Last month NCG corporate members had the opportunity to learn more about Shared Value from FSG Managing Director Lalitha Vaidyanathan. One of the presenters at NCG's 2012 Corporate Philanthropy Institute, Lalitha was invited by NCG's Corporate Contributions Roundtable to return and elaborate more on the concept of Shared Value which is still in its nascent stages of development within the field.
Program attendees were curious to learn more about Shared Value, how they could activate a discussion about it within their own companies and organizations, the metrics used to evaluate it, and how to spot opportunities for implementing it. \
What Is Shared Value?
“Corporations have assets beyond what they’ve set aside for philanthropy…so how can those be used to create impact?” -Lalitha Vaidyanathan
As our society has evolved, so has the role of corporations in society. And Lalitha explained that corporate philanthropy itself has also evolved-not that one practice has ceased to be used, but rather there are more types of corporate philanthropy in practice:
Traditional Corporate Philanthropy: separated from the core business; its purpose was to create community goodwill.
Aligned Corporate Philanthropy: aligned to and leveraged with the core business, but not tied to the business’ strategy.
Shared Value: mobilizing whole business to impact society in a way that benefits the business; meaningful social impact that is sustained through the business.
Still not sure what Shared Value is? Here’s a video by FSG that provides more tangible examples:
Main Points & Questions
While the program itself evolved into a conversation amongst attendees and Lalitha, here are some of the main points and questions that arose:
- You can’t do business and grow while doing harm to the world-it’s not longer a sustainable business practice as society will definitely push back.
- Business and the world need to co-exist. “We can help society grow and help our business” at the same time.
- What are the areas in society that can benefit from our company’s assets and expertise? How can this lead to benefits for our business at the same time?
What Does Shared Value Look Like?
“Shared Value is a management principle that seeks opportunity for business in solving social problems. Companies can solve problems in three ways that can lead to competitive wins.”-FSG website
Reconceiving Products and Services: a business tries to understand the social issues affecting a market they want to enter and then try to either help solve those social issues. The business impact would be increased revenue, market share and/or profitability. Example: GE’s Healthymaginations wanted to address infant mortality. After first trying to develop incubators for rural areas, they partnered with Embrace to distribute the Infant Warmer-that required no electricity-in rural areas around the globe.
Redefining Productivity in the Value Chain: a company can examine its products, supply chain and reconceive them in order to address or mitigate a societal problem. The business impact would be reduced cost, increased productivity, and/or improved quality. Example: “Excess packaging of products and greenhouse gases are not just costly to the environment but costly to the business. Wal-Mart, for example, was able to address both issues by reducing its packaging and rerouting its trucks to cut 100 million miles from its delivery routes in 2009, saving $200 million even as it shipped more products.”--"Creating Shared Value” by Michael E. Porter and Mark R. Kramer, Harvard Business Review
Strengthening Clusters and Frameworks: a company invests outside its operations to solve problems that are most connected to its growth and productivity potential. The business impact would be improved quality workforce and/or secured quality of supply. Example: Cisco saw their clients had a dearth of Network Administrators. This was a constraint on their business. To address this issue Cisco established the Network Academy, targeting community colleges in low-income communities.
- Positive Social Impact + Positive Business Impact = only when you do both is it.
- Shared Value. Shared Value doesn’t have to replace the corporate philanthropy you currently do, it can be part of your philanthropy portfolio.
- Most companies start philanthropy from a desire to increase growth or address a reputation issue, but society is becoming more savvy and if you aren’t really solving problems you set out to address (or if you create problems through your business practice) your approach won’t be viewed as genuine.
Here are some additional resources on Shared Value: