by Cisco.
Innovation at Cisco involves collaboration in addition to the traditional strategies of Building, Buying, or Allying.
Collaboration is crucial for differentiation and achieving competitive advantages, ensuring customer benefits.
A focus on partners who also collaborate emphasizes shared success in achieving market goals.
Reasons for building include owning technology, having in-house expertise, and the importance of core business innovation.
Discusses Cisco's essentials for innovation: deployment, differentiation, management, and repurposing resources.
Cisco organizes innovation around people, processes, and products, emphasizing entrepreneurial culture beyond acquisitions.
Acquisitions are crucial for accessing intellectual property, market leadership, and addressing internal talent gaps.
Introduces ETG's diverse growth model, combining external partnerships with acquisitions and internal development.
Partnerships accelerate time-to-market, reduce risks, and allow for tailored solutions that enhance customer appeal.
Identifies key dynamics in alliance strategies necessary for understanding market influences and changes.
Examines customer perspectives in value migration and the necessity for tailored solutions and market accessibility.
Highlights the mapping of competitive scenarios in the context of alliance dynamics.
Details Cisco's collaborative positioning within its ecosystem against competitors and highlights strategic allies.
Goal for future sales growth through varied approaches: alliances, acquisitions, and internal growth.
An outline of the phases that alliances go through from evaluation to retirement, emphasizing strategic planning.
Key steps to take before negotiations to ensure mutually beneficial outcomes in partnerships.
Describes the essential stages in negotiations for successful alliance formation and management.
Establishing metrics for success, adjusting resources accordingly, and knowing when to conclude partnerships.
Cites statistics on alliance failures, emphasizing the need for committed partnerships to achieve lasting success.
Criteria for choosing between growth strategies based on risk, speed, and resource availability.
Summarizes the importance of negotiation skills, partnership lifecycle awareness, and the necessity of collaboration.
Formal conclusion remark of the presentation.
Open floor for audience questions regarding the presentation.
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Build, Buy or Ally: Joe Deklic, Cisco Canada
- 1. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 6 Why Collaborate : Differentiation Power of many Time to execution Alignment Multiple competitive scenarios Customers win
- 7. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 7 Partners who Collaborate with other Partners…
- 8. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 16 Competitive Scenarios
- 17. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 20 Before negotiations begin Determine value proposition Develop joint win-win Build solid business plan Evaluate
- 21. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, 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. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 26
- 27. © 2009 CiscoSystems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 27 Q and A