What is Shared Value?
As purpose and social purpose gain more traction in the business world, we're starting to hear the term 'Shared Value' more and more.
But what does it actually mean?
In essence, shared value is a business strategy that is designed to solve social issues profitably.
It does this by leveraging the resources and innovation of the private sector to create new solutions to some of society’s most pressing issues. In doing so, it creates a more prosperous environment in which to operate.
Essentially, it makes business more sustainable and resilient.
Originally an academic concept, the idea was co-created by Harvard Business School Professors Michael Porter and Mark R Kramer and was introduced in 2011 in the Harvard Business Review article ‘Creating Shared Value.’
The establishment of shared value came after the GFC, when capitalism and the reputation of business were under siege.
Shared value made the radical proposition that corporate success and improved social and environmental conditions are in fact inherently linked – and when achieved together, they could dramatically enhance our future prosperity. The concept has since been adopted by global business.
The peak body for advancing the adoption of shared value in Australia and New Zealand, is the Shared Value Project (SVP)
Recently Shared Value has introduced The Purpose Playbook, an initiative that focuses on HOW.
It explains how to put purpose into action by employing nine essential shared-value practices, each of which is sup- ported by concrete steps and examples.
The Playbook aims to help companies better understand what it means to be a purpose-led organisation, what makes a purpose worth having, and how to deliver on the promise of purpose by focusing on the business discipline of shared value.
Shared value has gained significant momentum in Australia and New Zealand in recent years – so much so, that Professor Porter describes the Australia and New Zealand community as being ‘at the epicentre of shared value globally today’.
Since Shared Value Project’s inception in 2014, its membership base has tripled to almost forty organisations, including NAB, AIA, IAG, Enel Green Power, H&H Group and Optus. In the same time period, its members reported a 12 per cent average increase in gross profit during membership.
If you want to learn more about the Shared Value movement, have a listen to my interview with Sarah Downie, CEO of the Shared Value Project on the For Love & Money Podcast here. This interview delivers some great insights on how business can contribute value externally through their everyday operations.