In December 2006, Cisco Systems, the $40 billion California-based networking giant, selected Bangalore, India, as a second global headquarters — the Globalisation Centre East. Wim Elfrink, executive vice president, Cisco Services, was given additional responsibility as Cisco’s first chief globalization officer. He relocated to India, becoming the first direct report to chairman and CEO John Chambers living outside of California. In a recent interview with India Knowledge at Wharton, Elfrink discussed why globalization is the biggest market transition of our time, and why Cisco is well-positioned for the shift. Below is an edited transcript of the interview.
India Knowledge at Wharton: What is Cisco’s globalization strategy and what are the key factors that have shaped it?
Wim Elfrink: Globalization is the biggest market transition of our time. Demographics are undergoing a seismic shift; populations in developing countries are booming, while populations in developed countries remain static or shrink. This demographic transformation is creating new middle classes and exacerbating the climate crisis. Because of global technology networks, economic opportunities and social services are suddenly accessible to anyone with an Internet connection, equalizing economies and opportunities worldwide.
We see globalization as a tremendous opportunity to transform Cisco into a new company built for speed and scale. For us, globalization is about using technology to tap into global growth, innovation and talent. We do this by creating new business models and solutions to meet new customer needs, using technology to globalize our operations and by establishing new global ecosystems.
India Knowledge at Wharton: What was the rationale behind setting up the Globalisation Centre East?
Elfrink: The Globalisation Centre East was established as a second headquarters for Cisco — you can think about it as “Cisco East.” We set up this center to explore how to globalize talent, innovation and growth. The Globalisation Centre is much more than a sales center or an R&D center. Every function at Cisco is represented here, at every level, from individual contributor to executive vice president. This is just the first of what will eventually be four to six globalization centers worldwide, which will cluster Cisco’s operations in key regions and enable us to scale our operations efficiently around the world.
India Knowledge at Wharton: What made India the ideal location for Cisco’s Globalisation Centre East?
Elfrink: Cisco chose India for a number of reasons, including its proximity to 70% of the world’s population within a five-hour flight; a growing young, English-speaking population; strong engineering talent; an open, partner-friendly government; and a strong partner ecosystem. Also, being 12 and a half hours ahead of Cisco’s San Jose headquarters allows us to conduct business on a truly 24/7 basis.
India Knowledge at Wharton: Where else does Cisco plan to have such globalization centers?
Elfrink: Potentially in regions like China, Latin America and Russia.
India Knowledge at Wharton: How has the Globalisation Centre East changed Cisco’s way of working?
Elfrink: If you think about globalization in stages, it started when Christopher Columbus discovered America and global trade was initiated, followed hundreds of years later by global manufacturing and global R&D. Today, we are seeing what I call the globalization of the corporate brain. In other words, it’s not limited to one function or two; it’s thinking and acting globally about our innovation, growth and talent across the company.
Specifically, I am the first direct report to our chairman and CEO living outside of California, and I am also a member of our board of directors. I TelePresence in to board and operating meetings. Working in the developing world firsthand, I am able to understand and shape our strategy, so that we do not approach globalization by “selling what we have” but rather by “creating what we need” — or, rather, what our customers need.
This mantra has driven us to reexamine our global operating blueprint. We have also established the first business unit located outside of the United States in the Globalisation Centre. And we have driven acquisitions from here as well.
Perhaps most significant is a new global initiative we recently launched out of the Globalisation Centre called Smart+Connected Communities. This initiative is focused on working with cities to help them use technology to drive social, economic and environmental sustainability. When I worked in the United States, this was priority number 10. Working here, because I live in the heart of globalization and demographic shifts, this is now my number-one priority. And we have driven it to become a top company priority.
India Knowledge at Wharton: What advantage do you think Cisco has or will have over its competitors because of this new way of working?
Elfrink:Economic power is equalizing around the world. Companies who remain operating, thinking and innovating solely in the power centers of the past will lose the opportunities of the future. Because we have broadened our operations and our approach to match emerging power centers, we are building relationships and products that will match our reach and abilities to the new world footprint.
India Knowledge at Wharton: As Cisco becomes increasingly global, what are the challenges it needs to deal with?
