Shared Value Creation: Not Your Parent’s CSR

Move over, Corporate Social Responsibility (CSR). You’re about to become outdated by a new contender in town. Shared Value Creation (SVC) is a new type of strategic thinking advocated by Harvard Business School’s Michael Porter. It’s an evolution and step beyond plain old CSR.

CSR vs. SVC:

A fix for a problem caused vs. Problems to solve
Philanthropy vs. Business strategy
Threats vs. Opportunity
I think of SVC as a way to realign business interests with societal and environmental interests. As in, when mainstream and business media starts chattering about the ethical shortcomings in the business world, you should be concerned. As in, look at the systematic flaws of what has happened to capitalism, and how do we get American businesses back on track? between This new type of thinking, Shared Value Creation (SVC), demands that business take a proactive role in solving societal challenges.

At this NI panel, I heard three stories from corporate representatives working on SVC, and Greg Hills, Managing Director, FSG  was the moderator for this panel.

Kathryn Brown, Senior Vice President, Verizon Communications Inc. Verizon wants to leverage core competencies in mobile to address healthcare, and is trying to break down the barriers such as ID fraud, security, HIPA compliance, etc. that stop us from using mobile to lower health care costs.

Robert Corcoran, Vice President, Corporate Citizenship and President and Chairman of the GE Foundation, General Electric Company. GE Foundation identified health care as its focus area. Bob Corcoran pointed out that there are billions of people with no access or prohibitively costly access to healthcare. The problem is worse than it was 10 years ago, so GE is working with Intermountain Healthcare to address standards of care, as a means of bringing down whole systems’ cost and thereby increasing access to care.

Barbara McAllister, Director, Global Strategic Initiatives, Intel Corporation. Intel’s focus is on education and increasing access to technology.

Setting Up and Measuring:

SVC is about intentionality. This means you have to start with the end in mind: social impact. The conversation begins with positioning, identifying the opportunity, and of course, the ever-present challenge of coming up with tangible, relevant, and useful metrics. Part of what makes SVC much more serious than CSR is measurement. For example, GE applies its lean six sigma and weekly reporting requirements for its SVC duties. You won’t see that with an annual CSR report. Corcoran said: When you put in a measurement system, it drives the organization to integrate the new way of thinking and systematically change. Data enables you to test and redefine your strategy, and metrics incent behavior change. Corcoran also went on to say “If the sole pursuit of your business is to increase shareholder values, you are guaranteed failure. Who does your business value?”

SVC also requires firms to examine net system impact. Products are sold, but there are also patient outcomes to consider. There’s revenue, and then there’s net system impact. Revenues are necessary but not sufficient.

Implementation is also an essential aspect of SVC. The way you embed the strategy within your company organization matters. It’s not enough to measure SVC. SVC metrics also have to influence everyone on your staff.

Partnership is another theme I picked up on. Partnerships are key to helping businesses do SVC in a serious, non-CSR way. Don’t forget: The internet age is all about collaborating while competing at the same time, and a landscape analysis is critical in working through the ‘who,’ ‘where,’ ‘when’ questions for partnership.

My brain definitely gained some weight soaking in information at that panel – even despite the massive West to East Coast jetlag my body was battling on Friday afternoon.

Grace Chang, Sustainable Business Practices, Class of 2013

 

This post is part of a series from the UO Net Impact student group that traveled to Baltimore for the 2012 Net Impact Conference. The UO Net Impact Blog can be found at http://www.uonetimpact.org/

Written by Andrew White

Andrew is an MBA Candidate in the Center for Sustainable Business Practices. A native of Massachusetts, he came to UO to refine his business skills and build his expertise in the sustainability arena. His primary interest is in helping organizations implement environmentally and socially sustainable strategies for long-term success, and he is a regular participant on many of the MBA intramural sports teams.