Innovating for Shared Value was published in the September 2013 edition of the Harvard Business Review. A new article from Marc Pfitzer, Valerie Bockstette and Mike Stamp of FSG, it considers the findings of comprehensive research to define patterns among companies successfully creating shared value.
As the authors state in the introduction, company leaders recognise that social problems present daunting constraints in their operations and vast opportunities for growth. But many are struggling to design and implement initiatives that deliver both social and business benefits.
Most companies are not guided by a social purpose and don’t know how to research social problems at the level needed to drive change; company analysts and actuaries lack experience in measuring and linking social and business results; and it can be challenging to build networks of external stakeholders needed for successful product or value chain innovation.
In the study Marc Pfitzer, Valerie Bockstette and Mike Stampt argue that 30 companies – who were the subject of the study – consistently rely on five mutually reinforcing elements, whose optimal form and balance depend on a firm’s culture, context and strategy:
1. Embedding a social purpose: Re-emphasising a firm’s social mission in the corporate culture by redefining the aims and objectives of the business and incorporating its purpose with innovation and social problem solving. Examples include, Nestle redefining itself as a health company and Toyota as a low-emissions mobility company.
2. Defining the Social Need: Looking for underlying causes of social problems as the relate the activities of the business. Defining scale into business models and realising that businesses can be innovators for social problems. A recent example includes, Intel training up to 10 million teachers in the use of technology – turning education into a profitable business for the company in the long term.
3. Measuring Shared Value: Companies seeking to deliver scale-able social and business benefits need to be able to monitor their progress. Creating industry based standards to measure success will be crucial to tracking progress and measuring the business impact.
4. Creating the Optimal Innovation Structure: New projects pose risks as a firm departs from “established businesses” and these factors must be taken into account by considering issues of financing, governance, management systems and location.
5. Co-Creating with External Stakeholders: Deeply involving and integrating stakeholders into the entire development process. Work with them to identify key issues and encourage them to invest in implementing solutions on the ground.