Business 2.0, Sustainability

Definition of shared value

This is a cross-posting of a post originally published on the IDX Backstage blog. Note that Ben from SVA has commented on the original post.

Over at the SVA Blog Ben McAlpine asks the question Shared Value – Is it worth the hype?.

Specifically, he notes a colleague asking how Shared Value is different to “smart business”.

Shared Value, is of course, smart business. But Ben’s description of Shared Value I think has an issue that I see in an awful lot in discussions about the topic. It touches on only the first of 3 pillars that are outlined in Porter and Kramer’s HBR paper that launched the term into the business mindset.

This is really common, I am discovering, in talk about Shared Value. This core of the idea—the differentiation of innovation value in socially sustainable practice—has been around for a long time. It seems to have come to a peak around 1999 with books like Natural Capitalism, Cradle to Cradle, and Rosabeth Moss Kanter’s HBR article on Corporate Social Innovation. Some have called this broader movement “strategic CSR” (a term that I’m fond of to disambiguate with more specific ideas like Shared Value).

Shared Value incorporates this idea, and it seems has entered the corporate dialogue on this grounds alone (which is great in a “anything is better than nothing” sense). But Shared Value outlines 3 very specific ways that businesses are able to action this broader agenda in their business (paraphrased):

  1. Reconceiving of products and services
  2. Redefining value in the value chain
  3. Strengthening clusters

While this isn’t exactly a “recipe”, per se, it does present some very specific areas of consideration that can lead to strategic CSR outcomes. Getting more specific like this is valuable, IMO.

It can be easy to write these 3 ideas off as only applying to “big business”. But they can and do apply to smaller organisations also, as highlighted in a case study series on SMEs and Shared Value I wrote some time back.

I think Ben’s words of warning are important—it is too easy to bandy about the words “shared value” for any old CSR initiative. I suspect this is what Porter and Kramer were in part aiming to avoid in outlining their three areas of action. I hope we don’t lose this important part of their message in the rush to capitalise on the hype surrounding the term.