It’s not often you go to a conference and get to speak openly and comfortably with the CEOs and Chairs of the world’s largest companies. That was exactly the experience at the Global Leadership Summit in Boston on May 23, 2013.
The reason it was possible was not some exclusive club membership or overpriced ticket, it was ideas. The amazing energy and disarming influence a big idea can have when it is still in formation.
At this event the networking was primarily co-creation. Leading consultants, NGOs, philanthropists, companies and governments all asking the same questions. How can shared value work in my business? What would it look like? What problems can I solve? Can we make money from societal good?
Shared value is an exciting concept fast becoming a definable practice. In late 2011, Ellis Jones made the decision to found a network, the Shared Value Project, to ask these questions in Australia. It has been challenging. People can be dismissive and confused as well as energised. From semantic to method, the debate has been earnest and ultimately rewarding.
The Australian cohort in Boston are advanced in our thinking. We have many answers to the questions asked. At Ellis Jones, we have been working on a Social Thinking model which sees companies assess the social impact they are having now, developing strategies to escalate activities and drive economic returns.
What is shared value?
Shared value is an approach by which any organisation can create economic returns by developing solutions to social problems. These may be whole of society issues or those more local to a company’s operations and markets.
It requires a company’s leadership to the view creation of social value as a competitive advantage which can drive innovation and support the long term adaptation and prosperity of the company.
Shared value acknowledges that business, with its capital, market access, scale and capacity for innovation, is most capable to address societal issues.
Cross sector partnerships are important. Through strategy and execution, each participating stakeholder creates value on their terms, leading to a foundation of trust and the exchange of knowledge and information essential to success over time.
Shared value considers the social dimension of a company: the relationship between its people, assets, products, services, investments and systems to external stakeholder groups such as communities, suppliers (and suppliers of suppliers), customers and regulators. It acknowledges that employees are also community members who benefit from social value created outside of the workplace.
Social (societal) value can take the form of (but is not limited to) improved health, education, access, community participation and employment.
Economic value can take the form of increased financial returns, brand equity, market share, consistency of supply (lower risks) as well as more loyal employees, customers, shareholders and investors.
Business outcomes from shared value creation include:
- Process improvement: changing practices that are undermining the integrity of key relationships resulting in greater business continuity, productivity and efficiency.
- Continuity: improving health and education outcomes in communities which comprise the company’s existing and future suppliers, customers and employees leading to a more effective, stable and skilled labour force and/or supplier network.
- Product and service innovation: creating new products and services for the same or new markets based on collaboration with customers and community stakeholders to understand societal needs.
- Local cluster development – facilitating the clustering and sustainable development of communities, suppliers and partners resulting in efficiency and innovation gains.
Shared value can be created by different roles and business functions, from supply chain management and research and development to community engagement and sales. It is therefore a centralised strategy, embedded in whole of business planning, and requires reconsideration of employee roles and teams.
Measurement of shared value is conducted according to business and social metrics relevant to the company and its stakeholders.
Shared value is not:
- Sharing the value already created
- Personal values
- Employee engagement
- Corporate value systems (although it may inform them)
- Balancing stakeholder interests (community or stakeholder engagement)
How is shared value different from CSR?
In some instances corporate social responsibility has created shared value. However the hallmarks of CSR practice have become:
- A sense of obligation to ‘give back’
- A focus on measurement and reporting to demonstrate good corporate citizenship
- Investment in social programs is peripheral and minor as it is generally deemed a cost to the business
- Immediate or medium term public relations outcomes
Shared value is a core business philosophy and strategy that business returns – defined as competitive advantage, innovation, productivity and brand equity – arise from investment in social value creation.
Ellis Jones will be delivering executive and practitioner education workshops on shared value throughout June and July. Participants will gain an understanding of the principles and practice of shared value in different contexts. Facilitators will also share the fundamentals of Social Thinking.
If you are interested, please contact Katherine Karvess on (03) 9416 0046.
image credit: Shared Value Initiative