In a recent HBR article, Harvard University professor and authority on competitive strategy Michael Porter, with his colleague Mark Kramer, outline a new vision for business that they term shared value — where a business enhances its competitiveness while simultaneously advancing the economic and social conditions in the communities in which it operates.
They emphasise how a strategic focus on creating shared value has proven to be a powerful driver of innovation, brand equity and competitive advantage for international brands such as GE, Google, IBM, Intel, Johnson & Johnson, Unilever, and Wal-Mart. They also demonstrate how shared value “opens up many ways to serve new needs, gain efficiency, create differentiation, and expand markets.”
Porter and Kramer join a growing list of leading thinkers in articulating a new mode of operation for business, one in which business success is directly aligned with societal benefit. Economic strategist and author Umair Haque has coined the term “thick value”; Adam Werbach, Saatchi & Saatchi’s Chief Sustainability Officer, advocates a Strategy for Sustainability; others suggest that Corporate Social Responsibility (CSR) be replaced by Corporate Social Innovation. Here at Zumio, we have talked of “multi-dimensional value” and outlined high-level principles for how organisations can create it.
While the language may differ across these examples, some key themes are clear:
Strategic integration: Shared value goes beyond traditional Triple Bottom Line (TBL) and CSR approaches. TBL tends to optimise and “trade-off” individual components of the financial, social and environmental bottom-lines in isolation. It can be seen as destructive of value, placing constraints on operations or increasing costs, and seeking to do “the least harm” rather than looking for value creation opportunities. CSR tends to be an adjunct to core business, often focused on activities that are largely decoupled from business success. Shared value aligns core business value with positive societal outcomes, a win-win approach that can avoid the trade-offs of typical measures to minimise or mitigate social and environmental impacts.
Customer-centric: Shared value seeks to understand what your customers really value, going beyond convenience, price and performance to incorporate the drivers behind the networked and socially-aware economy. This broader contextual view, also emphasised in design thinking and service design, has the potential to create new market opportunities. This natural synergy between service design practice and shared value offers a powerful lever for innovation.
(Re)consider the value chain: Shared value looks across the value chain for opportunities to innovate. Whether it be facilitating suppliers in increasing quality while also providing economic and educational benefits, or leveraging social technologies to create new service delivery models such as Collaborative Consumption, social and environmental benefits are achieved not at the expense of the business, but to its advantage.
Collaboration: Shared value can’t be “delivered” by an organisation to its customers or suppliers — it is co-created with and for these key stakeholders. It demands a whole-of-system approach, channelling the energy of the people inside and outside your organisation to achieve optimum results. Ground-breaking ideas often come from unexpected places, by making surprising connections, and are not confined to organisational boundaries. Tactical collaboration, crowdsourcing, co-opetition and other models of collaboration support shared value creation while unlocking further innovation opportunities.
We see significant opportunities for businesses that apply these principles in the pursuit of shared value.