Georgetown University Cisco Switches in China Case StudyDiscussion Deliverable: After you have read through the case study, give thoughtful, well-develope

Georgetown University Cisco Switches in China Case StudyDiscussion Deliverable:

After you have read through the case study, give thoughtful, well-developed responses to these case analysis questions in a 1-2 page Word Document. Upload your document by clicking the Submit Assignment button at the top of this page.

If you were in Raznjevic’s position, would you promote Jasmine Zhou? Why or why not?
What, if anything, would you do about the blast email? Be specific.
How would you coach Ehud Oentung on his first encounter with Cisco’s ranking system?

Grading criteria and rubric for this assignment are located in your syllabus and a link to the rubric is provided below.

Instructions

Each student will submit their assignment by Sunday 11:55 PM, EDT. An answer key will be provided below, once the due date has passed.

Writing Assignments are submitted through the TurnItIn plagiarism tool, which evaluates them and assigns a score for originality. If you receive a score greater than 20%, you will need to rework and resubmit your paper.

Grading

The assignment for this week is worth 100 points. It will be graded according to the Assignment Grading Rubric [PDF] For the exclusive use of M. Esposito, 2019.
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January 21, 2010
CISCO SWITCHES IN CHINA: THE YEAR OF THE MANAGER
As an expat, your job from the beginning is to leave. The day you arrive is the day
you must start to think “What am I going to do to facilitate my leaving? Who is
going to work out and who should move up?”
Ivo Raznjevic, engineering director of the Cisco China Research and Development
Center (CRDC), was enjoying an end-of-day round of Ping-Pong he was playing with the
office’s most competitive player. Between challenging volleys, he couldn’t help but make the
connection between the game and his job; that for every challenge addressed, another came right
back at him. Working themselves out of a job was not that easy.
With buy-in from the top of the Cisco Systems (Cisco) San Jose-based executive team,
the CRDC leadership team of which Raznjevic and Gronski were members had started the
building of the fledgling organization in Shanghai. The initial development plan was to focus on
technologies and products targeting service providers and consumer networking sectors. Cisco
had committed to invest $32 million USD in the center. Not intending it to be an overseas R&D
center for internal outsourcing Cisco projects, the CRDC leadership team had pushed for
innovation and independence from corporate headquarters.
Within a year, the organization had top-notch local engineers who built relationships with
U.S. engineers and provided early delivery on CRDC’s first few projects. By the fall of 2007,
$100 million had been received, and the CRDC team was proud of its success.
But certain personnel issues still weighed on his mind. Should one of Cisco’s local
female employees be transferred laterally from a test manager position to a development
manager position? How should he help his newest manager through his first encounter with
Cisco’s ranking system? What action—if any—should he take regarding a UK-based senior
engineer who sent out a controversial e-mail? He readied his paddle as his opponent paused to
serve.
This case was prepared by Gerry Yemen, Senior Researcher, and Lynn A. Isabella, Associate Professor of Business
Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling
of an administrative situation. Copyright ? 2009 by the University of Virginia Darden School Foundation,
Charlottesville, VA. All rights reserved. To order copies, send an e-mail to sales@dardenbusinesspublishing.com.
No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in
any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission
of the Darden School Foundation.
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China Opens Its Doors, and the United States Becomes a Guest
Cisco made its global footprint in China during 1994, when the firm established Cisco
China in Beijing. Mainly a sales office, the company’s name recognition grew rapidly through
contracts to help the state-owned phone companies build nationwide networks.1 A few years
later, the “Huawei affair,” a messy lawsuit with a Chinese technology company over intellectual
property, that Cisco eventually dropped, left a bitter aftertaste.
In the fall of 2004, Cisco announced a plan to invest $32 million in a new R&D center in
Shanghai. The company already had several R&D centers geographically dispersed in North
Carolina; Massachusetts; Bangalore, India; and Tokyo, Japan. CEO John Chambers believed that
the firm’s long-time commitment to “ongoing research and development is the basis for Cisco’s
innovation.”2 The move was also intended to be symbolic of Cisco’s commitment to China—
