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© 2007 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialReza…Innovation… 1

Accelerating Innovation

Reza Mahdavi

Vice President Corporate Affairs and General manager Global Learning

Networks Cisco System

[email protected]


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

NationalRegional Customers Partners

Suppliers

Intra-OrganizationalEnterprise Innovation

Inter-OrganizationalOpen Innovation

Extra-OrganizationalEnvironmental Innovation


CULTURE


Innovation Is the Cornerstone ofCisco’s Culture


Cisco Innovation Evolution

1984 1986

Started atStanford

Shipped First Router; Developed IGRP Protocol

1988 1990 1992

Shipped Multiport Communications Interface (MCI)

IPO; 192Employees

Acquired Crescendo; Released 3000,4000 and 7000Series 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 TechnologyCRS-1/IOX

New Productor ServiceIP Telephony

New CustomerExperienceNetwork Advanced Services

New ProcessBusiness Councils

New Education EngineNetworking Academies

New Business ModelLinksys

New MarketUnified Communications

New ChannelE-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-1Carrier Routing

System

IOS XRSelf-Defending,

Self-Healing Operating System

Software

TelePresenceHigh-Definition Network-Based

Meeting Solution


Innovation Enables New OpportunityIn

ven

tio

n Z

on

eO

ptim

ization

Zo

ne

Deployment Zone

1 Invent

2 Scale 3Optimize

4Offload

FoundationAdvanced

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

Inve

nti

on

Zo

ne

Op

timizatio

n Z

on

e

Deployment Zone

1 Invent

2 Scale 3Optimize

4Offload

TDM PBX

Unified Comm

Case StudyReinventing 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 CiscoA Continuous Process


INTERNAL VENTURINGEMERGING MARKETS TECHNOLOGY GROUP


Cycle of Innovation

DeployDifferentiation

at Scale

InventDifferentiated

Offering

ManageMission-criticalProcessesat Scale

ExtractResourcesto Reinvestfor Core

2. Deploy

1. Invent

3. Manage

4. Offload / Repurpose

AdvancedAdvancedTechnologyTechnology

FoundationFoundationTechnologyTechnology

EmergingEmergingTechnologyTechnology

ReinventReinventTechnologyTechnology



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%

1,000Prospects

20ET Investments

2%

Internal Venture Math


Cisco

EMTG

NewNewBUBU

Source: “Mapping your Innovation Strategy”, Harvard Business Review, May 2006

DemosAlliance

Channels

JobRFP

Lab Acquisition

Nurture & Scale Internal InnovationProtect and Grow


Invent Like a StartupScale Like Cisco

New BU

Invent Build Sell Support

Mfg

Marketing Sales

Services

IntegratedGo-To-Market

Approach

© 2007 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialReza…Innovation… 24Source: Geoffrey Moore, “Dealing with Darwin”

EMTGEMTG

EMTG and Innovation TypesFocus 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

DescriptionInvolving consumers as a source of new ideas to create or improve products and services

Proof PointsFirms like P&G, Nokia, and Nestle are using the Internet to gathering input from customers

ImpactProducts that include consumer input are better and more responsive to consumer needs

Thought StarterLaunch an “Innovations Hub” and invite customers to design a next new product or service


“CONNECTED INNOVATION”


It’s All About Connections

THINGSAvailability

PEOPLEDiversity

PLACESAccessibility

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 201020072002 2003 2004 2005


Innovation Is Occurring Everywhere

Connecting for Innovation

Global

NationalRegional Customers Partners

Suppliers

Intra-OrganizationalEnterprise Innovation

Inter-OrganizationalOpen Innovation

Extra-OrganizationalEnvironmental Innovation


Network-Accelerated Innovation (NAI)

Connects all sources in the innovation process—from idea to execution

Diversity of ideasIndependent thoughtDecentralization of powerAggregation of information

BenefitsImproves 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

GenerateSense 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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