In the news, Inside Track, February 2011
The big idea: creating shared value
Just when I was thinking that there must be a better way to reconcile the competing interests of economic growth and social cohesion (bankers’ bonus payments being a potential tipping point here, surely?), I happened to hear the strategy guru, Michael Porter on BBC Radio 4’s In Business programme talking about his latest big idea, also published in the current edition of the Harvard Business Review.
As ever, he and his Harvard colleague Mark Kramer manage to capture the zeitgeist. They argue persuasively that the only sustainable route to growth is to ‘create shared value’. That means redefining the traditional notions of maximising profits, which are often at the expense of societal needs or impact on the environment or the community, so that they embrace economic and social progress in their local or operating environment at the same time. They cite several examples of hard-nosed corporations such as Wal-Mart, which has reduced its packaging and cut miles from its delivery routes and thereby reduced carbon emissions and saved $200 million in costs.
I have to say it struck a chord. I have been recently working with a company that recognised the power of having a strong, more inspiring purpose that embraces the notion of achieving sustainability and providing benefits to society at the same time as achieving profitable growth. It’s a win-win; talented employees especially those of generations x and y are more motivated to expend their discretional energy in contributing to a wider social purpose, than to the one dimensional goal of simply making more profit.
When I saw Porter and Kramer’s table comparing the worthy but limited goals of CSR (Corporate social responsibility) with the limitless potential of CSV (creating shared value), I was convinced that there is at last a compelling economic argument to think again about integrating profitability, competitiveness and social transformation.
