Social Impact & Volunteering

Making Shared Value An Internal Value System

Blended Value, Shared Value and Beyond: The Transformative Value Series
Mar 12, 2014 11:20 AM ET

The Realized Worth Blog

Check out the Realized Worth Blog What is value?

We think aboutt value every day. We are constantly evaluating the choices facing us trying to determine if acting or not acting (which includes responding) is worth it. Is the choice to act possess enough value to offset:

  • The expense of energy, time, resources?
  • The risk involved (whatever that may be)?
  • The loss of missed opportunities (again, whatever that may be)?

We come by this process honestly. Remember your former life, when you were a cave-person heading out to hunt. As you stood on that pre-historic plain looking at the not-too-big-but-big-enough dinosaur you thought:

  • Is chasing that thing for 3 miles worth the expense of the energy stores I possess (you’ve only eaten leaves for the last 3 days)?
  • What if I get eaten instead?
  • Maybe if I just sit in the camp Bob (your cave-person friend) will come back with some food and he’ll share it with everyone.
What's the value of that opportunity?

This is prevalent and important question. Most of us don’t have to worry about the possible outcomes of chasing carnivores anymore but we all have important personal choices to make that determine our future, both its length and quality. We make these choices as individuals, organizations and societies. Up until recently, corporations had a fairly singular (or myopic) view of the choices they faced. Although the legal entity of a corporation is as old as the Roman Empire, it wasn’t until the Industrial Revolution that the modern day company was born. Milton Friedman understood the original intent and design of the modern day corporation.  A Nobel Prize-winning economist, he believed there to be "one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits." (Read the entire Time magazine article here.)

Either/Or 

Friedman wasn’t wrong about the value of profit driving choices, he just believed that profit demanded either/or choices. For him, employees were bound to make every decision with the goal of increasing the profitability of the company to the benefit of shareholders. The world was black and white, in and out, and very much either/or. As long as companies paid their taxes and obeyed the law, profit was to be the only estimation of value for every choice an employee made. Radical libertarians continue to pen either/or articles for Time magazine. In a recent article, Nick Gillespie criticizes two industry leaders, Apple and Chipotle, as dangerous radicals for NOT being concerned enough about profit. It was an odd article to say the least. Especially considering that his main arguments undermined the premise of the article – "companies that put people before profits is a stupid business plan" because neither Apple nor Chipotle would argue that point. Instead, many companies today believe that a singular focus on profit as espoused by Friedman (and Gillespie in a modified manner) is antiquated and dangerous.

Both/And: The Triple Bottom Line

Although the idea of corporate social responsibility became popular in the 1960’s in western societies, it wasn’t until John Elkington, the founder of SustainAbility, coined the phrase ‘triple bottom line’ in 1994 that people began to seriously question the traditional idea of a single bottom line of financial return. Responsible companies would account the cost of their actions as it related to all three aspects of doing business.

Both/And: Blended Value

In 2000, Jed Emerson presented the concept of "Blended Value" with a focus on investment strategies that would create financial returns while simultaneously creating important social and environmental returns. The idea that companies could generate value that was not singularly financial for shareholders was incredibly provocative. This ideology pushed the conversation past managing cost as it related to people, profit and planet in order to be responsible corporate citizens. Jed believed that investing in social and environmental returns promised shareholders a new kind of value that they had not considered before. Ultimately, Jed’s desire was to move investors (individuals, organizations and governments) away from the myth of a necessary tension between profit and social/environmental good to that of blended value.

Both/And: Shared Value

Michael Porter and Mark Kramer built upon Jed’s work by proposing that companies could gain a competitive advantage through Corporate Social Responsibility if they applied the principle of shared value. They proposed that this principle should be applied across multiple areas of business operations that comprise the supply chain as well as competitive advantage.  The article appeared in Harvard Business Review in 2006, “Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility” (read the article here) Five years later, Kramer and Porter turned the principle into a business strategy. In the January 2011 HBR follow-up piece entitled "Creating Shared Value: Redefining Capitalism and the Role of the Corporation in Society" the authors proposed what they believed to be a distinct strategy to that of corporate social responsibility with a focus on:

  • Reconceiving products and markets
  • Redefining productivity in the value chain
  • Enabling local cluster development

For more information check out the Wikipedia page of CSV. Shared Value has come under some criticism from thought leaders for its lack of originality, yet the evolutionary process it highlights is incredibly important. The Shared Value framework builds on Jed Emerson’s idea of Blended Value.  Individual and corporate investments for the purpose of profit and social/environmental value are not an either/or conversation. Going one step further, the concept of Shared Value invites corporations to reconsider long held notions of operation and competitive advantage as ‘either/or’ formulas when it comes to value creation.

Transformative Value: The Next Evolution

Today, corporations not only have the unique opportunity to address social and environmental concerns, the public has given them a mandate to do so. The value created by companies must extend well beyond the restrictions of a financial evaluation. The concepts of Blended Value and Shared Value offer practical frameworks for companies to develop strategy and make critical decisions based on a more holistic understanding of value. For more of our thinking about the Corporate Citizen be sure to read our series:

Part One - The Rise of the Corporate Citizen 

Part Two - What is Real Corporate Citizenship?

Part Three - Employee Volunteering – Is It Working?

You can also view my presentation at Ebay  on the Rise of the Corporate Citizen (introduced by Google's Diane Solinger).

Yet all of the approaches discussed so far remain limited by one singularly important respect: they are external constructs. When push comes to shove in everyday life it is not the corporation’s policy, mission or vision statement that makes decisions. It is the individual employee based on their beliefs about the value of the opportunity. Here's how our original three questions may translate when it comes to making a choice regarding a company's CSR strategy:

  • Is it worth the expense of time, energy and resources (including my personal gain)?
  • Is it worth the risk to the company (including my job)?
  • Is it worth the missed opportunity to the company (and to my career)?
The Transformative Value Series

In this series we will explore how external constructs expressed as policies, strategies, manuals, performance reviews and mission statements must be internalized by individuals in order to achieve the promise of both blended and shared value. Here are some questions we’ll be answering:

  1. How is Transformative Value essential to achieving the ambitions of Blended Value and Shared Value?
  2. How is employee volunteering and workplace giving connected to Transformative Value?
  3. What are the Five Phases of creating Transformative Value through corporate volunteering and workplace giving programs - and where is your company on the continuum?
Explore this with me in NYC, April 3, 4

I will be moderating a panel discussion Transformative Value: Evolving Beyond Shared Value.

This plenary explores the potential of mobilizing global workforces supported by the enormous resources of the private sector to address acute social and environmental issues. The expert panel will explore a vision for a radically different future that can be achieved through engaging our employees in volunteer opportunities in the communities in which they live and work.

  Some ways we can help

If you’d like our help with your employee volunteering or workplace giving program, please feel free to drop us a line at contact@realizedworth.com or call us at 855-926-4678. Or take a look at the services we offer here. Be sure to check out our newest offering – Cohort Consulting. Receive all of the services we provide for Fortune 500 companies. Each month, collaborate with others in your field to discuss best practices, address challenges, and receive tools for running a great program. Click here for more details about Cohort Consulting. __________________________________________________________

 

Chris Jarvis Realized Worth, Senior Partner

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