The Reason To Feel Optimistic About Business Again
Shared value—the approach that business can profit by doing good—offers new hope for the role of the private sector in solving tough social issues from income inequality to climate change. At the Shared Value Leadership Summit this year, Michael Porter (the co-originator of the idea) channeled that hope. “I have never felt more optimistic about business, about how we in business can matter,” he said in the keynote address.
To Porter, shared value truly reflects a new way to run business. He expanded on those implications in the keynote (which you can watch below in its entirety):
“[Shared value] reflects perspectives and ideas about marketing, customer, brand, supply chain, value chain, and business environment that we’ve never understood before. But we are, in some important ways, rewriting the discipline of management here. I have never been more optimistic—which is nice—because I think for the last couple of decades it’s been easy to be pessimist, as we see the mismatch between the obvious social challenges (that only seem to get more challenging) and the limited resources that society has to devote to those social challenges.”
Beyond giving money to a cause, beyond corporate social responsibility, shared value allows business to do what it does best—to innovate solutions for social problems, which are more sustainable at the core of a sound business model. Porter continually brought up the theme that this approach breaks with the traditional idea that social issues must be externalities for business:
“Shared value is not about balancing interests of stakeholders—which was the fundamental idea that [business has] been operating on historically—that you had to balance interest, that there were tradeoffs between economic success and social outcomes. This idea of shared value crossed a fundamental line in saying that, actually, if we deeply understand what business does; if we deeply understand this notion of meeting needs at a profit; if we deeply understand the social challenges and issues we face—then we can align and actually put those together. We don’t have to balance interests anymore.”
And while four years ago this was just an idea, there are now real companies baking this concept into what they do. “There are thousands of examples that are just piling up every day,” says Porter, citing examples from enterprise-wide initiatives at Nestlé and BD to starter pilot projects in the extractives industries. (View Porter’s presentation slides for more detail.)
Extractives especially illustrate a unique opportunity to Porter, who has been recently involved in FSG research in that sector: “So many people believe it’s profitable for businesses to have an unsafe set of working conditions. When everything we’ve learned for the last 20 years has taught us that actually zero accidents is the most profitable model.”
I invite you to watch the video of Porter’s keynote and feel inspired by the momentum around this movement that’s making real change. And if you’d like to engage further in resources and updates on shared value, join the free online community at sharedvalue.org/community.