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Stanford offers possible direction for Shared Value practice

November 8, 2011

In recent years business has increasingly been viewed as a major cause of social, environmental, and economic problems, and widely perceived as prospering at the expense of the broader community. But the success of a company and the health of the communities around it are closely intertwined. A business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment.

A big part of the problem is seen to be an outdat­ed approach to value creation that has emerged over the past few decades. Businesses are opting for short-term financial solutions instead of expanding to broader influences which can create long term success and revenue. Corporate social responsibility programs are assembled to demonstrate company social and environmental values but they often fail to have a meaningful impact or be acceptable to communities past a short term sponsorship arrangement.

So, how can we develop a framework for all parties to collaborate on mutually beneficial, long term value? There are a number of key social issues – ageing workforce, obesity, carbon neutral cities – that can be solved with shared value as a foundation for collaboration and negotiation.

Stage One: Facilitation

Each party – government, business and community representatives – need to:

  • define the problem and agree on its parameters
  • have equal power in developing the outcome
  • agree to the others’ definition of value
  • agree on time frames for value creation

Resourcing is a key as change takes time. The value of resources – not just finance but intelligence, experience, access to communities, and leadership capacity – need to have agreed value.

Stage Two: The Model

Once the facilitation period is completed, a practice model needs to be developed.

Under the title ‘Collective Impact’, Stanford Social Review released a paper in early 2011 which provides a very early prototype for taking shared value approaches into practice. With 5 key elements it establishes a foundation for setting targets, maintaining agreement and generating results

1. Common Agenda

All participants need to share a vision of change that includes a com­mon understanding of the problem and a joint approach to solving it through agreed upon actions.

Each organisation often has a slightly different definition of the problem and the ultimate goal.

Differences are often ignored when organi­sations work indepen­dently on isolated issues and can undermine the impact of the field as a whole.

2. Shared Analytics

Agreement on a com­mon agenda is illusory without agreement on the ways success will be measured and reported.

Collecting data and measuring results con­sistently on a short list of indicators at the commu­nity level and across all participating organisa­tions ensures efforts re­main aligned and partici­pants are accountable.

Recent advances in web-based technologies have enabled common systems for reporting performance and meas­uring outcomes. These increase efficiency and reduce costs.

3. Integrated Activities

The power of collective action comes from the coordination of differen­tiated activities through a mutually reinforcing plan of action rather than from the number of participants.

Each stakeholder’s efforts must fit into an overarching plan if their combined efforts are to succeed.

Each participant needs to be encouraged to undertake a specific set of activities in which it excels in a way that it supports and is coordi­nated with the actions of others.

4. Communications

A high level of trust needs to develop among nonprofits, corporations and government agen­cies.

Time is needed to ensure that each stakeholder’s own interests will be treated fairly and that decisions will be made on the basis of objective evidence and the best possible solution to the problem.

A common vocabulary will develop with time and is an essential prerequisite to develop­ing shared measurement systems.

5. Backbone Organisation

A backbone organisation supported by dedicated staff separate from the participating organisa­tions who can plan, manage and support the initiative through ongoing facilitation, technology and commu­nications support, data collection and reporting, and handling the logisti­cal and administrative details.

Three roles are recom­mended for the backbone organisation:

  • Project Manager
  • Data Manager
  • Facilitator

It’s early days, so all feedback is welcome as we work towards a workable model.