Shared Value: Business at its Best
“Corporations wield enormous power in society. In order to see lasting social change, leaders in the private sector must begin to think of their own business plans as plans for good as well as profit. That’s not such a big leap.”
- Darren Walker, President, Ford Foundation
This year’s Shared Value Leadership Summit theme was acceleration – from Shared Value theory to action. Companies around the world are intentionally designing business models and strategies around shared value that create both business and social value. As a practitioner and member of the affiliated professional network of the Shared Value Initiative, I am pleased to share my top takeaways from this year’s conference, with more to come in subsequent blogs!
Shared Value is Strategy, not CSR
Shared Value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the social conditions of the communities in which it operates. In short, Shared Value is the interface at which business goals meet societal needs. Shared Value exists in its truest form when social responsibility is at the core of a company’s strategy— not the periphery.
In the past, firms have been organized around the idea that shareholder value is the only concern. CSR was developed to address community issues with determined budgets, a focus on stakeholder management and operating on the sideline. The Shared Value strategy focuses on creating measurable business value by identifying and addressing social problems that intersect with their business. The shared value framework creates new opportunities for companies, civil society organizations, and governments to leverage the power of market-based competition in addressing social problems. The ultimate goal is profits + purpose = positive net value for the company and the community that sustains our economy and society over time.
Intentionality is Key
Creating shared value is not easy. However the businesses that get it right are able to differentiate themselves and sustain a competitive advantage. To be successful, business must be intentional in infusing Shared Value into their core business strategy. This year’s summit featured panels, storytelling and examples of companies who are moving beyond understanding shared value to implementing strategies. Shared Value is a journey and companies shared their experience and learning along the way.
Start with an Aligned Social Purpose
At its heart, shared value is built through a deep understanding of a business’ strengths, assets and challenges and aligning them with a social need. It begins with asking, “what is the social problem you company can uniquely help to address”?
The summit explored multiple examples of companies identifying social issues relevant to their business and through re-imagining products and services, redefining productivity in the value chains or strengthening the competitive context of their operations they created shared value.
Leadership is Vital
Leadership is essential to driving shared value. Shared Value challenges assumptions and mindsets and espouses new ways of conducting business. Creating a shared value strategy is not business as usual; it demands leaders who are willing to move outside their own comfort zone for the benefit of a bigger purpose. Although its champions exist at all levels, leaders must encourage shared value to emerge from the bottom up. “Inspiration from the top, aspiration from the bottom,” was how it was described Robert Johanson of Bendigo Bank in Australia.
Innovation and Intrapreneurship are Drivers
Shared value ideas are generated through as an innovation challenge and require intrapreneurs to bring them to life. Intrapreneurs are people working within large companies that spend their time innovating, improving business and thinking like entrepreneurs. They are infectiously creative, passionate about their work and have a strong internal desire to bring corporations along with them.
Learning Comes by Doing
While frameworks are important and strategies critical, exploring ideas and opportunities is what makes Shared Value come to life. There is a challenge between intent and action that realizes “just trying”. Shared value breakthroughs are not sitting on a shelf waiting to be executed. They need to be explored, discovered and fostered. Learn by doing requires courage and boldness but is the only way forward.
This is a long game approach
Shared value rarely emerges through short-term investments made amid pressures of reporting quarterly profits. However, strategic business leaders realize that overstressed suppliers, ravaged natural resources, and devastated communities compromise their profits, supply chains and growth.
Levis Strauss began a commitment to worker empowerment and well-being over 15 years ago. Initially the organization provided short-term funding to local NGO partners but realized the need for a long-term commitment for sustained success. Watch the video interview with Levi Strauss Foundation's Daniel Lee.
While adding social value is what makes Shared Value a unique element of business strategy, in the end shared value is about developing a commercially feasible business proposition. In other words, profits matter. Shared value profits can be defined as revenue, growth, competitive advantage, innovation, productivity and brand equity that arise from investment in social value creation.
Shared value is a journey, one that is advancing and growing. At JS Daw & Associates we believe that corporate success and social contributions are interdependent. If company’s can use the same passion, energy and culture of innovation that has made them successful and apply that to social challenges, they can make profound and positive social impact in the world. We are optimistic about the evolution taking place in the private sector as more companies embrace the concept of creating shared value.