As Porter and Kramer write in their seminal article, “Not all profit are equal. Profits involving a social purpose represent a higher form of capitalism, one that creates a positive cycle of company and community prosperity.”
“What is Shared Value? The concept of shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the company communities in which it operates shared value creation focuses on identifying and expanding the connection between societal and economic progress.”
“The concept rests on the premise that both economic and social progress must be addressed using value principles value is defined as benefits relative to costs not just benefits alone value creation is an idea that has long been recognized in business where profits revenue revenues earned from customers minus the costs incurred. However businesses have rarely approached societal issues from a value perspective but have treated them as peripheral matters because cured the connection between economic and social concerns.” Porter/Kramer note by way of example: “By investing in employee wellness programs Johnson and Johnson has saved $250 million on health care costs.”
A key critique of “Creating Shared Value” (CSV) is that it is often seen as a repackaging of existing corporate social responsibility (CSR) concepts, lacking true innovation, and potentially oversimplifying the complex relationship between economic profit and social impact, potentially leading companies to prioritize business gains over genuine societal change, while downplaying the inherent trade-offs involved in balancing both goals; critics also argue that it can be used to greenwash corporate practices by presenting a superficial commitment to social good without addressing systemic issues.
Contesting Creating Shared Value
But see also, Julian Gresser, “Beyond Shared Value—Character as Corporate Destiny”
Recommended Practical Actions
- Experiment: Identify one specific pressing community or societal need that your organization’s products and services significantly and measurably address.
- Then devise an innovative way to address that need by making available your organizations know how as well as products and services.
- Track the financial and other outcomes over a reasonable period of time.
- Note the Multiplier Effect if any. (See below)
- Conduct kaizen analysis
- Expand the program imaginatively