Shared Value for Collective Benefit

Shared Value for Collective Benefit

December 27, 2016

As a relatively new concept in Australia, shared value is fast becoming the beacon for purpose and sustainable development in business. Not to be confused with the philanthropic and volunteering contributions of corporate social responsibility, shared value meets the capitalist need for profit while bringing social problems to the heart of business.

By Gabrielle Martinovich

With an increased focus on the role of corporations, effective leadership and slow global growth rates, traditional models of business, government and civil society are fast becoming outdated. Similarly, there’s a growing view that corporate social responsibility programs have done little to deflect poor business conduct and often fall short of long-term sustainable development. Increasingly business needs to innovate for value and leaders need to live the values they espouse.

Globally our understanding of value is shifting from a focus on short-term financial value to one that includes longer timeframes and more concrete measures of societal value. Consumers and community are more aware, and more demanding, of corporate efforts in terms of governance, transparency, ethics, social value and environmental responsibility.

Coined by Michael Porter and Mark Kramer, shared value is a business strategy that addresses societal challenges and delivers a clear financial benefit. By redefining productivity, reconceiving products and markets, and creating alternative marketplaces, it also delivers measurable financial and social value linked to a company’s strategy.

Growth through innovation

Reminiscent of the sustainable supply chain approaches of the 80s, you’d be forgiven for thinking shared value is reinvention. Ultimately shared value is about seeking better outcomes through collective benefit rather than charitable benevolence, and growth through innovation that addresses societal challenges is the key differentiator.


Innovating for good

Shared value requires a mindset shift from purpose as a sideline to business, to purpose led businesses. An innovative and profitable business model is created when an organisation identifies the social problems and understands what skills and resources can be applied to solve them.

To innovate for good requires collaboration and more partnering, yet governments, NGOs, companies, and community members more often work in opposition than alignment.

Shared value seeks to identify and bring together the interests of all parties to achieve mutual benefit. It seeks to develop approaches that more fundamentally address inherent issues and their associated root causes for collective benefit. An organisation can develop new products and services to meet a social need, improve productivity of its value chain and increase the supply of goods and services.

Taking an active role in helping people who are excluded from mainstream banking to access fair and affordable financial products and services, National Australia Bank (NAB) in partnership with Good Shepherd Microfinance have created a No Interest Loan Scheme. The scheme offers people on low incomes safe, fair and affordable loans for fridges, washing machines and furniture, as well as education and medical expenses.

Using mobile to create alternative markets, Telstra has partnered with the women’s service network (WESNET) to provide 20,000 smartphones, pre-paid credit and information on the safe use of technology for women experiencing domestic violence to stay safely connected.

Purpose is business

Embedding social purpose is paramount. Porter and Kramer suggest shared value is not about a redistribution approach of already created value instead it’s about expanding the total pool of economic and social value.

By embracing shared value at the core of business incites a strategic lens to inform decision making, where the commercial opportunity aligns to the purpose and values of the company. An authentic company has stakeholders who believe the brand, the products and services are consistent with the purpose and behaviours of the company and so consumers trust the company to deliver on its promises.

As millennials demand more from corporations and governments, companies are no longer the exclusive arbiter of economic life. Organisations, whether in the corporate, government or not-for-profit sectors, have the opportunity to harness the creative energy of their business models. As shared value creates an appetite for more purpose-led business and moves the conversation beyond mistrust, everyone has the opportunity to ride the wave and get ahead of the curve.


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