The introduction of social purpose into boardroom debates can be a game changer for companies that previously did not perceive themselves as agents of social change. In an award- winning article entitled, ‘Creating Shared Value’, published in 2011 in the Harvard Business Review, Professor Michael Porter and Mark Kramer elucidated how companies can gain competitive advantage by including social and environmental considerations into their strategies. Reframing societal challenges as business opportunities can help companies adjust their strategies to create economic value by creating societal value. Indeed, this concept has gained traction in organizations across the world as consumers become more environmentally and socially conscious and as company practices come under closer scrutiny in the age of social media. Companies that are viewed as benefiting at the expense of the greater good of society receive considerable backlash and negative publicity.
Additionally, as the COVID-19 pandemic changes the business landscape globally, companies must take an in-depth look at their strategies to create and support sustainable communities that are resilient and can withstand future disruptions. The shift from a shareholder-oriented approach to capitalism to a more inclusive stakeholder approach is now inevitable and no longer a business choice. Porter and Kramer argue that capitalism is the perfect vehicle for addressing both economic and societal needs and that it needs to be re-examined to achieve its full potential. Addressing societal needs can be the engine for innovation through new technologies, optimized operations and novel management approaches. This paradigm shift of businesses viewing issues such as improving environmental performance, public health and nutrition and others as business opportunities that can improve profitability and not merely as CSR activities, can help create scalable and self-sustaining solutions.
There are numerous examples of the concept of shared value at work in companies across the world. A local example is the innovative mobile money transfer system that provides access to financial services to Kenya’s under and unbanked populations while creating revenue streams for the telecom giant, Safaricom. M-PESA has become synonymous with money transfer in Kenya. Safaricom has endeavored to use its telecommunications products and services to contribute to sustainable livelihoods for people throughout Kenya. In India, companies such as General Electric and Vaatsalya are creating shared value by improving rural access to healthcare and developing innovative medical devices designed for low-income populations. Companies such as Nestle have launched global initiatives to create shared value by unlocking the power of food to enhance the quality of life for communities today and for future generations.
A growing number of companies are incorporating Shared Value or Corporate Shared Value (CSV) into their operations. From designing new products to meet societal needs, redefining productivity in the value chain to utilize resources better, to creating supportive industry clusters to increase productivity, innovation and support growth, the entire business ecosystem is being structured to enhance profitability and advance society. The transformative power of Shared Value is becoming increasingly evident as the intersection between society and corporate performance is re-imagined. Leaders and Managers will need to develop new skills and knowledge to harness its full potential and position their companies as forces for the greater good of society whilst enhancing their competitive edge and business performance.
About the Shared Value Executive Programme
The Shared Value Executive Programme is offered by Strathmore University Business School in partnership with the Shared Value initiative Africa and is geared at getting business leaders and executives to rethink current strategies and business models by combining profit and purpose.
By going through this Programme, you will be able to understand how the Shared Value approach can help your company mitigate risk and improve your company’s value to society, as it has for companies across our continent and beyond. Learn about the Shared Value Executive Programme
- Porter M. & Kramer M. (2011). Creating Shared Value: How to Reinvent Capitalism—and Unleash a Wave of Innovation and Growth, Retrieved from: https://hbr.org/2011/01/the-big-idea-creating-shared-value
Article by Shailja Sharma, Executive Fellow and Coach
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