Elfrink: In order to become a truly global company, we are moving from a “command and control” approach to one based on collaboration and teamwork. Across Cisco, we are developing councils, boards and collaboration processes to further cross-company functions. This shift is a significant cultural challenge, requiring people to “let go.” I always say leaders understand globalization and managers ruin it. My point is that managers want to control, while leaders are able to let go, decentralizing decision-making, innovation and teams.
Cisco is fortunate in that we have deep experience using technology to decentralize our operations, which is the only way to decentralize control while ensuring we continue to move in the same direction, by leveraging such technologies as TelePresence and WebEx to communicate and stay connected. I personally have TelePresence in my home; it was one of my requirements when I agreed to take on this role.
India Knowledge at Wharton: What are your key priorities as chief globalization officer?
Elfrink: Generally, my priorities are working with the company to develop new business models, ecosystem partnerships and solutions as we begin to engage with new kinds of customers worldwide. I’m also helping drive transformation of the company’s operational blueprint, to help us operate both for speed and for scale. More specifically, the initiative at the top of my priority list is Smart+Connected Communities.
India Knowledge at Wharton: Can you explain the Smart+Connected Communities initiative? How important is this initiative for Cisco?
Elfrink: Smart+Connected Communities is a global initiative from Cisco to help cities around the world use the network as the next utility for integrated city management, better quality of life for citizens and economic development. Enabled by the network as the fourth utility, Cisco’s Smart+Connected Communities initiative brings together a broad portfolio of partnerships, products, services and solutions to address this emerging significant opportunity, beginning with a focus on four main areas – intelligent security, intelligent buildings, intelligent energy and intelligent transportation.
This is a very important initiative for Cisco as we believe our Smart+Connected Communities initiative will drive an entire new industry and ecosystem. Recently, we have made significant announcements in Bangalore, Incheon in South Korea and with the Metropolis association of cities. We see the Smart+Connected Communities initiative as a major global market transition being driven and enabled by the network, and we intend to be the leader of this emerging industry.
India Knowledge at Wharton: Can you elaborate on Cisco’s vision of creating the network as the fourth utility for developing countries?
Elfrink:In a world where all things are becoming connected, the network has become the next utility, enabling the holistic, intelligent and environmentally sustainable creation and management of cities, industries and public services. Visionary countries understand that the network is the fourth utility, enhancing global competitiveness, innovation and standard of living. Cisco works with governments across the world leveraging the network as the platform to achieve the countries’ economic and social development goals. Particularly in these tough economic times, cities that use the network to accelerate and multiply their infrastructure investments will not only survive challenges but will thrive and lead into the future.
India Knowledge at Wharton: It has been more than two years since Cisco set up the Globalisation Centre East. Has it met yours and John Chambers’ expectations? Have there been any disappointments?
Elfrink: Yes, it has met our initial expectations. But those initial expectations have changed, and continue to change. The work we are doing here is pioneering, a type of work that is always both challenging and rewarding. I have been able to see fundamental changes in how the company operates, how our leaders think and the kinds of solutions we deliver. Yet I also recognize the work of globalization is never truly done, because the world continues to change, particularly now, as the economic downturn is transforming the world even more rapidly.
India Knowledge at Wharton: Cisco’s target is to decentralize 20% of the company’s top executives over the next three to five years. How much of a challenge is it to get your top talent to relocate to India? How do you motivate them?
Elfrink: We have been able to attract over 60 families to India from around the world, and at all levels of the organization and all functions across the company. The type of employee who comes here is an entrepreneurial one, people who are motivated by the opportunity to create, pioneer, innovate. We have been able to attract some exceptional talent. I’m very proud of our team here.
India Knowledge at Wharton: What are the targets/milestones for the Globalisation Centre East in the coming years?
Elfrink:Milestones will include creation of new business models, continued decentralization of top talent, development of new global partnerships and establishment of a new global operating model.
India Knowledge at Wharton: What is Cisco’s vision for the future?
Elfrink: In the past, companies were structured for speed or scale. With the network as the platform, we’re building Cisco as a next-generation company for speed and scale.