despite the Huawei affair.3 Soon after the People’s Republic of China (PRC) granted the
necessary licensing and approval for the center to operate as a wholly owned foreign enterprise
(WOFE).
Cisco tapped Jan Gronski to establish the Cisco China Research and Development
Center. Gronski, a Chinese-speaking PhD, who grew up in Warsaw, Poland and had worked for
Cisco since 1996, ran the systems and solutions quality business unit in San Jose and knew most
of the senior vice presidents of Cisco’s other business units. In the fall of 2004, Gronski
relocated to Shanghai, eager to start as managing director of CRDC. With start-up cash4 and a
few engineering jobs in his pocket, Gronski’s first job was to assemble his leadership team.
Don’t Apply Unless You Fly
To build the leadership team he wanted, Gronski put a lot of effort into recruiting. He
called Daniel Puche, a French Canadian he had worked with in Montreal for awhile. Puche had a
PhD in physics and spent several years doing research and working around the world. He then
joined Cisco holding various jobs mainly as a development manager and software process expert.
Puche recalled:
Jan called and asked if I’d like to help him open an engineering facility in
Shanghai. I said, “No.” I turned it down because Jan had an engineering team in
1
Peter Burrows, Manjeet Kripalani, and Bruce Einhorn, “Cisco: Sold on India,” Businessweek, November 28,
2005, http://www.businessweek.com/magazine/content/05_48/b3961055.htm (accessed September 17, 2008).
2
2006 Cisco annual report.
3
Bruce Einhorn, “Selling Cisco to China’s Tech Talent Pool,” Businessweek, September 17, 2007,
http://www.businessweek.com/globalbiz/content/sep2007/gb20070913_971883.htm (accessed September 17, 2008).
4
Gronski said it was hard to tell how much money he had. He knew that Cisco had committed $32 million over
a three-year period and that he could go ahead and hire.
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Canada, and I was in a position that made things difficult to go. And I didn’t want
to be away from my family that much. China was an unknown to me.
Jan has always been a believer in the way I teach engineering, which is quite
different from any others in Cisco, and he told me I would have private run of
engineers who would have no resistance to learning things differently. That was
an interesting challenge and an opportunity for me to show we could do things
just as well or even better than how engineering was done in San Jose. He
convinced me and I went with him.
Gronski also recruited one of his employees, Jerry Chen, to go to Shanghai with them.
Chen was a software developer who had been at Cisco since graduating with a master’s degree in
computer science. Chen said:
Jan was my boss and liked me. Then he gets an assignment to open a center in
China. I grew up in China and left when I was 12 years old. He was chatting with
me and said, “Do you want to go back to China and do something?” “Why not?” I
answered. I’d never really experienced Chinese culture, so the reason I went back
was to experience the cultural differences between the U.S. and China. To me,
actually, it was very exciting to get a job working in China.
On January 2, 2005, Gronski, Puche, and Chen arrived together in Shanghai and started
to set up shop. “We landed and there was no center,” Chen said. “We didn’t even have a place to
sit, so we borrowed space at the sales facility.” A few weeks later, Ted Curran, an Irishman with
degrees in engineering and computer science, joined the group as a technology expert. Curran
recalled:
I didn’t know anybody. The team was from all parts of Cisco and different
nationalities. I arrived at the airport and had to figure out how to get a taxi to the
office. And then try to understand the complexity of building a new team. I’d
been involved in team building but never to create a new one.
Ivo Raznjevic, who arrived in February 2005, was the next recruit to complete the initial
CRDC team. He grew up in Zagreb, Croatia, when it was one of the Yugoslav republics.
Raznjevic earned an undergraduate degree in mathematics in 1989 and a master’s degree in
computer science. In 1994, he started working for Cisco in San Jose. Raznjevic smiled when he
talked about his background: “Who would have thought that being from a communist country
would be a job qualification?”
The group was diverse enough to conduct business in at least 11 different languages. “Jan
was the only one fluent in Chinese,” Curran said. “That made it a great adventure because most
of us didn’t know the language, the culture, and we didn’t pretend to know the culture.” Among
them they had a broad array of degrees from highly respected institutions that included Oxford
University, University of California Santa Barbara, University of Illinois, Université de
