The idea that profit, sustainability and social good are opposing practices, is fast changing. Be it PepsiCo’s Performance with Purpose, P&G’s One for One campaign, or Bill Gates’ Mazzi, enterprises/ investors are steadily becoming conscious of how they are interacting with, and impacting planet Earth. That is the expectation of all 21st Century businesses – to solve problems beyond their company’s profitability.
This trend was highlighted by Prof. Michael E. Porter of Harvard Business School. According to him, traditionally, companies remained focused on optimizing short-term financial performance. In turn, they overlooked many unmet needs in the market, as well as the meaning of their long-term success. He is of the belief that companies can bring business and society back together, if they redefine their purpose. This goes beyond corporate social responsibility as we know it.
What is it really about? Creating actual products and services with a social purpose. “The ultimate impact businesses can have is through the business itself,” he says. “There are huge unmet needs in the world today. The question now is how to get capitalism to operate such that it solves the world’s problems, instead of contributing to it?” This practice is popularly known as ‘shared value’, and argues that social causes are sources of competitive advantage. Firms can tap into them in three distinct ways.
- Defining markets in terms of unmet needs or social ills, and developing profitable products or services that remedy these conditions. Becton & Dickinson (BD), a global manufacturer/seller of medical equipment, developed a new type of safety syringe to reduce needle-stick injuries of healthcare workers. This product innovation grew to $2 billion – a quarter of the company’s revenue.
- Increasing productivity by addressing the social and environmental constraints in its value chain. For example, BD forged local partnerships and health clusters to raise awareness of issues. It influenced national policies on healthcare worker safety, trained hospital workers, and provided unrestricted grants for tracking and analysis of needle-stick injuries. This served to accelerate the health system’s adoption of safety devices.
- Strengthening the company’s competitive edge by increasing social reach/ influence. Recognizing a need for a workforce capable of using its products globally, Cisco introduced the Networking Academy. It’s a cloud-based e-learning initiative, which allows students to take online certification courses in IT in 16 languages, with the support of 20,000 Cisco-trained instructors. Results: across 10,000 academies in 165 countries, more than four million students have been trained for IT careers. 750,000 are considered ‘Cisco certification read’.
Shared value not only has undeniable business and societal impact, but also does wonders for your company internally. Research shows that employees want to work at companies with good values, and seek passionate leadership that drives a company to give back to the community. If you’ve been looking to attract talent that is invested, you know what to do now.
You can also apply the intent of shared value to your organization’s culture. Your employees reflect a part of the society you are catering to. Are your HR practices addressing the real needs/ challenges of your employees? Do you consciously create space for your teams to bring their personal experiences into product ideation or customer service? And finally, is your company’s growth directly proportional to your employees’? This would be a great place to collaboratively create value at a smaller scale, before impacting the world!
Paul Polam, CEO of Unilever says, “This movement is a critical part of the shift to a more inclusive and purpose-driven economy, which is unquestionably needed.” Where do you stand with taking this leap?