absa shared value

About Shared Value

The key to business sustainability is changing how we think about competition and partnership. The business landscape is beginning to shift away from the traditional competition model, especially in Africa, to a form of capitalism that is more open to collaboration. When it comes to making a positive impact on the world, of course, there is immense power in joining forces to create collective impact at a scale far beyond what any one company could achieve alone.

One of the three pillars of the Shared Value business model is Enabling Local Cluster Development, which the Shared Value Initiative defines as “Improving the available skills, supplier base, and supporting institutions in the communities where a company operates to boost productivity, innovation, and growth”. In a nutshell, this is the development of and investment in the Shared Value ecosystem. In order to implement Shared Value successfully throughout the value chain, a business must work with the communities in which it operates, the non-government organisations that have the knowledge and experience to guide purpose-driven policy implementation, and the government entities responsible for regulation and maintaining the infrastructure essential to normal business operations.

 

Tags: Shared Value News and opinions

Professor Michael Porter of Harvard Business School spoke to an audience of senior corporate giving professionals at CECP's Corporate Philanthropy Summit on June 2, 2010 about the role of business in social and economic development. He introduced the concept of "Creating Shared Value" (CSV) as distinct from "Corporate Social Responsibility" (CSR) and explained how CSV can help advance both the corporate and social goals of a company.

Read more: What is 'Creating Shared Value'?

It’s the hot new buzzword in progressive business thinking – creating shared value, or CSV. Esteemed business thinkers Michael Porter and Mark Kramer introduced it in the January/February 2011 edition of Harvard Business Review, and it has stimulated lively debate since.

“We need to understand that what’s good for the community is actually good for business,” said Porter, explaining CSV at the World Economic Forum at Davos earlier this year. “If we can organise ourselves to do this stuff inside our operating units, rather than on the side, we can have a profound effect on many of the most important social issues of our time.” In Harvard Business Review, Kramer and Porter define creating shared value as “creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress.”

Read more: Creating shared value: The new sustainability?

We were delighted that John Elkington attended our second annual Shared Value Summit, held last week in Cambridge Massachusetts, and I was pleased to read his blogpost highlighting some of the synergies between shared value and sustainability. It is high praise indeed for John to say that sustainability might be the ultimate form of Shared Value.

John agrees with the central message of Shared Value about the power of business to solve social problems and increase profitability by aligning its commercial and social interests, but he raises several concerns. 

We are at a defining moment in our country’s history. The tragic violence brought on by Marikana, the multitude of service boycotts, countless reports of corruption, ineffective policy execution and the high inequality levels in South Africa are indicators that the country has broadly-based value creation issues.

A complete change in stakeholder thought and action is required at a national, industry and company level to create shared value for all.

This is the view of Tjaart Minnaar, Managing Director of OIM, one of South Africa’s leading business consultancy firms. He echoes Dr. Mamphela Ramphele’s recent call to build sustainable, local, economic development programmes. “Shared value, although a possible reality, will require a complete ideology shift whereby shareholders, customers, suppliers, employees and society at large will benefit.”

That business can have shared values — making a profit while effecting social change — is a notion millennials understand, and insist on.

Business strategy does like its catchphrases: terms such as sustainability, good governance and, of course, shared value. Each has merit, but a recent dusting off of shared value is particularly relevant in today’s constrained and challenging economic and business environment.

 

Why do we turn to nonprofits, NGOs and governments to solve society's biggest problems? Michael Porter admits he's biased, as a business school professor, but he wants you to hear his case for letting business try to solve massive problems like climate change and access to water.

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