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© 2007 Cisco Systems, Inc. All rights reserved. Cisco Confidential
Reza…Innovation… 1
Accelerating Innovation
Reza Mahdavi
Vice President Corporate Affairs and
General manager Global Learning
Networks Cisco System
rmahdavi@cisco.com

Dream of Flying……

The great Leonardo Davinci

Bishop John Wilkins

Gliding and not flapping…..

The wrights Brothers

Innovation Is Occurring Everywhere
Connecting for Innovation
Global
National
Regional Customers Partners
Suppliers
Intra-Organizational
Enterprise Innovation
Inter-Organizational
Open Innovation
Extra-Organizational
Environmental Innovation

CULTURE

Innovation Is the Cornerstone of
Cisco’s Culture

Cisco Innovation Evolution
1984 1986
Started at
Stanford
Shipped First
Router;
Developed
IGRP Protocol
1988 1990 1992
Shipped Multiport
Communications
Interface (MCI)
IPO; 192
Employees
Acquired
Crescendo;
Released 3000,
4000 and 7000
Series Routers
Released
Catalyst
Switch:
Collaboration
with IBM
1994 1996
Entered Service
Provider Market;
Released Gigabit
Switch Router
(GSR)
1998 2000 2002 2004 2006
Shipped First IP
Telephone;
Developed
Optical Strategy;
First GGSN to
market with
Microsoft (1999)
Released
Wireless LAN
Products
Acquired
Andiamo;
Purchased
Linksys to Enter
Home
Networking
Market; EMC,
Hitachi, HP, IBM
become OSMs
for MDS (2003);
W/less, security
embedded in
Intel silicon
(2003)
Developed CRS-1
Carrier Routing
System; Shipped
6-millionth IP
Phone (2005) ;
Launch SMB
Communications
with Microsoft
Introduced
Integrated
Services
Router;
Purchased
Scientific
Atlanta for
Video;
Deliver
Next-Gen
Routers with
Fujitsu
(2005)

Innovation Outputs: Multiple Manifestations
New Technology
CRS-1/IOX
New Product
or Service
IP Telephony
New Customer
Experience
Network Advanced
Services
New Process
Business Councils
New Education
Engine
Networking Academies
New Business Model
Linksys
New Market
Unified
Communications
New Channel
E-Commerce

BUILD
BUY
Cisco’s Innovation Model...
Build / Buy / Partner... Collaborate
COLLABORATE
PARTNER

Cisco—The Technology Innovator
$4+ Billion R&D Investment Annually
More than 17,000 Engineers Working in
More than 10 Major Labs Worldwide
More than 2000 Patents Have Been
Issued to Cisco Inventors
99 issued patents and 386 patents
pending from India-based R&D
Recent Innovations
CRS-1
Carrier Routing
System
IOS XR
Self-Defending,
Self-Healing
Operating System
Software
TelePresence
High-Definition
Network-Based
Meeting Solution

Innovation Enables New Opportunity
Invention
Zone
Optimization
Zone
Deployment Zone
1 Invent
2 Scale 3
Optimize
4
Offload
Foundation
Advanced
Emerging

Find
2. Deploy
1. Invent
New Innovation for New Markets
Filter Initiate
BU
Formed
Graduate
Eliminate
Accelerate
$1B,
5-7 yrs?
Execute
Commit
Ideas

Source: Cisco, TCG Advisors
Invention
Zone
Optimization
Zone
Deployment Zone
1 Invent
2 Scale 3
Optimize
4
Offload
TDM PBX
Unified Comm
Case Study
Reinventing an Industry

Innovation
… is built into Cisco’s culture
… takes many forms:
Technology, products,
business processes and models
… results from common tools:
Build, buy, partner
Innovation at Cisco
A Continuous Process

INTERNAL VENTURING
EMERGING MARKETS
TECHNOLOGY GROUP

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

What is “Core” to you?
 “Any activity that creates sustainable
differentiation in the target markets
resulting in premium prices or increased
volume.
 Core management seeks to dramatically
outperform all competitors within the
domain of core.

15
Successful ET’s
$6.5B
75%
1,000
Prospects
20
ET Investments
2%
Internal Venture Math

Cisco
EMTG
New
BU
Source: “Mapping your Innovation Strategy”, Harvard Business Review, May 2006
Demos
Alliance
Channels
Job
RFP
Lab Acquisition
Nurture & Scale Internal Innovation
Protect and Grow

Invent Like a Startup
Scale Like Cisco
New BU
Invent Build Sell Support
Mfg
Marketing Sales
Services
Integrated
Go-To-Market
Approach

Source: Geoffrey Moore, “Dealing with Darwin”
EMTG
EMTG and Innovation Types
Focus on the Product Leadership Zone

OPEN INNOVATION

Top Three External R&D Partners
1. Other Companies
2. Academia
3. Commercial labs
4. Possible Partners….
InnoCentives – global 25K problem solvers
Yet2be.com – online broker
Source: Dr. J. Duga and T. Studt, “ 2006 R&D Funding Improves Amid Increasing Restraints”, R&D
Magazine, January 2006

Benefits
 Share risk of costly and disruptive innovation
 Curb shrinkage of local talent pool
 Address emerging market needs
 Reduce new product and services failures
 Increase responsiveness to unpredictable market shifts
Source: Forrester research,” Innovation Networks: Global Process report 2006

What to do
 Find your core – pick the right role
 Networked Innovation culture
 Increase Innovation Capabilities (process &
Governance, comp)
 Share IP
 Involve customers

Hire for
 Adaptability
 Strategic thinking
 Team building
 Customer empathy
 Ability to make connections
 Cross cultural communications

Innovation Driven By Consumers
Source: TrendWatching, 2006
 Description
Involving consumers as a source
of new ideas to create or improve
products and services
 Proof Points
Firms like P&G, Nokia, and Nestle
are using the Internet to gathering
input from customers
 Impact
Products that include consumer
input are better and more responsive
to consumer needs
 Thought Starter
Launch an “Innovations Hub” and
invite customers to design a next
new product or service

“CONNECTED INNOVATION”

It’s All About Connections
THINGS
Availability
PEOPLE
Diversity
PLACES
Accessibility
NETWORK
Mobility
Enterprise Internet

Everything Will Be Connected
Source: Forrester Research, February 2005
14 billion devices will be connected
to the Internet by 2010
14 Billion
300 Million
2001 2006 2008 2009 2010
2007
2002 2003 2004 2005

Innovation Is Occurring Everywhere
Connecting for Innovation
Global
National
Regional Customers Partners
Suppliers
Intra-Organizational
Enterprise Innovation
Inter-Organizational
Open Innovation
Extra-Organizational
Environmental Innovation

Network-Accelerated Innovation (NAI)
Connects all sources in the
innovation process—from
idea to execution
Diversity of ideas
Independent thought
Decentralization of power
Aggregation of information
Benefits
Improves quality, desirability,
and viability of ideas
Increases productivity; reduces
costs in the process
Delivers faster time to value
NAI

BARRIERS TO INNOVATIONS

The Innovation Process
Generate
Sense Select Develop Commercialize
to bring into
being;
combine
to become
aware of;
perceive;
notice trends
to make a
choice among
several;
prioritize
to come
gradually into
existence or
activity
to put into
effect; carry
out; make
valid

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