5. Creating Shared Value: Redefining the Role of Business in Society
Mark R. Kramer, at the 3rd Global Peter Drucker Forum on November 3rd, 2011
https://youtu.be/CPxdH-2dVFA
6. Emerging view on the purpose of business
Porter and Kramer (2011) proposes the concept of shared value: addressing a social
issue with a business model and argue:
“Capitalism is under siege ... Diminished trust in business is causing
political leaders to set policies that sap economic growth .... Business is
caught in a vicious circle ... The purpose of the corporation must be
redefined around SHARED VALUE”
“There's a fundamental opportunity for business today to impact and address these social
problems, and this opportunity is the largest business opportunity we see in business”
(Porter, 2013)
Three opportunities for companies to CSV (Porter and Kramer, 2013):
1. By reconceiving products and markets
2. By redefining productivity in the value chain
3. By enabling local cluster development
7. (Porter, TEDGlobal, 2013)
• In a Scottish context, the third sector attracts £4.9 billion in funding from various
sources, using SCVO statistics 34% (£1,686m) comes in from the public sector (includes
local, devolved and national governments) when only 1.5% (73m) comes from the private
sector (Weaver, Crossan, Tan & Paxton, forthcoming).
• Median donation by FTSE 100 companies have trebled from £1m in 2007 to £3 million in
2012 (CAF Bank, 2014)
8. CSR Vs. Shared Value (Porter and Kramer, 2011)
CSR Shared Value
Value: doing good Value: economic and societal benefits
relative to cost
Citizenship, philanthropy, sustainability Joint company and community value creation
Discretionary or in response to external
pressure
Integral to competing
Separate from profit maximisation Integral to profit maximisation
Agenda is determined by external reporting
and personal preferences
Agenda is company specific and internally
generated
Impact limited by corporate footprint and CSR
budget
Realigns the entire company budget
Creating shared value CSV enhances social and economic conditions in the
community, which then simultaneously enhances the company’s competitiveness
= Businesses should reconnect business goals with societal goals, and go
beyond CSR efforts (Porter and Kramer, 2011; Scagnelli and Cisi, 2014)
9. (Porter and Kramer, 2013,
pp. 8)
Critical thought: Many of
your examples demonstrate
the connection between
building a competitive
advantage and addressing a
social issue?
Keep collating these ideas in
everyday life
11. The Strengths and Weaknesses of the
Shared Value Concept (Crane et al., 2014)
“ what about … people and their relationships”?
(… Social capital)
12. Sustainable Capitalism (Asia Global Institute, October 2012 Hong Kong) (7:37)
Final thought to take-away: how should businesses work with civil society (the third sector)
and government in addressing environmental and social challenges?
https://youtu.be/77SPFSW9bHc
Notas del editor
http://twitterfontana.com
https://youtu.be/CPxdH-2dVFA
“So how could we tap into the power of business to address the fundamental problems that we face? Imagine if we could do that, because if we could do it, we could scale. We could tap into this enormous resource pool and this organizational capacity” (Porter, 2013).
Most wealth in business … only business can create resources … when it can meet a need … when it makes a profit ….
How do we tap into this? It’s the ‘profit’ that makes it scalable
See tutorial notes
Miles: By creating ‘shared spaces’ for CSV to happen (prefer the term “co-created value”)? Co-created focuses on the “inputs” and “outcome” when CSV is more shallow, on “benefits”, the outcomes to business (with a societal impact).