Global Shared Value Summit in Brief: Meaning, Measurement and Momentum

I’m sitting in my hotel room, looking out a heavy clouds on the Boston horizon, at the end of four days of intensive work discussing shared value implementation with companies and practitioners from all around the world, including Colombia, India, Philippines, Canada, Czech Republic, Brazil, Australia, Italy, Hong Kong, Singapore, US, UK, Costa Rica, Mexico, Korea, Japan and Chile.

We rubbed shoulders with the likes of Harvard’s Professor Michael Porter, Mark Kramer of FSG and the Chairman of Nestle, Peter Brabeck-Letmathe, and that’s just the tip of the iceberg. This is a pivotal moment in the development of this field – you may like to refer to sharedvalue.org or this article of mine that Porter re-tweeted last year, if the topic is quite new to you.

It’s impossible to summarise everything in one go, but here’s three big take-aways for the business, government and the NGO sectors:

1. Meaning

For a business to have real purpose and be resilient to future shocks, it helps to identify it’s role in improving society. This approach underpins sustained profitability; if profitability is the primary short-term goal, then there is a risk that the business model fails overnight.

Nestle adopted “shared value” as a formal strategic initiative in 2006; however Chairman Peter Brabeck-Letmathe remarked that shared value is now the strategy. It has transformed from being a food and beverage company to one that seeks to improve nutrition, access to water and develop rural economies. Nike was once a footwear company, it now sees itself as a health and well-being player. Thermo-Fisher saw itself as a scientific company, it now sees its role as building a healthier and safer world.

On my table at the global summit, four companies talk about their evolution in the way that they define their purpose. They were all at different stages – for different reasons – and still had some way to go, but the point is that they were all conscious of the need to bring clarity.

2. Measurement

How do we measure if and when shared value is created? There are two sets of indicators that need to be present: Read more →

Think ‘social’ to drive ‘financial’

For the excitement that comes with company reporting season and the financial results that comes with it, all we are looking at is numbers and commentary that reflect the outcomes of past actions.

Having managed a high performance financial analyst team for a decade or so, I found that our team was really good at analysing numbers, calculating ratios and making forward projections, but what we weren’t always so good at was understanding the real drivers of the businesses we were investing in. In saying that, I don’t mean that we didn’t understand their business or their markets, I mean that success or failure was often driven by factors that were hard to ascertain or analyse.

To be exposed to a company that has failed makes you feel sick in the pit of your stomach for a long time, and you start asking yourself real questions and challenging the assumptions you have previously made. I reckon that experience alone is worth ten times what you learn from any textbook on finance or business performance.

Common reasons for company failure include poor culture, poor governance, poor management and poor processes and systems. We don’t see the value of any of these ‘assets’ listed in the balance sheet, and yet they make or break a business!

Nowadays, creating financial value is all about understanding, managing and developing the soft – or intangible – assets in our businesses, such as our people, stakeholder relationships and organisational capabilities. In fact, studies show that the 80% of the value of the S&P 500 stock market index in the US is attributed to intangible assets.

We need to think ‘social’ in order to drive ‘financial’.

We should be asking ourselves if we truly understand the array of assets we possess? And when we do, how are we managing them? And which ones should we be developing to give us the performance edge in the future?

As Albert Einstein said: Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning.

There’s a lot of scope to improve the financial performance of our organisations through the management of social factors, which improves the productivity of all of our assets.

Turning cultural and language barriers into business opportunity

[This feature was co-authored with Adrianne Talbot-Thomson; refer endnote]

If someone told you that a thorny social problem could be transformed into a business opportunity that spins off environmental, economic and societal benefits, you probably tell ‘em they’re dreamin’.

However this is exactly what is happening through the formation of event waste-management firm, GreenConnect, in the Illawarra region of NSW. It is the holistic view taken by its founders that underpins its fledgling success and there are a multitude of lessons for business, non-profits and government to be garnered from it.

The suburbs that fringe Wollongong to the south are now home to refugees from a range of countries, such as Burma, Ethiopia, Congo, Liberia and Sudan. Cultural and language barriers stand in the way of integration into local communities. The unemployment rate runs at close to 90% for this group because:

• English language proficiency is non-existent or poor
• Australian work culture is quite different to their own experiences
• They often lack access to decent transport; and
• Compulsory TAFE attendance inhibits their capacity to hold down regular work.

 
This was a problem until Robynne Murphy saw an opportunity to integrate refugee participation into the Illawarra Folk Festival, which sowed the seeds for the formation of GreenConnect.

Read more →

Levering the ‘Tail’ of the Charity Donor Market

A service known as Philanthroper launched earlier this year in the US with the aim of harnessing contributions from individuals and applying them to the smaller end of the charity market. It is trying to lever the ‘tail’ of the donor market – the market for small donation amounts. Will it succeed? Read more →