The term "shared value" was introduced in 2010 by Michael Porter and Mark Kramer, co-founders of FSG, a nonprofit consulting firm specializing in strategy, evaluation, and research.
But what does it mean? Simply put, it is the concept that a company can enhance its own competitiveness while simultaneously alleviating social problems in the communities where it operates.
According to Porter and Kramer, one way in which companies can create shared value opportunities is to enable "local cluster development."
"When a firm builds clusters in its key locations, they also amplify the connection between their success and their communities' success," Porter and Kramer wrote in the January-February 2010 issue of Harvard Business Review.
I am a believer in this approach to creating shared value because it is the basis for the Cisco Networking Academy, our largest and longest-running corporate social responsibility program.
I even spoke about this subject recently at a conference on "Creating Shared Value and Evaluating Social Impact," sponsored by the Center for Socially Responsible Business at Mills College in Oakland, California.
Networking Academy both supports and relies on local "clusters"--partnerships with schools, government agencies, nonprofits, and other organizations--to promote education and career readiness in science, technology, engineering, and math (STEM).
As background, Networking Academy uses cloud technology to deliver information and communications technology (ICT) education. It helps improve individual lives by providing education and career opportunities, and it helps create strong local talent pools of technology professionals to support local industries.
Creating Value for People and Communities
Each year, 1 million students take Networking Academy courses at 10,000 locations in 165 countries worldwide. Many of these individual academies are developed specifically to support a community's unique needs.
In Brazil, for example, Networking Academy partners with government agencies and non-governmental organizations to deliver ICT training to individuals who have traditionally lacked access to such education and career opportunities.
Sergio Bruno, 26, is one such person. He grew up the in SOS Children's Villages in São Paolo, a nonprofit that provides shelter to children at social and personal risk. The Villages adopted the Networking Academy curriculum to help young residents develop skills that can translate directly into jobs and careers in ICT. Sergio participated in the program and is now a network analyst with Alpargatas, a footwear and textile manufacturer.
In addition to helping individuals like Sergio, we are helping the country close a daunting skills gap: Global research firm International Data Corporation (IDC) predicts that by 2015, Brazil will have 100,000 more ICT jobs than qualified people to fill them.
Another example is Saudi Arabia, where young people face one of the most challenging and competitive job markets in the world. The unemployment rate is as high as 35 percent for men in their 20s and those with university degrees. To specifically address this challenge, we partnered with the King Abdulaziz University in Jeddah to integrate Networking Academy coursework into a two-year degree program that gives young men the practical, hands-on training they need to have an advantage over other applicants.
The Business Value in Shared Value
In addition to supporting the local communities and the individuals who live there, Networking Academy is providing value to Cisco by not only driving brand awareness but also creating a competitive job market in regions where our business, and our need for trained ICT professionals, is growing. A skilled ICT workforce also benefits our customers and partners around the world.
Many educators and business leaders in the United States are concerned about the ability of our future workforce to meet the challenges of global economic competition. Pressure is increasing for U.S. schools to offer more rigorous studies in STEM subjects.
To address that concern, we have aligned the Networking Academy curriculum to academic standards around STEM career pathways. The innovative online curriculum supports a broad range of STEM education goals, including increased student engagement through the use of gaming and simulation, better 21st century career skills, and enhanced teacher expertise. These are skills that will create a more innovative, socially aware workforce.
True shared value, according to Porter and Kramer, "is integral to a company's profitability and competitive position. It leverages the unique resources and expertise of the company to create economic value by creating social value."
A rising tide lifts all boats. Training people in ICT and preparing them for sought-after STEM careers, even if they don't ever work at Cisco or for one of our customers or partners, brings positive benefits to the communities around us: living wages, improved quality of life, greater access to healthcare, higher productivity, more opportunities for advancement. These are the characteristics of a successful business - and of healthy communities that surround it.
Please visit csr.cisco.com to learn more about Cisco's approach to creating shared value.