14 terms

Creating Shared Value

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What is shared value thought of as?
Porter and Kramer urge leaders to recognize that "shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success". They advocate that creating shared value will drive the next wave of innovation and growth in the global economy.
Definition of Share value?
Shared Value: Corporate policies and practices that
enhance the competitiveness of a company while
simultaneously advancing social and economic
conditions in the communities in which it operates
What does it create?
Shared value creates economic value for the corporation through innovations that address society's needs and challenges.
How companies create shared value in three ways:
1. Reimagining products and markets
2. Redefining productivity in the value chain
3. Developing local business clusters
Profit equal?
All profit is not equal. Profit involving shared value enables
society to advance more rapidly and allows companies to grow
faster
Societal issues
• Incorporating societal issues into strategy and operations is the next major transformation in management thinking
Creating shared value is NOT:
• Sharing created value
• Philanthropy
• Giving back
• Ethics
• Personal values
• Harm reduction
• (Just) sustainability
• Triple bottom line
• Balancing stakeholder interests
Levels of shared value
Reconceiving customer needs, products, and markets
• Redefining productivity in the value chain
• Enabling local cluster development
the potential of businesses?
Businesses have the potential to be more effective than governments and NGOs in
marketing solutions to social problems
• Shared value offers new opportunities for differentiation, innovation, and growth
Finding Product and Market Opportunities
to Create Shared Value
Redefine the business around unsolved customer
problems or concerns, not traditional product definitions
• Think in terms of improving lives, not just meeting
consumer needs
• Identify customer groups that have been poorly served or
overlooked by the industry's products in both advanced and
emerging markets
• Start with no preconceived constraints about product
attributes, channel configuration, or the economic model of
the business (e.g., small loans are unprofitable)
Opportunities for Shared Value in Value Chain
Enhancing partnerships with colleges and universities
• Value adding procurement practices
• Energy and water use
• Worker safety and labor practices
• Limiting emissions and waste
• Biodiversity and low ecological impacts
• Minimizing effects of hazardous materials
• Recruiting from disadvantaged communities
• Diversity
• Employee education and job training
• Safe working conditions
• Onsite housing
• Employee health
• Compensation and benefits to support low income workers
• Staff retraining
• Employment in disadvantaged regions
Difference between CSR & CSV?
CSR:
Values: "doing good"
• Good citizenship,
philanthropy, and
sustainability
• Discretionary
• Separate from profit
maximization
• Agenda externally
determined
• Impact is limited by the
corporate footprint and
CSR budget
CSV
Value: economic and
societal benefits relative
to cost
• Joint company and
community value creation
• Integral to competing
• Essential to profit
maximization
• Agenda is business
specific
• Mobilizes the entire
company budget
Purpose of CSV
CSV depends on selecting targeted social issues
rooted in the core business strategy
then setting explicit goals and tracking progress toward them
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