Over the last decade, companies have begun to recognize the connection between social progress and business success. Advances in technology and social media have empowered consumers to become educated and vocal about societal issues. Now more than ever, business practices come under the close scrutiny of an interconnected, global community. Shared Value is a powerful business approach that allows companies to innovate, compete and create a business environment that is sustainable. The world’s far-reaching problems that range from ecological issues to protracted social issues such as access to medicines and employment require solutions that leverage on the expertise and scalable business models of the private sector. Governments and civil society have a critical role in addressing societal issues however their resources are eclipsed by those of the private sector.
Reflecting on his journey developing the Shared Value concept with Professor Michael Porter of Harvard Business School, Professor Mark Kramer, Co-Founder and Managing Director of FSG, commented during the CEO Connect on the 4th of June that, “I thought if we can make philanthropy more effective, we can solve social problems. It was not until we began working together with foundations and then companies that we began to realize that companies have a much greater impact on social issues and the world than foundations or philanthropy ever will. Out of the hundred largest economic entities in the world, more than two thirds of them are companies not countries. Philanthropy is important but what I have really come to see over the last ten years is that if we are going to solve the world’s problems, it has to be with the leadership of business and it has to be with businesses approaching social problems as business opportunities not as philanthropy nor as corporate social responsibility, both of these things are important and shared value does not replace them, but what shared value is about is rethinking your strategy and business model in ways that align positive impact for society with better economic performance for your company.’’
The Shared Value concept was developed ten years ago by Professor Michael Porter and Professor Mark Kramer. The Shared Value course has been cocreated by Strathmore University Business School (SBS) and the Shared Value Africa Initiative (SVAI) and is aligned to Harvard Business School’s offering. The mandate of the Shared Value Initiative is to advocate across the African continent for the adoption of the Shared Value business management concept as a business strategy. Speaking during a webinar hosted by SBS on July 25th 2021, Tiekie Bernard, SVAI founder and CEO commented, ‘’We were determined to deliver the course on the African Continent, because if we really want to advocate properly as SVAI we have to enable our businesses and our business leaders and our business leaders of the future with the information they can use.’’ The course material and cases used are contextualized to be relevant to businesses operating in Africa.
Speaking during the webinar, Dr. Mumbi Wachira a Lecturer at SBS remarked that, “To achieve Shared Value, we can look at social challenges and ecological challenges as opportunities and consider building a viable business model around them.’’ In the past, such problems were the focus of corporate social responsibility initiatives and there was a lot of publicity around these endeavors. However, companies are now beginning to shift their strategies by looking at the unique challenges faced by the community their operate in and linking the resolution of these issues with profit generation and business success. There are many local, regional and international examples.
A wonderful local example that illustrates the Shared Value model in Africa is the company M-KOPA’s approach to the social issue of lack of access to electricity. In Africa, access to power has been a key issue that is still being tackled with a large population of rural people off-grid and relying on unhealthy and environmentally detrimental practices such as the use of kerosene and paraffin lamps. M-KOPA pioneered a pay-as-you-go solar market that combines the power of digital micropayments with IoT(Internet-of-Things) connectivity to make financing more accessible. The company provides solar energy to the ‘’bottom of the pyramid’’ customers and calls itself, ‘’the world’s leading pay-as-you-go energy provider to off-grid homes.’’ The company has provided nearly $400 million in financing that has enabled 1 million customers to access solar lighting, energy-efficient televisions and fridges, smartphones and cash loans. The purpose of the company to upgrade lives has also translated into massive growth for the company and revenue generation.
Identifying social issues that are holding your business back and building a business case around it can prove to be fruitful from a social impact perspective and from a business perspective. Shared Value is an umbrella concept that includes the disciplines and principles of responsible business practices and sustainability as well as profitability. It is about creating economic value and value for society. The course will delve into cases like these and help you to understand how to apply these principles to your business, create an impactful corporate purpose, discover innovative business models, leverage private sector collaboration, address social and environmental goals profitably and create and implement a Shared Value strategy.
Once a Shared Value strategy has been crafted it is important to secure the buy-in from the core stakeholders of your company particularly the board and investors. The course will help you to articulate the value of this approach and present a convincing business case. When companies embark upon their shared value journey the mindset shift of no longer pursuing profitability on conventional business models but by understanding the societal challenges around the company and embedding it into the business model requires a lot of innovation, creativity, strategic thinking and support from top management. Once this understanding is established and consensus is reached, the necessary leeway to refine the strategy and make adjustments as necessary will allow the implementors the flexibility to course correct as they go along. The Shared Value approach can be very successful over time but it needs to constantly be refined and requires patience to reap the rewards. Indeed, the impact from this approach on social and environmental challenges over time can positively transform the lives of many people and make the world we live in a better place and forge an enduring legacy for your company.
Article by Shailja Sharma, Executive Fellow and Coach
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