New age of Capitalism

Creating shared value
PostedAugust 28, 2013, in  Step 8: sustainable society
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It has little to do with corporate social responsibility, philanthropy, or even sustainability. Creating shared value is about capitalism. It is a strategy in which the stimulation of the environment leads to business success. Social processes as a means to make more profit. Unorthodox maybe?

 

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Porter Prize (source: www.porterprize.in)

Create magic

At first glance completely conflicting interests: profit maximization and social issues. However, Michael Porter (Harvard Business School) and Mark Kramer (Kennedy School) have used exactly this combination as the starting point for their unique business concept. The premise: there is an interaction between the competitiveness of a company and the health of the environment. Or as the gentlemen themselves candidly say: When we put Shared Value in the capitalism-bucket we create magic, because then we can scale and sustain indefinitely.

Uncharted territory

Every company is capable of creating shared value or to put it differently creating added value for society. The type of business determines the limit of that value however. On 3 levels an organisation can achieve results:

  1. Re-conceiving product and markets: Companies can meet social needs while better serving existing markets, accessing new ones, or lowering costs through innovation.
  2. Redefining productivity in the value chain: Companies can improve the quality, quantity, cost, and reliability of inputs and distribution while they simultaneously act as a steward for essential natural resources and drive economic and social development.
  3. Enabling local cluster development: Companies do not operate in isolation from their surroundings. To compete and thrive, for example, they need reliable local suppliers, a functioning infrastructure of roads and telecommunications, access to talent, and an effective and predictable legal system.  

Change thinking

Creating shared value can only lead to change when it is integrated into the mission, vision and strategy of the company. That means a change in the way we think, both by management and stakeholders: it's not about making a product because of a (supposed) need, but to deliver a product that is positively contributing to the environment. This requires the financial and social results to be in balance. A good reason to start reporting on sustainability.

Idea?

Creating shared value means no less than redefining capitalism. Translating this to the EFQM Excellende Model we might wish to consider evaluating the current relationship between criterion 8 (social results) and criterion 9 (business results). Shared value ‘suddenly’ puts the social results as the central motive of the organization. Possibly an idea for the planned update of the EFQM Model in 2016?

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PostedAugust 28, 2013, in Step 8: sustainable society
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