(this article was first published in Cuffelinks on 31 May, 2013)
Professor Michael Porter is a committed capitalist, and about as hardline as you can get. So why has he seemingly dive-bombed out of the clouds to champion the role and obligations of business in society? Why does he get excited about Nestle’s support of rural development, Cisco’s partnering with public institutions to provide online curricula, teacher training and professional development for instructors and Wal-Mart’s supply chain re-invention, cutting energy costs, emissions and engaging with local suppliers?
Start thinking about ‘Shared Value’
The answer lies in business model innovation: it’s the way companies will get ahead and create real business value in the future and, at the same time, address society’s pressing needs. This type of innovation is called ‘Shared Value’ and it is increasingly being applied to improve competitive positioning and financial performance. This may come across as idle curiosity that hardly warrants keeping a fund trustee awake at night. However, it is likely to spawn new conversations about the effectiveness of trustee boards.