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Montréal, University of New Hampshire, the University of Warsaw, and the University of
Zagreb. “We complemented each other,” said Curran. “Jan was dogmatic, Daniel was passionate,
and Ivo was very strategic.” Curran was described as “patient and able to provide a lot of
laughter.” Little did they realize how much they would need all of those perspectives. Using
borrowed furniture and office space, the team settled down to sort out many issues. What was
their vision for this center? How would CRDC govern itself? What should it ask Cisco’s India
facility about best practices? What kind of projects should it take on? What was its strategy for
talent management?
CRDC Governance
In May of 2005, Gronski and Raznjevic returned to Cisco headquarters in San Jose to
meet with an oversight group that eventually became the CRDC Strategy Board. Gronski’s
significant network contacts at the company’s vice president level were instrumental to the
board’s formation. In the end, Charles Giancarlo, Cisco chief development officer and senior
vice president, agreed to head the board. His participation was key because he agreed that, to
keep talent at the firm, CRDC had to be a place to engage in important work and become a center
of expertise, not a place to outsource undesirable work. “Giancarlo supported growing CRDC
and made sure it was part of the corporate global strategy,” a CRDC business operations
manager said.
The board met quarterly to formulate CRDC’s strategic direction and facilitate its
alignment with corporate’s business initiatives. Members of the board included several other
high-ranking executives from San Jose and China besides Gronski and Raznjevic.
A CRDC Core Team was also established and included VP-appointed stakeholders from
various Cisco support functions (CDO, finance, HR, WPR, legal, and CRDC). The idea was that
the Core Team would provide tactical guidance and assistance to execute board-approved CRDC
strategy.
In Shanghai, Gronski and senior CRDC managers were the CRDC Management Team
(see Exhibit 1 for CRDC governance model). Its goal was to create an R&D center to architect,
design, develop, test, and support products and solutions for delivery to Cisco customers
worldwide.
Looking West for Guidance
Cisco’s first foray into an R&D center outside the United States was India, so when the
CRDC team needed to figure out what the structure of an R&D facility might look like, India
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provided clues. Attracted by the English-speaking engineering talent India offered, Cisco had
opened the Global Development Centre (GDC) 10 years earlier in Bangalore. The GDC grew to
employ approximately 300 people by 2005,5 becoming a low-cost engineering resource for San
Jose. Different business units in San Jose allocated work to GDC whose engineers
complemented or extended engineering efforts on the product. GDC was not originating work
but supporting projects controlled from other parts of Cisco. As a result, the GDC had many
groups of various sizes reporting to individual business units in San Jose. Attrition rates in India
were high and the CRDC team suspected that the high turnover was because of how the work
was structured.
Believing that engineers would be proud to own something—even if it was small—and
work harder (and not leave), the team decided that the China facility needed to be different.
“Right away at CRDC we negotiated with upper management in San Jose that we would bring
ownership of the projects to China as we built up the capability,” Puche recalled. “Our goal was
to have ownership with project management, leadership, and so on.”
Finding that First Project
Cisco maintained a defined process within its R&D centers. The first step at developing a
project at a Cisco R&D site was to have an idea that excited the decision makers and
conceptually won approval—called Concept Commit (CC). The next phase was to have
resources approved and available—referred to as Execution Commit (EC). After that, engineers
and scientists generally conducted original investigations on a systematic basis to gain new
knowledge (research) and/or the application of research findings to create or significantly
improve products or processes. This work was done on the development side of the product and
service. So at Cisco R&D centers, several software developers thought about how to create a
product or process and how to implement it—take ideas from zero and create new things. Once
the product or process was developed, it moved over to the test side. Testers spent a lot of time
ensuring that things worked. The tester thought about whether the new design met all the
necessary requirements and whether or not they could destroy the product or process—did the
product deliver good quality to the customer?
The CRDC group knew that the first project would be critical. Raznjevic believed they
