CSR as a Critical Tool in New Market Entry Strategy

Speakers

• Krista Bauer, Director of Global Programs, GE
• Kathy Mulvany, Senior Director, Corporate Affairs, Cisco Systems, Inc.
• Dunstan Allison Hope, Managing Director, Advisory Services, BSR (Moderator)

Highlights

• Trusting, engaged partnerships are crucial to developing effective solutions and building the company brand.
• Engaging employees throughout the company—including at the top—is critical to building companywide engagement, support, and enthusiasm.
• CSR efforts can offer important lessons on how products and users work in developing countries.

Memorable Quotes

“In emerging countries today, it is not enough that you have a sales presence or an office in that country. You are expected, as a global company, to do more than just have a presence.” —Kathy Mulvany, Cisco Systems, Inc.

“For every dollar that we spend, how many people do we impact? And for every activity that we engage in, how do we make it sustainable? … It’s got nothing to do with units out the door, with margin to the company, or with any sort of commercial angle or metric. And that’s been entirely liberating because it has opened our eyes to a lot of things … that GE doesn’t make but that GE can enable.” —Krista Bauer, GE

Overview

Hope opened the session with the observation that CSR is increasingly used as a tool for new market entry, geared not only toward risk mitigation but value creation as well.

From here, Bauer provided background on her work at GE, focusing on the Developing Health Globally program in base-of-the-pyramid markets (i.e., not BRIC markets). The goal of the program is to work with governments in developing countries to improve health care systems. She outlined three internal guidelines. First, the company does not give money; it makes product donations, improves processes, builds capacity, and works on other structural enhancements. Second, the program partners with health ministers in each country to understand key health priorities and how GE can help. Third, the program aligns with business strategy, but its activities are completely separate from commercial activities in order to focus on high-impact actions.

Next, Mulvany introduced her work at Cisco Systems. She cited the company’s long CSR history, the role of employees, and how CSR efforts build the brand and lay the groundwork for trusting engagements in developing countries. She noted that the vast majority of the company’s giving comes from the corporation not the foundation. She went on to describe the company’s Networking Academy, a program that educates students about how to build and design networks. Among its 1 million enrollees, it helps proliferate information and communications technology (ICT) skills, build local capacity, and increase impact by bringing people and technology together.

Hope asked the panelists how they choose their focus markets. Bauer explained that GE starts by assessing needs. Then the company thinks about long-term prospects, including the potential for sustainability, the viability and transparency of partners on the ground, and the stability of the country. Mulvany commented that for the Networking Academy, Cisco starts by looking at where it’s easier to do business, and also where it is approached by potential partners. Other Cisco programs center on disaster areas to help with immediate responses and to lay the groundwork to “build back better.”

Hope then inquired into how the companies do business in areas with corruption, conflict, and dubious rule of law. Bauer noted that the company has to pick its battles in terms of where to work and what issues to push. Mulvany highlighted the crucial importance of doing due diligence, conducting partner assessments, and tracking milestones. She explained that the company has criteria for selecting partners to ensure that values align and that the company is not putting its brand at risk.

Hope continued by asking the panelists about internal corporate engagement and influence. Bauer explained that she often uses her budget to buy company products, so she also gets attention as a customer. Additionally, GE deploys employees as volunteers to help lead engagements, which spreads responsibility along with enthusiasm and awareness. She also is able to engage internally by providing key lessons on user experiences and products’ technical performance in developing countries. Mulvany said that a lot of people at Cisco are paying attention, and that employees are eager to participate. She also noted that through their educational programs and testing the company learns about technology capabilities and skills in different regions.

Jessica Hubbard, Senior Manager of Corporate Responsibility at Houghton Mifflin Harcourt, asked about operating programs through the companies rather than the foundations. Bauer explained that a component of their work is funded by the foundation, but she also stressed the importance of carefully monitoring conflicts of interest to protect the brand and corporate integrity. Mulvany underlined the strict rules on foundation giving, adding that the foundation has to consider if conflicts could arise years into the future.

Kenzie Ferguson, Director of Corporate Responsibility at TE Connectivity, asked what advice the panelists have for building similar programs. Bauer offered three suggestions. First, get out early with big signature programs that the entire company can get behind. Second, identify top-level support and champions. Third, engage locally through smaller initiatives that excite employees locally and engage them at a practical level. Mulvany agreed with the importance of this last point. For disaster-response work, she cited the importance of identifying good partners in advance, so that if tragedy strikes a region, the company can act quickly. She also stressed the importance of not doing it alone and of creating multi-stakeholder partnerships with a clear vision, strategy, and execution plan. Such programs should feature buy-in from the top; clear roles, responsibilities, metrics, and communications; and an exit plan to transition programs over to local partners.

In response to a question from Chris Nordlinger of Nordlinger & Associates, Mulvany explained that many of their efforts are endowment-funded, and hence resilient to economic fluctuations. That endowment was started with funds from the release of competitive stocks held by companies Cisco acquired. In contrast, Bauer explained that they do not have an endowment; they are solely funded by the parent company, but that funding is not pegged to revenue or net income and high-level support means that they can count on the company to stand behind them.

Replying to a final question from Hope, Mulvany commented that the focus on creating global jobs has raised the profile of Cisco’s ICT education work in a way that has been positive for the brand. Bauer added that increasing interest in growth in emerging markets has stimulated interest in understanding lessons from CSR efforts in those areas.