Stay up to date with all the latest from Shared Value Project by signing up to our eNewsletter

What is Shared Value?

If purpose is the ‘why’, then shared value is the ‘how’.

In recent years, purpose has gained momentum in business. With societal issues on the rise, government and community resources are under pressure. And increasingly, consumers expect organisations to step in, and play a greater role in advancing social or environmental issues.

But, whilst companies understand the moral imperative in delivering value for all stakeholders, a huge opportunity exists in seeing the business imperative. This can be explained through a simple but powerful idea:

A company’s success and social progress are interdependent.

This is the key principle of shared value.

Tourism companies can’t thrive if a pandemic prevents us from travelling. Food suppliers can’t thrive if extreme weather events spoil farmers’ crops. And financial services can’t thrive amid financial hardship.

In this context, purpose has an important place within business strategy; and, when used to its full potential, it can reach beyond risk mitigation – or doing no harm – to actually create new value for business (and society).

Shared value is a framework designed to create business solutions to social and environmental problems. Put differently, it’s a means to deliver on your purpose, profitably

And that’s ok, if not important. As delivering on your purpose through the business itself can enhance the authenticity, sustainability and scalability of the impact you’re creating.

In practice . . .

Shared value harnesses the resources, skills and innovation of an organisation to target the issues that intersect with its business. As a differentiation strategy, it seeks to address these issues in a way the rest of the market is not.

The concept was introduced in 2011, by Harvard professors Michael Porter and Mark R. Kramer in the Harvard Business Review article ‘Creating Shared Value,’ and has since been adopted by the global business community. Shared value policies and thinking can be adopted by Government and not-for-profits too; both of which can serve as valuable partners in delivering meaningful and sustainable 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 creation of both societal and business value is integral to shared value. 

Societal value comes from vastly improving the conditions in which we live; advancing health outcomes, education, employment, financial or digital inclusion, service access and participation and/or helping to reduce our impact on the environment.

Meanwhile, business value can range from increased revenue or market share to improved productivity, greater efficiency, reduced costs, improved quality, a more secure supply chain, or a more skilled or productive workforce.

“As one of the first regions to really understand the power and potential of shared value a decade ago, we need [Australia] to show the world what truly embracing shared value at a national level can look like”

  • Professor Mark Kramer