Creating shared value
The basic idea of creating shared value (Porter)
Applying the capitalist model of addressing issues in a society (hunger, water, health)
Its about making money (capitalism)
We can open up our thinking to create economic value by understanding that there is huge opportunities for companies to have fundamental impacts on almost all the issues in society
Get capitalism to not work against the interest of society but integral to addressing the problem
How is creating a shared value different to CSR?
CSR was an effort for companies to be responsible
CSR motivations are separate from the core of their business
EG taking money from their capitalist activity and invest it in other stuff (redistribution/donation)
Shared value understand a bigger opportunity - its rethinking how we practice capitalism (not just taking money from capitalist activities and investing them elsewhere)
Shared value isn't possible for every company in every situations
Its not about reducing harms (such as CSR) but its actually creating value for a social issue but at the same time - a business model that leads to profit
Shared values says that CSR only has so much to give
If you re engineer the way you do business, with a new business model, you see the magic of capitalism at work
Porter believes that capitalism is where all wealth is created
Companies can stretch their market, stretch their consumer, differentiate themselves and operate their value chains
People used to believe that being environmentally responsible was expensive
They believed there was a trade off between a social agenda and a business agenda
Its now not about philanthropy, its about doing business in a smart way
Capitalism has a bad name however its not working against society
Businesses were not understanding their power to benefit society
Is there a risk for businesses when trying to fulfill a social need that they fall short?
There is a risk as they will not be 'profit maximisers'
If you can't make money doing it, you shouldn't do it where otherwise is becomes part of the CSR bucket where there is only so much you can do
Shared value is business specific - its not a one size fits all
Because capitalism is business specific
Three areas where companies can practice CSV
The product
What features/needs is the product meeting?
The customers that the company is seeking to serve
The value chain
The way the company conducts its business
The supply chain
Procurement
Operations
Logistics
Customer service
Opening up new opportunities to save energy, packaging, have more beneficial impacts on suppliers
The cluster
The businesses and institutions around a company
Companies rely on others to remain efficient
Think about the echo system around the company
The better this is, the more competitive and efficient a company can be
Policy implications
CSV will allow governments and NGOs to be more successful in what they are seeking to do if they allow shared value in the private sector
Capitalism benefits
Its scalable
It pays for itself
It doesn't require donations or philanthropy
Its dispassionate
If you are not creating a benefit that funds itself then it is not worth doing