By Jocelyne Daw
"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 speaking at the fifth annual global Shared Value Leadership Conference in New York.
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 take-aways from this year’s conference, with more to come in subsequent blogs! Shared Value is Strategy, not CSRShared 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 KeyCreating 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 PurposeAt 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.
Health & Well-being: When South African firm, Discovery was established as a small specialist health insurer two decades ago, they made a clear and profound promise: to make people healthier. Rather than focusing on administering insurance claims,the firm was driven by constant innovation. Over the years, they created a multifaceted, integrated financial services organization and expanded the original promise to include enhancing and protecting lives. Throughout their constant innovation and ongoing growth, the founding social purpose has remained unchanged – making people healthier and enhancing and protecting their lives. This core social purpose frames their ambition, strategy and business methodology.
Economic Development: Yara International’s Africa strategy was featured as the keynote business case study when leaders gathered at the Shared Value Leadership Summit. By connecting smallholder farmers with the infrastructure that provided better access to markets, Yara grew the economic development in rural farming communities—and increased sales. To Yara, delivering its business solutions for improving agricultural productivity in a sustainable way is an important part of growing the company’s business.
Environment:Ecolour is an Australian manufacturer of premium quality, climate friendly synthetic paint. It performs like any other premium quality paint, is scrubbable and certified Carbon Neutral. What makes it unique is it is an Australian invention that uses re-cycled waste engine oil to make the water based paint that is also ZERO VOCs free (Volatile Organic Compounds). The company infused an environmental performance purpose into their product to deliver unique value to its customers while differentiating itself in the marketplace.
Leadership is VitalLeadership 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.
Western Union’s CEO, Hikmet Ersek Western Union provides leadership for the company’s commitment to promoting economic opportunity by bridging gaps in the financial services sector. Through electronic channels, phone, 100,000 ATMs and 510,000 agent locations in 200 countries and territories, Western Union helps businesses, governments and universities make cross-border payments and provides families with an economic lifeline. Western Union’s shared value strategy is focused on new product innovations, such as mobile money or micro-insurance, that utilizes the company’s core infrastructure and scale to help address social issues such as poverty and education.
Innovation and Intrapreneurship are DriversShared 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.
Barclay’s has developed a social innovation lab that provides intrapreneurs at the financial services firm with resources and space to experiment, innovative and apply shared value concepts within the business.
Learning Comes by DoingWhile 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.
Phil Preston, from Purpose with Performance Network, has co-designed a Shared Value Canvas resource which helps map out who is involved and why. It’s an open source tool that provides structures and processes to get started and keep learning. To download your copy: http://bit.ly/1JnXGtB
This is a long game approachShared 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.
https://www.youtube.com/watch?v=9rG7fB7qz0Y&utm_source=social&utm_medium=twitter&utm_campaign=daily_post Profits MatterWhile 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.