THE BLOG

New Wine, New Bottle

06/26/2015 02:19 pm ET | Updated Jun 29, 2016

2015-06-25-1435258054-9329287-SVI_Logo_Color_Master_v01.jpg

"Old wine in a new bottle" was my perspective as I flew east early this year to participate in the first Harvard Business School executive education session on "Shared Value." I thought it was a new way of describing corporate social responsibility or corporate philanthropy -- both have been around for a while. Turns out, I was wrong.

The "Shared Value" proposition is that the most successful companies are those that consciously aim to meet society's most critical needs. Harvard Business School strategy guru Michael Porter and FSG's Mark Kramer are advancing this framework because they believe it could lead to breakthrough solutions to society's most challenging problems. Why? Because if something is profitable, it can be scaled sufficiently to solve, not just ameliorate problems.

By the time I boarded the plane back to California from the class, my thinking had evolved. I saw the Shared Value framework not just as a means of repackaging how business contributes to society, but as a tool that could actually drive change. Months later, at the Shared Value Summit in New York I learned about several examples of transformative change that go beyond traditional models -- corporate philanthropy's aim -- of generosity to good causes; and corporate social responsibility's objective of avoiding harm.

Porter puts forward some simple health examples: Colgate changed its focus from selling toothpaste to dental health. They invested in dental education and access to dental care -- improving health while increasing toothpaste sales. South African insurance company Discovery Health has grown exponentially after starting an allied company focused on rewarding healthy behaviors.

The framework got me thinking about what kind of innovation is needed to make the workforce training and education systems in the US more effective. For decades, there has been a persistent gap between the business community and the community programs that are supposed to connect people with low incomes to jobs.

Specifically, the Shared Value framework challenged me to rethink how to engage the business community in creating jobs and pathways into the mainstream workforce for people who face some of the most significant barriers to work -- the focus of REDF's work.

REDF is a business-oriented venture philanthropy that has invested in social enterprises -- businesses that have employed more than 10,000 people who would otherwise have been almost completely excluded from the workforce due to histories of incarceration, homelessness or other high barriers. With fresh data from a Mathematica Policy Research study showing that every $1 spent by a social enterprise that provides jobs to those otherwise left out results in $2.23 of benefits to society from reduced incarceration, homelessness and welfare payments, it is time to scale up.

By providing real jobs in a supportive work environment and transitioning those who are prepared into mainstream employment, this approach has had tremendous, positive impact on employment rates and wages. And it is a sustainable model, as most of the on-the-job training costs are covered by business revenue.

Given the hugely disproportionate unemployment rates - 50 - 70 percent for people who have been incarcerated or homeless, among other challenges; and with widespread concern about economic inequity growing -- action is more urgent than ever.

I now can see that companies (and the government) face a significant 'shared value' opportunity in scaling up this work. They can include social enterprise in their supply chains -- buying goods and services from these local enterprises so that they can offer more jobs to people who need them most, and preparing them for long-term employment. And business can source talent from local communities for the prepared, front-line workforce it needs by opening up to hiring those prepared for work, overlooking histories that might exclude them from consideration and providing the kind of work environment in which they can be successful.

Business is increasingly interested in its role in creating the conditions and behaviors that lead to a thriving economy, healthy communities and inclusion in the workforce of everyone who can and wants to work. Efforts like Upskill America, associations like Sustainable Brands and Business for Social Responsibility, recent gatherings hosted by the Institute of Medicine among others on the role of business in society, all drive toward making the real the concepts being promoted by the Shared Value Initiative. This new wine may well be the most valuable vintage bottled in decades.