Growth and Innovation

Haas Business School Tech Speaker Series

November 29, 2010

Inder SinghVice President

Corporate Portfolio Management, Long-Range Planning, andMergers & Acquisitions

Agenda

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Why Innovation Matters

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Q&A

Enabling Innovation

Portfolio Framework

Source: Connecting Cities: Achieving Sustainability Through Innovation Nicola Villa and Wolfgang Wagener, Cisco IBSG

Many people get Internet or a phone, before running water

100 new cities with one million residents by 2025

Innovations for Emerging Mkts Likely to Disrupt

300M connected devices in ~2001, growing to Billions in next few years

A World in Transition

At Least 3 Key Implications for Technology

1) Video & Collaboration

Video could rise from 4% today, to >64% of carrier traffic next few years

Web

Cloud

Client Server

MinicomputerMainframe

Data Center capex shifting towards virtualization and cloud

2) New Consumption Models

3) Reverse Innovation

“Built for Developing World, Sold Back into Developed”

Innovations Often Disrupt Incumbents

Christiansen, Clayton: “The Innovator’s Dilemma”

PERFORMANCE

TIME

High End

Low End

DisruptiveInnovation

DevelopNew Technology

Start New Business Models

Pursue Acquisitions

Partner with Other Companies

Investments

Design New Products

A Broad Approach to Innovation

Weighing Competing Investment Needs

Core Business

• Routing• Switching• Architectural

approach

30 Market Adjacencies

• Smart Grid• Cloud• Video

M&A• Deal 1• Deal 2• Deal 3

OPPORTUNITIES …

Investment Requests

AvailableCapital

GAP

DEMAND… & ...SUPPLY

Capital• Stock buybacks• Dividends

Agenda

text

Why Innovation Matters

text

Q&A

Enabling Innovation

Portfolio Framework

Find

Internal Venture Framework

Filter

Business Unit Formed

Graduate

Eliminate

Accelerate

Ideas

Incubate

Initiate

© 2006 Cisco Systems, Inc. All rights reserved. Cisco ConfidentialPresentation_ID 12

Agenda

text

Why Innovation Matters

text

Culture

Enabling Innovation

Portfolio Framework

Targeting a Balanced Corporate Portfolio

1 2 3

4 5 6

7 8 9

Product Extensions

New

er

Bu

sin

esses

Current Business

Adjacencies

New Markets

1–2 years 2–3 years 3+ years

Long Range Planning Process

Final Plan

Updated strategies

Council/ Function alignment readouts

Key strategic decisions

Alignment finalization

Long-term business strategies

Strategic growth scenarios

Portfolio performance deep-dives

Business momentum updates

Final P&L and investments

Communicate funding decisions

Portfolio Exchange

Strategy Onsite II

OperationsReview

Strategy Onsite I

Understand business environment

Identify top “trends” and Cisco wide imperatives

Business Environment

Review

Investment Scenario are Modeled

Data not actual

Cisco Priority Assessment Dashboard-- A Management Framework

CPAD is used to manage identified Cisco corporate adjacencies in their early life cycle.

CPAD Steering Committee

Phase 5Phase 4Phase 3Phase 2Phase 1

TH

E C

HA

SM

Re

ve

nu

e G

row

th

Fully Managed Jointly Managed Monitor

CPAD Overview

© 2010 Cisco Systems, Inc. All rights reserved.

TH

E C

HA

SM

Jointly Managed

Phase 1 Phase 2 Phase 3

Managing Investment with CPAD

Biz CasePrototype

EarlyCustomers

Commit

ManyProductionCustomers

Productize

BroaderAdoption

6 12 18 30 42 48

Months

3624

18

Invest

Check

Points

Adjacent Direct

0 1.1 1.2 1.3 2.1 2.2 2.3 3.0

Agenda

text

Why Innovation Matters

text

Q&A

Enabling Innovation

Portfolio Framework