mark kramer - from corporate social responsibility (csr) to creating shared value (csv) - bringing...
DESCRIPTION
Shared value is ‘the idea that the most powerful way for business to benefit society is not through charitable giving or even good corporate citizenship, but through addressing social issues connected to the company’s industry and strategy directly with a business model – that is, through capitalism!’ Michael E. Porter, the Bishop William Lawrence University Professor at Harvard Business School. Corporate Shared Value (CSV) differs from Corporate Social Responsibility (CSR) in that it is embedded in organisational strategies to generate benefits rather than a more philanthropic focus. The moment for redefining the role of capitalism in society is now. The simple concept of “giving back” as framed by CSR is limiting the sense of purpose which customers, employees, and a new generation are demanding from business.TRANSCRIPT
Creating Shared Value:Redefining the Role of Business in Society
Mark KramerCo-Founder & Managing Director, FSG
Senior Fellow, Harvard University
Australian Institute of Company Directors
May 23, 2014
© 2010 FSG2
FSG.ORG
“Giving Back”
Business must fulfill community obligations
Business Can Engage With Society In Three Ways
Shared ValueCorporate Philanthropy
“Finding business opportunities in social problems”
Business can solve social problems to
increase profits and gain competitive
advantage
“Minimizing harm to society and the
company”
Business should be responsible
Corporate Responsibility
Past efforts have emphasized the friction between business and society instead of the synergy
© 2010 FSG3
FSG.ORG
• The long-term competitiveness of companies depends on social conditions
• Business has an essential role to play in solving social problems
− Only companies can create prosperity that funds government and civil society
− Companies can create solutions to many social problems in ways that governments and NGOs cannot
− Companies have the incentive to take risk− Competitions fuels innovation, efficiency, and adoption− For-profit models are scalable and self-sustaining
Through Shared Value, businesses can find new opportunities for profit and overcome constraints that limit their growth
Societal and Corporate Success are Inextricably Linked
© 2010 FSG4
FSG.ORG
Corporations
Governments
Nonprofits
Foundations
The Potential Scale of Shared Value
< U.S. Spending by Sector in 2012 >
© 2010 FSG5
FSG.ORG
Shared Value Is Found at the Nexus of Business Opportunities, Corporate Assets and Social Needs
Social Need
Business Opportunities
Corporate Assets and Expertise
Shared Value Opportunity
© 2010 FSG6
FSG.ORG
1 2 3
• Improving the communities where a company operates to boost productivity, innovation, and growth
• Changing practices in the value chain to drive productivity
• Meeting societal needs through products
• Addressing underserved customers
Redefining Productivity in the
Value Chain
Enabling Local Cluster Development
Reconceiving Products and Markets
Shared Value Operates at Three Levels
These levels can be overlapping and mutually reinforcing
© 2010 FSG7
FSG.ORG
• Shared Value is NOT
‒ Sharing the value already created
‒ Personal values
‒ Balancing stakeholder interests
• Shared Value IS
‒ Creating economic value by creating societal value
‒ Using capitalism to address social needs
Shared Value removes the blinders that conceal new business opportunities
© 2010 FSG8
FSG.ORG
All Profit Is Not Equal
• Profit involving shared value enables society to advance and companies to grow faster
• Incorporating societal issues into strategy and operations is the next major transformation in management thinking
Shared value thinking
represents the next evolution of capitalism itself
© 2010 FSG9
FSG.ORG
Automotive Green Mobility
Food Nutrition
Computing / IT Smarter Cities
Shoes Health
Chemistry Enabling Life
Companies Are Moving to Purpose-Based Competitive Positioning
© 2010 FSG10
FSG.ORG
The Role of Company Directors
• Quarter to quarter performance is the responsibility of management
• The wisdom, vision, and fiduciary responsibility of company directors is to focus on long-term value creation for shareholders
– For directors of charities, it is the long-term value to beneficiaries
• Directors have a responsibility to awaken management to the opportunities for improved economic performance and social impact through shared value
• By encouraging companies to create shared value, directors help create a virtuous cycle that
– Improves the business environment– Rewards shareholders, and– Strengthens society
sharedvalueinitiative.org sharedvalue.org
www.SharedValue.org
A Global Resource to Promote the Understanding, Adoption and Implementation of Shared Value Strategies