Suncorp Group’s Chris Newlan, Head of Strategy and Corporate Affairs for Personal Insurance, shares his insights and key takeaways from the 2015 Shared Value Leadership Summit in New York. Chris was part of the Australian contingent of Shared Value Project members and business leaders who travelled to New York for the Summit. This year’s Australian attendees reflected the impressive progress and action being taken by Australian companies, who had the opportunity to engage with fellow global leaders in shared value and gain the latest global insights to bring back and help advance the movement in Australia.
Four years after Michael Porter and Mark Kramer declared capitalism was broken, the 2015 Shared Value Leadership Summit in New York in May was an opportunity to see how the repair job was going.
The verdict? Pockets of good progress but some way to go.
It was abundantly clear many businesses had enthusiastically embraced the shared value philosophy Porter and Kramer outlined in the Harvard Business Review in 2011. Indeed, some companies had been practicing it for years and hadn’t even known it.
The delegate list was testament to that enthusiasm. Representatives from some of the largest corporations in the world including Walmart, Coca Cola, Nestlé and Toyota attended the summit. Suncorp Group, IAG, Bendigo and Adelaide Bank, Ellis Jones, and NAB led the Australian contingent with Shared Value Project Chair Peter Yates AM and Executive Director Helen Steel.
Pockets of excellence were evident from different parts of the globe. Porter said shared value gave businesses the “opportunity to compete by going in a different direction, not fighting over onesies and twosies.”
Discovery, a South African based life insurer, explained its purpose wasn’t to sell insurance but to keep people healthy. While the insurance business model monetises behaviour, Discovery’s approach focusses on changing behaviour – a purpose that underpins their entire strategy and institutionalises shared value.
Porter talked passionately about “shared value going beyond being generous and stopping things from going wrong.”
“Using a business model and making a profit is the key. This is a most powerful force because we can do it at scale to address societal problems,” Porter told the conference.
Businesses require leaders who are prepared to move out of their comfort zone and embrace a purpose bigger than shareholder value.
It might sound easy, but it’s not. The uncomfortable reality surrounding Porter’s comments is that business here and abroad continues to operate against an unfavourable backdrop, despite the shared value principles and benefits being espoused for several years.
Trust in business continues to plumb embarrassing lows. Lurid accounts of corporate wrongdoing plague boardrooms and excite newspaper editors.
Is it a case of either the message failing to get through to CEOs and Boards or a need to take a longer term view of the incubation period?
“Flexibility and patience is one of the biggest things that will allow shared value to succeed and this potentially conflicts with the short-termism of shareholders,” said Elizabeth Littlefield, President and CEO of the Overseas Private Investment Corporation.
Pharmaceutical giant Eli Lilly take the long term view to create shared value. Chairman and CEO Dr John Lechleiter, said his business sought to identify and understand future risks and connect them to societal issues.
“Success requires companies to confront some of the big challenges that stand in the way of success such as short termism,” he said
“Equally important was having a relentless focus on moving opportunities from pilot to scale, shifting a company’s culture to maximise employee buy in and creating a language that motivates and inspires.
“Inspiration from the top, and aspiration from the bottom,’ is how Bendigo and Adelaide Bank Chairman Robert Johanson described shared value leadership.
Barbara Byrne, Barclays Investment Bank Vice Chair of Investment Banking, described shared value as “shared growth over the longer term” but acknowledged this could potentially conflict with the average CEO turnover cycle of around five years.
“We need to measure what really matters over the long term and people will perform to those metrics,” she said.
Barclays has developed a AUD $50 million social innovation hub. It provides employees with resources and space to experiment with shared value and create concepts for management consideration.
The view of global practitioners towards Australia’s efforts in the shared value arena were some of the interesting comments gleaned from the sidelines of the conference. Peter Yates said it was critical to have regional champions of shared value. Such an approach is clearly working with many commenting Australia had moved away from “talk’ and into “action”.