There’s a new kid on the block in the business world and it’s called 'shared value'. It rests on the concept of linking business success to societal progress. Creating shared value is about applying the capitalist model to addressing complex issues in society. Companies are realising more and more that there is huge economic value in finding where their business intersects societal challenges. Let’s not forget doing good makes sense, it’s been estimated that there will be $12 Trillion in market opportunities by 2030. Companies such as Toms shoes and Patagonia are leading the movement today around businesses having a fundamental impact on all the major issues facing our world. Companies like these are now thinking differently and questioning the difference they are making in the world. They have the understanding that we are each dependent upon one another and thus responsible for each other and future generations is not only sensible but profitable.
So how can we harness the power of business to change the world? The answer lies in the concept of shared value. Shared value addresses a social issue with a business model. It is essentially capitalism but a higher form of capitalism and many companies are now embracing this new idea. Businesses can identify unmet needs in the market by assessing and addressing some of the challenges facing society. These initiatives include water management, soil health, energy generation, gender diversity, financial resilience, waste disposal, mental health, social housing shortages and healthcare.
It’s an exciting opportunity because the idea is to get capitalism to work not against, but for, the interests of society. That business is seen as integral to addressing the challenging problems of our society. The beauty of shared value is that it is a mindset away from harmful business practices. Some have coined it, the new wave of doing conscious business. Purpose driven businesses that have the power to make positive fundamental impact in the world.
The central premise around creating shared value is that the competitiveness of a company and the health of the communities around it are mutually dependent. Recognising and capitalising on these connections between societal and economic progress has the power to unleash the next wave of economic growth and redefine capitalism. Customers want sustainable and ethical. Employees want meaning. Shared value is created through a connection with commercial goals and the needs of the communities in which it operates. It lines them up, so the success of the enterprise benefits everybody.
If businesses want to achieve this success they need to move beyond Corporate Social Responsibility. Because Corporate Shared Value is not just about reducing harm, it’s about creating value. CSV is a more sustainable way in terms of creating the companies business model around an idea. CSR is useful and generous, but its not scalable or enough to really solve problems and is the first to be cut in a downturn. CSV in contrast embeds new thinking, products, strategies and above all, doing good into the core of business. Corporate social value therefore needs to stand alongside as a powerful corporate strategy and data proves its value.
So how does it work? The key is that CSV has to have a company specific connection. There needs to be an understanding of the value chain of the product and the customers you serve to be sustainable and scalable. Core corporate strategic thinking begins with focused attention on where the link lies between the business and societal needs.
Companies need to ask themselves;
- Where is the value chain?
- What does the company stand for?
- What do your customers and staff care about?
- What are the community projects that share those values?
The next step is thinking creatively to explore ideas for working together for mutual advantage. It all makes sense in world that’s facing an uncertain future. With a world in crisis it seems common sense that businesses rally behind some of these societal challenges, and they are so well placed to do so? A company thrives only when its community thrives, after all. It seems that the answers will need to be solved collectively and business has the power to harness this. Will business be the change we seek in the world? I hope so. For all of us.