needed a core project that would bring some money to the company but was not strategic to
Cisco. “The ideal scenario would be to find something to own that was losing money in San
Jose, move it to China, and make it profitable,” Raznjevic said. “We couldn’t start with the
crown jewels (IOS). Finding a project that was in the red and then moved to China and moved
back in the black, not much money nor intellectual property to risk.”
5
“Cisco invests US$50 million for new campus in Bangalore,” EMSNow, October 25, 2005, http://www
.emsnow.com/newsarchives/archivedetails.cfm?ID=10684.
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Early on the CRDC team had identified a list of possible projects. Because each business
unit at Cisco had its own marketing, engineering, testing, and finance people, the CRDC team
had to convince business unit managers who owned that project of the value in moving it to
China. Puche remembered the issue:
If you go to establish an R&D center in a country like the UK or Germany, they
would get responsibility to do stuff. Why not the same for China? We created a
model against the grain of Cisco where engineers working for a particular BU
were not directly reporting to that BU but to Gronski and a dotted line to the BU
with little intervention on our part except to coach them to do it.
Not surprisingly, relinquishing ownership of the project (see Exhibit 2 for structure) was
not easy for business unit managers. Raznjevic recalled:
How you present information, and to whom, became important. Each project had
a list of people involved like the vice president, general manager (GM),
senior/junior staff. So we decided which staff meeting to hit—initially this was
the three BUs where we knew the GM. We talked to a lot of people to make sure
we knew in advance what problem they were having with the project. And there
were certain topics we learned just not to mention to general managers in the U.S.
because all they wanted was to get it done the cheapest way—not necessarily
concerned with our longevity.
Space Shot
The CRDC management team wanted to provide a pleasant and secure environment for
their employees, who would spend 10 or 12 hours a day at the office. Raznjevic preferred that
the CRDC lab and offices be housed at a single site. Scouting for good locations and negotiating
leases would be a frustrating task in any country, and China was no exception. Several questions
guided the search: What was a prime location? Could employees tolerate a long commute to and
from the office, or should it be close to where they lived? Should their space be near potential
key customers? Perhaps somewhere with a prestigious address? Then there was the issue of how
much space was enough. The average footage per employee in the United States was 175–275
square feet.6 What was the norm in Shanghai, where people were used to living and working
closer together than in the United States?
6
Lee Anne Obringer, “How Finding Office Space Works,” HowStuffWorks, http://money.howstuffworks.com/
office-space3.htm.
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The group planned to double or triple in size over the next five years. Outgrowing a
chosen facility would require renting additional space, which would mean having offices all over
the place with different lease-end times. On top of that, the Shanghai real-estate market was hot
and demand for buildings high. How could the CRDC sign long-term leases and still
accommodate growth? How much of its resources should it spend on buildings?
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Despite finding a great building in a good location in Pudong Park (on the east bank of
the Huangpu River) for the right price and lease arrangements that would accommodate the
expected growth, the CRDC was not allowed to move forward. Raznjevic recalled part of that
search: “We had WPR, the real estate VP, come to look. They saw a fancy chandelier in the
lobby of the building and then walked out—‘too opulent’—they said.” As Gronski recalled:
There were other buildings that we went through. Unfortunately there was not a
single one that satisfied my requirements—convenient for employees to get to
work. The “opulent” one satisfied that criterion, but had some other
characteristics which made it less desirable from the corporate view point. In
hindsight the “opulence” issue was a red herring. The core problem was the issue
of growth. That place had very limited expansion opportunity.
That interaction was the team’s first hint that even though they were in Shanghai, San
Jose was not that far away. “WPR didn’t believe that we would get any bigger,” Raznjevic said.
“They didn’t think we were serious. We ended up in a temporary office in a poor facility with
our people squeezed in there. It was a short-term lease, and we wanted a long-term.” A
temporary office was found in the L…
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