Michael Porter: Creating Shared Value

let's talk a little bit about creating shared value and the broader question of what should be the role of corporations in economic and social development this question now has reached the level of urgency for business we are right now at a time where there are many many challenges facing the world and what has been so striking to me is how the awareness of these challenges has grown to a level that I have never experienced before business has often been seen as part of the problem in these challenges and indeed the legitimacy of business today is the lowest that I have ever experienced in my professional career what we're doing now isn't working we haven't solved the problems of society and it hasn't benefited us as businesses if you look really really hard at impact and ask ourselves you know how many corporate csr programs initiatives actually really move the needle in a way that's really noticeable and measurable you know in the community or in any particular dimension of social impact we have very few examples where that could be kind of confidently asserted I think fundamentally the problem is that still the vast majority of activity in this area is actually seen as separate from the business I firmly believe that now we have to now raise the bar what we're talking about here is a way of rican sieving how we do business to actually create a positive benefit from some for society at the same time as we're creating economic value so what's the notion of creating shared value corporate policies and practices that enhance the competitiveness of the company while simultaneously advancing economic and social conditions in the communities in which the company operates if we take the notion of CSR and if we take this notion of creating shared value which will abbreviate as CSV how do we kind of compare and contrast the two CSR is an area where agendas are often heavily externally determined there's a variety of pressure points on the business on the firm and we have to respond to those pressure points CSV is something that has to be company specific because if you're going to create shared value there has to be the shared part therefore there has to be the connection to you and and therefore this is an area that requires intense and deep understanding of the business of the value chain of the product of the customers that you can or do serve CSR is kind of separate from profit maximization CSV is integral to profit maximization in CSR the impact you can have is limited to your CSR budget CSV is about mobilizing the entire budget of the corporation to impact social issues I don't mean to make this an either-or we're gonna have to do a combination of both but what I'm saying is that it's time and we must we must start to increase the energy the focus and the dedication within our companies on the CSV side that I believe is the only way to restore the legitimacy of the corporation sure value at this moment in history I believe can be created at four different levels within the firm the first is in actually redefining operating practices and activities within the value chain itself second level is actually re conceiving our products and value propositions that our company is actually offering and I think we are getting a growing understanding that a lot of products meet social needs as well as economic needs the third level is building clusters in the communities in which we're operating a cluster is a set of supporting institutions and supporting organizations in the same field and finally there's some broader economic and social issues the company can create shared value in those areas as well but there often it's going to need to do it collaboratively to create shared value you've got to focus on those areas where your particular business most intersects with the most important social challenges I believe that businesses acting as businesses not as charitable givers are arguably the most powerful force for addressing many of the pressing issues of society we've got to do things in running our core businesses that maximize the positive benefits for the community and for society and guess what many of those things are going to advance the core agenda of the firm you

Channel: CECP

Views: 109,592

Rating: 4.8831463 out of 5

Keywords: Michael Porter, Harvard Business School, CECP, CSR, Creating Shared Value, CSV, Corporate Philanthropy, business strategy, Professor Porter, FSG Social Impact Advisors

Id: z2oS3zk8VA4

Length: 6min 10sec (370 seconds)

Published: Tue Aug 10 2010