Why should your business invest in creating shared value?
There’s a new way of doing business that’s emerging, quite different from the traditional approach in the capitalist system. By embracing it, companies will no longer be viewed as the cause for much of the existing social, environmental and economic problems. Instead, they can be seen as the driving force behind social and environmental advancement by bringing societal issues to the centre of everything they do. This new way of thinking is known as shared value.
Often companies have a sense of corporate responsibility that is too narrow and too focused on short-term value creation. Companies need to change their very definition of ‘success’ by moving away from pure economic growth and considering social progress as one of their main goals. In this way, shared value is about much more than just sustainability, philanthropy or corporate responsibility - it requires an entire shift in a company’s focus.
Can it work?
Shared value has already been embraced by a number of companies and helped them become better businesses that customers are loyal to and passionate about. For example, IBM has moved from offering just IT services to managing the world’s precious resources, while medicine development organisation Eli Lilly and Company have shifted their focus to include improving health in low and middle income countries.
At their core, these companies have changed the business focus from simply profit to creating societal change, and this is the essence of shared value.
One major international company getting it right is Heinz. Taking a holistic approach to improving their wider social, environmental and economic impact the company has embarked on a variety of company wide projects and reforms. They have looked at ways to become more energy and resource efficient and set goals towards reducing their greenhouse gas emissions. Heinz has also reviewed their products in an effort to improve the nutritional value of the food they sell. Yet central to the company’s attempt to create shared value is the Heinz Micronutrient Campaign. The campaign provides multivitamin and mineral powders to children in developing countries as a way to counteract the health effects of iron deficiency and vitamin and mineral malnutrition. It’s a simple solution, where for only a $1.50 the vitamin and mineral needs of a child can be met for a year.
In creating shared value Heinz has not kept sustainability and social initiative at the periphery of their company model. Rather they have sought to transform the way their company operates, and this is the attitude corporations need to take when introducing shared value to their company model.
Who is interested in shared value?
More and more people want to be supporting companies who care about positive social change, preservation of the environment and ethical approaches to business - almost as much as they want to buy quality products at a reasonable price. Consumers are increasingly paying attention to the philosophies behind brands and not just their products or services. What’s more, by thinking differently and looking after the wellbeing of the broader community (including customers and potential customers) corporations achieve a clear long term purpose and prosperity.
Shared value is also one of the greatest ways to attract tomorrow’s best and brightest talents. A business is only ever as good as its people, therefore a key part of any successful business is finding the right employees. And how do you find them? By aligning your company values with the next generation’s concerns. Today’s millennials have a lot to offer the corporate world. They are driven, connected and highly educated. With so many businesses fighting for them, it’s important you stand out from the rest and offer millennials something they care about - and that is often social responsibility. The young are looking for more than just a career these days, wanting to also make a positive social impact with what they do. They are on the look out for organisations where this purpose can be fulfilled, for corporations who are consistent in their CSR action plans.
Corporate shared value is about rethinking the importance of having a positive impact on the community, while still staying commercially competitive. In doing so, shared value can boost shareholder value but can also serve as a catalyst to advance social conditions in the communities in which a company operates. It’s the next evolution of capitalism and a train that any driven business should be boarding. Michael E. Porter, the founding father and leader of the initiative says shared value is “the next major transformation in management thinking”.