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What is Shared Value?

Shared value is a business strategy designed to solve social issues profitably.

It does this by leveraging the resources and innovation of the private sector to create new solutions to some of society’s most pressing issues. In doing so, it creates a more prosperous environment in which to operate, making business more sustainable and resilient.

An academic concept

Originally an academic concept, the idea was co-created by Harvard Business School Professors Michael Porter and Mark R. Kramer and was introduced in 2011 in the Harvard Business Review article ‘Creating Shared Value.’

The establishment of shared value came after the global financial crisis, when capitalism and the reputation of business were under siege. Shared value made the radical proposition that corporate success and improved social and environmental conditions are in fact inherently linked – and when achieved together, they could dramatically enhance our future prosperity. The concept has since been adopted by global business.

Shared value in practice

Shared value is all about doing business differently – in a way the rest of the market is not.

To create shared value, a company must transform its business model into a self-resourcing value creation model; where it is designed to solve social challenges through the business itself. Shared value policies and principles can be adopted by Government and not-for-profits too; both of which can serve as valuable partners in delivering reliable and meaningful change at scale.

There are three key ways that shared value is achieved:

  • Reconceiving products and markets

Creating new products and services for existing or new markets which better serve societal needs.

  • Redefining productivity in the value chain

Accessing and using resources, energy, suppliers, logistics and employees differently, and more productively 

  • Enabling local cluster development

Improving the local operating environment by supporting skill-development and capacity-building

The benefits of shared value

Socially and environmentally, shared value can vastly improve the conditions in which we live – advancing community health, education, employment, service access and participation; and helping to conserve our wildlife and wild environments.

The economic benefits afforded by shared value are also numerous, and include, but are not limited to:

  • Self-sustaining purpose and profitability
  • Stronger brand equity and marketability
  • Increased customer preference and loyalty
  • Higher advocacy, retention and productivity among employees
  • Resilience against external business threats
  • Regained credibility among a disillusioned public
  • Enhanced or sustained interest from like-minded shareholders and investors

Shared value in Australia and New Zealand

Shared value has gained significant momentum across the region in recent years. So much so, that Professor Porter describes the Australia and New Zealand community as being “at the epicentre of shared value globally today”.