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10 Essential Ingredients for Creating Shared Value

Spices and herbs in metal bowls. Food and cuisine ingredients.Shared value is created when businesses improve their competitive positioning and address social needs at the same time.

Many of us would argue that businesses should always be focused on delivering social benefits, however we’ve seen the relationship between business owners / managers and the communities they serve break down on many levels.

The shared value approach can help repair this relationship at scale by linking social outcomes with financial opportunities.

How easy is creating shared value? Based on my experience in this field, it isn’t easy. However the businesses that get it right are able to differentiate themselves and sustain their advantage.

I decided to list the top 10 barriers or challenges that businesses face in creating shared value initiatives strategies and, from that, derived the top ten essential ingredients for success:

1. Accept that share value is business innovation, not an extension of CSR

Whilst both pursuits have social benefits in mind, creating shared value is about developing a commercially feasible business proposition. Traditional forms of CSR have fixed budgets and are more concerned with managing stakeholders. Shared value sits in strategy and operations, not on the sideline.

2. Accept that the CSR skill base is not necessarily suited to creating shared value

How do you generate a high number of good quality ideas? It will be invaluable to have people with CSR experience and skills in the room to help the process, however the process should be designed as an innovation challenge. Hire the people who know how to get the right people in the room and manage ideas effectively.

3. Accept that shared value is complementary to philanthropy and CSR

It is not an either / or choice, these three pursuits exist for different reasons. Review your portfolio of social initiatives and make a conscious choice about how you would like it to look in the future.

4. Change the conversation

Be willing to talk about the drivers of your involvement in social initiatives and the benefits it brings. More discussion and transparency around your challenges and successes will help attract the right types of partners. The example of real estate agents reducing homelessness and increasing financial returns is a powerful one.

5. Identify concrete examples

When introducing the shared value concept to a work team, make use of relevant examples. Having said that, there are a limited number of developed-world case studies out there.  Conduct a review to see if you already have existing examples in your business. For reference purposes, NAB’s Dig Deeper report is worth looking at.

6. Less work on frameworks, more on creativity and collaboration

Frameworks are important, but I believe we spend too much time on them relative to the time we devote to the exploration of ideas and opportunities. To innovate, you need to enter into unknown spaces. Shared value opportunities are not sitting on the shelf waiting to be picked up, they need to be nurtured and may turn up unexpectedly.

7. Provide practical tools

There is an awkward grey space between intent and action. Many of the businesses I talk to are keen to start identifying shared value opportunities but they don’t know where to start. In short, there have been few practical tools to help the process along. This is why I teamed up with design thinking and innovation specialists to create the Shared Value Canvas tool – which helps map out who is involved and why. You should be pressing your advisers for processes and tools.

8. Work top down and bottom up

There may be opportunities to address social issues inhibiting your supply chain that business units can identify and run with, without the need for top down support. At the same time, there may be bigger strategic plays that need full executive buy-in. And then there are new product development processes that draw in a multitude of internal stakeholders. Awareness at all levels, telling and selling the story upwards and downwards is the challenge.

9. Get content into executive, management and leadership programs

Review your educational materials and service providers for opportunities to introduce shared value concepts into the learning process. Better still, use an ideas competition or collaboration task as the basis for internal teams to start applying the concepts in your business.

10. Get your people involved in cross-sector leadership teams

Business people don’t understand the complexity of social issues. Social sector people don’t always know what motivates businesses to act. To overcome the misconceptions and ‘language’ barriers that exist, help your mid-level leaders mix with their social sector counterparts.

What to do next?

How many of these 10 ingredients exist in your business? Where are the gaps? What should be your priority items going forward?

Hopefully, this list has presented some insights that will guide you on your journey.

Phil Preston helps businesses, non-profits and governments improve their performance using collaborative approaches, with specialisation in the shared value field. He can be reached at enquiries@philpreston.co and you can DOWNLOAD his (free) guide to shared value.

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+61-408-259-633

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NSW 2508, Australia

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