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Cisco: Giving Back Is "Good Business"

Cisco Systems (CSCO) Chief Executive John Chambers is known as one of tech's most successful CEOs. So it's no surprise his capitalist drive would extend even to the topic of corporate citizenship. Chambers argues that giving back to society brings benefits that far exceed any costs -- whether it's in terms of employee morale or strengthening the brand name.

That's why San Jose (Calif.)-based Cisco donated $56 million to various programs in 2004. These include the Second Harvest Food Bank and NetHope, a consortium of not-for-profit organizations such as Save The Children. After the tsunami last December, Cisco staffers installed emergency networking gear to help these organizations get up and running. And Cisco will provide volunteers as part of an effort by the community group Hands-On Network to make this September a corporate "Month of Service."

Chambers spoke with Peter Burrows, BusinessWeek's computer editor in the Silicon Valley bureau, about his attitude to doing good. Edited excerpts of the conversation follow:

Q: Tell us about Cisco's approach to corporate citizenship.

A: I'm always glad to talk about such an important topic, although [corporate citizenship] is an issue that very few people really understand. It's a topic not many people have wanted to talk about for the past few years.

Q: What don't people understand about it?

A: Very few people understand that it's not just a one-way street [benefiting the recipients of corporate volunteerism]. It's also a critical element of a company's brand and reputation. I've always thought the most successful and strongest companies had the greatest obligation to give back, and not just because it's the right thing to do. It's also good business.

Q: Volunteering has been a part of Cisco's culture since the company was founded 21 years ago. How did that develop?

A: At first, we didn't think about how it would benefit us as a company. It just felt like the right thing to do. But it was in our culture from the start.... I remember a day early on when John Morgridge [then Cisco's CEO and its current chairman] came and asked me to make a contribution to Stanford University [where Cisco had been created]. I said fine -- but the air went out of my lungs when he handed me the bill. [The amount he'd asked for] was equal to 10% of my net worth at the time!

Q: In its earliest days, Cisco staffers took it upon themselves to set up networks in some of the grade schools near Cisco's offices. Did that end up benefiting the company, or was it just another case of "the right thing to do"?

A: Looking back, it's clear it paid some early dividends.... For one thing, East Menlo Park [where Cisco was located] was a very tough community, but in all those years we had only one incident. And no, I'm not going to say what that incident was.

Also, it indirectly led us to set up our Network Academies, so people could learn about networking and get training [on using Cisco gear]. At first, it wasn't so much about business. We never dreamed the impact it would have on our corporate image. There are now 425,000 people attending these academies in 152 nations.

Q: How else has Cisco's reputation for corporate citizenship aided shareholders?

A: It has had a huge impact on our brand. We have one of the top 20 brands in the world, right up there with names like Coca Cola that spend a huge amount more than we do on advertising. Part of that is that people like to be in business with people they respect and trust.

I know that has helped us in terms of international expansion. One top government official told me that "one of the reasons you'll be successful here is that you give something back."

Q: Cynics might say some companies get involved with programs like the Hands-On Network only because it's good PR. How do you respond to those people?

A: Of course. But if someone decides to go to church and then decides to make a contribution once they're there, the minister doesn't ask questions [about their motivations].

And once you start to give something back -- especially once you start seeing the benefits of it -- it becomes a habit.

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