How to Create a Shared Value Business Model

social need shared value

What Is Shared Value And How Can It Work For Your Business?

In the past decade there has been a heightened focus on corporate social responsibility (CSR) from both large corporations and small start-up businesses. In most cases, this sense of renewed responsibility can be traced to declining consumer trust and the belief that “companies are widely thought to be prospering at the expense of their communities”4. While corporate social responsibility certainly helps businesses remain connected to their communities, is there a more modern, authentic model that aligns better with today’s conscious consumer?

Please don’t misunderstand my message - corporate social responsibly is extremely important in ensuring businesses operate in a responsible and accountable manner. There is immense benefit to having a CSR mindset and the benefit many communities reap from CSR engagements are undeniable. What I want you to consider is, can we do better?  

While CSR is often driven by a sense of philanthropic responsibility and a desire to act in a responsible manner, I can’t help but feel that it is compelled by a sense of corporate need, rather than a desire to simply participate in actions that are in the community’s best interest. In this sense, shared value stems from a much more authentic source and is driven by a completely different mindset than the traditional CSR model.


WHAT IS SHARED VALUE?

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If you haven’t heard of creating shared value (CSV) before, don’t fret, you’re not alone! Coined in 2011 by Harvard Business professors Michael E. Porter and Mark R. Kramer, the concept focuses on the idea that “companies could bring business and society back together if they redefined their purpose as creating ‘shared value’—generating economic value in a way that also produces value for society by addressing its challenges”4. Compared to the typical CSR model where businesses quite often add responsible actions into their everyday operations, shared value encourages businesses to take a more introspective approach from the get-go. In this sense it is much more proactive, rather than reactive.

“Shared value is a management strategy in which companies find business opportunities in social problems. While philanthropy and CSR focus efforts on ‘giving back’ or minimizing the harm business has on society, shared value focuses company leaders on maximizing the competitive value of solving social problems”1.

In simpler terms, CSR is doing good, whereas CSV is being good. See the difference?


HOW CAN IT WORK WITH YOUR BUSINESS MODEL?

While this concept may appear complicated, chances are you’ve already considered creating a form of shared value within your company structure. To help put this practice to use, Porter and Kramer have identified three key ways in which “shared value could reshape capitalism and its relationship to society”4. They are as follows:

  1. Reconceiving products and markets

Is there a new client base you can target that is currently not being served? What does the market look like for a different demographic? How can you adapt your current product offering to serve a more diversified group of customers?

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One of the simplest ways to put shared value into practical use is to think outside the traditional constructs of traditional products and markets. Get creative! Most businesses target today’s average consumer, but what about the customers who don’t fit into that traditional bubble?

While attending the inaugural Africa Shared Value Summit in 2017 I was introduced to Claire Reid, CEO of Reel Gardening based out of South Africa. Quite frankly, her story is incredible. Drawing from her life experiences, Claire founded Reel Gardening at the age of 16 after attempting to grow a vegetable garden in her backyard with the assistance of her nanny. She was shocked at how difficult the task was for a young, upper-class, educated woman, and became infatuated with the idea that if it was this difficult for her, how could others with a lower level of education and less financial stability successfully create their own food security.

Today, 16 years later, Reel Gardening is still deeply rooted in their desire to empower others to take control of their own food security, through making gardening accessible and effective for everyone. Not only do they support social impact projects in their community, Reel Gardening’s business model is designed with a Buy One Donate One structure, where for every product sold, Reel Gardening donates seed tape to a person in need.

Through stepping back and reconceiving the gardening market, Claire was able to design a business model that grew organically and consciously by recognising a social need in her community. More about Reel Gardening and their products can be found here: https://reelgardening.co.za

2. Redefining productivity in the value chain

Can you turn by-products from your business into a new product? Is there a way to use the waste your community is generating and repurpose it into something useful? Can you operate your business in a more sustainable and environmentally friendly manner?

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While all businesses strive to be as productive as possible (mostly for the sheer purpose of lowering costs and keeping revenues high), sometimes businesses can find opportunities in their value chain operations and create a whole new product or market from this discovery.

Dunia Designs is an “eco-friendly design company that [specializes] in the up-cycling of plastic bottles, plastic bag waste & other recycled materials to create beautiful & bespoke furniture”.

Based out of Tanzania, Dunia Designs not only creates job security, they are helping to reduce the amount of plastic plaguing the community by turning everyday waste into tangible products.

“Since February 2015, Dunia Designs [has] collected and recycled 10,680 plastic bottles”, which amounts to “2.6 x the height of Mount Kilimanjaro” (Africa’s tallest freestanding peak, standing at 5,895 meters tall).

While Dunia Designs employs numerous individuals from their community to help collect plastic waste, they have also made it their mission to help facilitate the collection of unwanted plastics from community members who want to ensure their waste is being recycled responsibly. In this sense, they are not only helping to keep the community plastic free, but also receiving the majority of their raw materials at zero cost – now that’s what I call a win-win! To read more about their story or view their stunning product gallery, please visit: https://www.duniadesigns.org

3. Enabling local cluster development

Can you source more products locally? Is it possible to adapt your business model to fit your local environment better? What local skills and assets can you incorporate into your business?

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With the increasing level of interconnectedness we all feel globally, sometimes our focus on community can fall by the wayside. Refocusing efforts to remain attached and invested in our local cluster can assist in growth and development for, not only your firm, but other invested parties.

Take for example Nando’s Chicken. Those familiar with the brand will be accustomed with its unmistakeable personality and vibrant restaurant atmosphere. But, how does this make Nando’s unique?

Drawn from a love for its Southern African roots, Nando’s personally curates each restaurant, worldwide, with the art of its African community.

“With over 9,000 pieces (and counting!), [Nando’s is] officially the biggest collector of Southern African contemporary art in the world”.

This passion has become a huge part of their brand, exclaiming: “We love our art, but we love its story more. Through our long-term commitment to contemporary Southern African art, we want to make a real difference to artists' lives we work with”. This genuine investment in the local community has benefited Nando’s twofold: firstly by helping establish a unique brand story, and secondly by cultivating continued support and loyalty from community members.

Through reconsidering their brand from a local perspective, Nando’s has been able to successfully grow their brand while simultaneously creating opportunities for local artists to advance their careers and personal development. To learn more about Nando’s brand and artists, please visit: https://www.nandos.co.uk/explore/art


CONCLUSION

There are many innovative and unique ways to incorporate a shared value business model into any firm. Shared value can “drive the next wave of innovation and productivity growth in the global economy as it opens managers’ eyes to immense human needs that must be met, large new markets to be served, and the internal costs of social deficits—as well as the competitive advantages available from addressing them”4.

It not only helps keep firms competitive, it draws inspiration and growth from our greatest social challenges.

No matter your industry, product, or geographical location, a shared value business model can work for you!


REFERENCES


  1. (2018). About Shared Value, Shared Value Initiative. Retrieved from: https://www.sharedvalue.org/about-shared-value


  1. Epstein-Reeves, J. (2012). What is ‘Creating Shared Value’?, Forbes. Retrieved from: https://www.forbes.com/sites/csr/2012/06/04/what-is-creating-shared-value/#4e78182e2bf1


  1. Pfitzer, M.W., Bockstette, V., Stamp, M. (2013). Innovating for Shared Value, Harvard Business Review. Retrieved from: https://hbr.org/2013/09/innovating-for-shared-value?referral=03759&cm_vc=rr_item_page.bottom


  1. Porter, M.E. & Kramer, M.R. (2011). Creating Shared Value, Harvard Business Review. Retrieved from: https://hbr.org/2011/01/the-big-idea-creating-shared-value