Shared Value: Creating Economic Prosperity for All

We are all familiar with the concept of Corporate Social Responsibility and Corporate Philanthropy. Many companies leverage CSR to build brand loyalty and to attract and retain talent.  Advancements in the field focus on integrating CSR into core business strategy.

For an increasing number of companies, doing well by doing good is now becoming a cornerstone of their business strategy (as opposed to an add-on). The Shared Value philosophy offers a way to maximize overall returns to society while driving real business growth. Shared Value looks beyond short-term financial gains and into the future for long-term growth and community development.

Shared Value elevates the conversation beyond CSR or Corporate Philanthropy as a new way of thinking and approach to business that includes societal benefits at the center instead of the periphery. As opposed to looking narrowly at the business landscape, the Shared Value approach opens the horizon to the possibilities of new products and markets which create value for all parties involved.

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Shared Value can be realized through the creation of new products, the entering of new markets, reevaluating the value chain, and cluster development (whereby businesses collaborate with existing educational institutions for talent supply, create partners including suppliers, and build infrastructure).

How can we create Shared Value? Let’s look at a few examples. First, environmentally friendly products create value for society by using less packaging and electricity thereby eliminating waste and conserving natural resources.

Second, products delivered to the market at the bottom-of-the-pyramid (BOP) provide critical assistance to individuals typically ignored in the marketplace. Low-cost cellphones and laptops offer access to mobile-banking which allows BOP individuals the opportunity to participate in the financial sector while laptops provide access to information for educational and communication purposes. Businesses prosper by accessing a new market and new revenue source while incurring cheaper production costs.

Michael Porter, the esteemed HBS professor, and Mark Kramer, the co-founder and Managing Director of FSG, offer a suggestion for the creation of a Shared Value strategy. They suggest analyzing the positive and negative effects of your products upon society, demonstrating opportunities of growth and/or areas of reevaluation of current business practices that create a net positive impact upon society.

Several corporations already execute on Shared Value initiatives:

1) Nestle

Nestle partners with low-income coffee growers to provide jobs while creating clusters of agricultural, technology, financial, and logistical firms to provide an ecosystem of support and economic progress.

2) Coca-Cola’s 5×20 Initiative

Coca-Cola’s 5×20 initiative aims to empower 5 million women entrepreneurs across the company’s value chain by 2020 through business education and mentoring. These women will join Coca-Cola as producers, distributors, recyclers, suppliers, retailers, and artisans and continue to impact the communities in which they live.

3) Wal-Mart

Wal-Mart creates Shared Value through women’s and sustainable initiatives. Their Empowering Women Together program provides women entrepreneurs with access to Wal-Mart’s customer base through placement on the Wal-Mart website. Furthermore, Wal-Mart works closely with suppliers to measure sustainability through the product index as well as converts waste into recyclable goods.

4) Capital One

Capital One employees and community organizations worked to rebuild the community of Gentilly, a neighborhood in New Orleans, after Hurricane Katrina. Their work included: a neighborhood center which offered a safe place for kids and employment opportunities, affordable housing, training for jobs in the educational field, business training for entrepreneurs, and financial literacy programs. Capital One’s multi-faced approach to disaster created hope and opportunity in light of despair and destruction. 

At Good Done Great, we strive to create Shared Value by strategically directing the flow of capital from individuals and corporate groups to deserving non-profits throughout the world. Our status as a B-Corporation reinforces business as a force for good and holds us to strict environmental and social standards which improve our communities and protect the environment. (Click here for more details on this growing movement).

Shared Value challenges the traditional business model to include societal needs at the center while promoting long-term growth. If corporate groups seek to disrupt the marketplace and increase economic and social value for all, the Shared Value approach offers a holistic way to accomplish this challenging task.