How is Shared Value Created?

This post is part of a series in anticipation of the Sustainable Brands 2011 conference of which 3p is a media partner.

Throughout time, civilization has distinguished subdivisions of economic, political, and social activity – in other words – business, government, and society. Although the interaction and interrelation of these three has evolved over the centuries, the role of business in society has increased in priority on the agendas of nearly every CEO and Board in recent years. Although it is the fundamental purpose of every business to make a profit by providing products and services that satisfy human needs, it is the concept of sustainability that requires businesses to look beyond their bottom-line profits and consider their environmental and social impacts as well.
In a recent Harvard Business Review article, The Big Idea: Creating Shared Value, Michael Porter and Mark Kramer discuss the importance of business leaders looking beyond the short-term financial performance found in capital markets today and focus on the longer-term success that is achieved when companies bring business and society closer together. This concept of “shared value” rests on the premise that companies must connect business success with community success in order to achieve a value that is even greater than profit alone. By connecting success with societal improvement, companies innovate to serve new needs, gain efficiencies, create differentiation, and expand into new market opportunities. When this happens, the unlocking of business innovation and long-term growth are sure to follow.

But how is shared value created and how do leading companies go about connecting with society on different levels? A company’s value chain is compromised when society bears the burden of negative environmental impacts brought on by a company doing “business as usual.” Issues such as natural resource depletion, health and safety concerns, and degraded working conditions bring an increase in economic costs and erode a company’s value chain. It takes innovation in business models to change the way business operates to create shared value.

Join Marc Mathieu from Unilever for an in depth pre-conference session at SB’11 as he explores what it takes to stir up the traditional business models in support of brand innovation and growth. He’ll spend time dissecting shared value – what it means, why it’s important, and why it’s going to change the way companies think about connecting with society in ways that they haven’t thought of before. The discussion will also dive deeper into how companies can address societal concerns in ways that yield productivity benefits to both business and brands, looking at ways to permeate the value chain in areas such as logistics, procurement, resource use, and distribution.