In 2006, American strategy experts Michael Porter and Mark Kramer raised the profile of “shared value” business models in an article they authored for the Harvard Business Review. Since then, the concept of “creating shared value” has become not so much a buzzword as the increasingly loud voice of corporate conscience for the sake of all concerned.
Unpacking this paradigm-shifting model within the context of South Africa’s socio-economic landscape, it is clear that AVBOB started practising in 1918 what Porter and Kramer started preaching in 2006.
The resurgence in interest in shared value business models was forged in the crucible of the 2008 financial crisis, where many accused big business of earning obscene profits at the expense of society. While AVBOB’s humble beginnings were also rooted in pain, its founding purpose was for the benefit – not the detriment – of its members.
To understand AVBOB’s compassionate roots, one has to go back to the Spanish Flu epidemic that arrived in South Africa in the wake of the First World War. This caused countless deaths and infinite trauma, both emotional and financial, with many families unable to afford dignified funerals. It was amidst this death and trauma that the original founders of AVBOB stepped forward with a solution: a business started by a community for the upliftment of the community.
From day one, the concept of uplifting their members has been not only AVBOB’s guiding force, but part of their corporate DNA. In addition, AVBOB believes that shared value is not a feel-good strategy they have adopted to gain competitive advantage or to improve their corporate image. It is fundamentally who they are. And it is not a one-size-fits-all solution.
Recognising the wide disparity of income and wealth distribution in South Africa and our responsibility to all citizens, AVBOB is deeply invested in the concept and reality of connectedness through caring and sharing. Informing everything they do, is their understanding of the reality that the costs associated with funeral preparations can often deplete savings and drive families into debt. Without access to financial markets and without meaningful participation in economic growth, the cycle of poverty is never broken. And so, never before has AVBOB had a more relevant role to play in South African society than today.
AVBOB’s shared value business model is rooted in its status as a “mutual society”. As a mutual, it has no shareholders. The profits that arise from the various businesses in the Group are deployed solely for the benefit of its members (who are its policyholders).
As strong as AVBOB’s commitment to their policyholders is their passion for improving literacy in South Africa. AVBOB is actively engaged in the communities in which they operate. To date, they have donated 55 container libraries to underprivileged schools, with five more to follow. AVBOB has pledged to invest R150 million to the refurbishment and upgrading of rural schools in partnership with the Department of Basic Education. And on the economic front, AVBOB funeral branches procure services from the local communities, thus stimulating local economies.