Wednesday 12 January 2011

Will CSV supersede CSR?

I am celebrating 20 years in business for myself this year. And since the beginning I have been helping my clients to build and grow businesses that are good for people, our planet, and for profit.

A key to my modis operandi has been helping my clients to discover a shared view about now, where, why, how, who, what, and when, and the creation of shared value for all stakeholders of their businesses.

In my 20 years I have come across many operators who have wanted to embrace CSR (Corporate Social Responsibility) for all the wrong reasons or have taken the view that CSR is a must do in order to maintain a good reputation or that CSR is a nice thing to do because it can be a way of giving back or doing good.

A few enlightened leaders have taken a different view. They see responsibility as integral to their growth strategies. These folk are my kind of people and it is working with such people that brings me joy because creating shared value is at the top of their agendas.

So you can imagine my delight when I read a Harvard Business Review article recently about creating shared value and referring to it as The Big Idea! The article is written by none other than highly regarded strategy guru Michael E. Porter and a colleague Mark R. Kramer. You can read the article here.

Here is an excerpt:

Companies must take the lead in bringing business and society back together. The recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not the core.

The solution lies in the principle of shared value, which involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. We believe that it can give rise to the next major transformation of business thinking.

A growing number of companies known for their hard-nosed approach to business—such as GE, Google, IBM, Intel, Johnson & Johnson, NestlĂ©, Unilever, and Wal-Mart—have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance. Yet our recognition of the transformative power of shared value is still in its genesis.

Realizing it will require leaders and managers to develop new skills and knowledge—such as a far deeper appreciation of societal needs, a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it.

Capitalism is an unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth. But a narrow conception of capitalism has prevented business from harnessing its full potential to meet society’s broader challenges. The opportunities have been there all along but have been overlooked. Businesses acting as businesses, not as charitable donors, are the most powerful force for addressing the pressing issues we face.

The moment for a new conception of capitalism is now; society’s needs are large and growing, while customers, employees, and a new generation of young people are asking business to step up.

The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society. Perhaps most important of all, learning how to create shared value is our best chance to legitimize business again.

If these words delight you as much as they do me then I suggest you are going to have a great year in 2011 and beyond.

Will CSV (Creating Shared Value) supersede CSR? I expect it will and along with it a changing of what’s normal for the betterment of the world.

Be the difference you want to see in the world

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