Use Existing Business Systems to Create Shared Value Strategy

06/15/2015 02:15 am ET | Updated Jun 14, 2016

We have a lot to do. Every day.

It's often not the risk of change that stops us from evolving, it's the specter of shifting systems and processes; it's finding enough time in everyone's diaries. Like moving mountains.

But sometimes change really is on the doorstep. We either move early and leverage the impact, awareness and excitement that accompanies the novel and desirable, or we bunker down as long as we can and get the last seat on the bus. The late comers jump on, but the ride is nowhere near as good as the one the guys at the front are getting.

This is how I see the current status of shared value strategy adoption. There are a handful of companies out in front, followed by a group that measured the risk and are starting to evolve (albeit at a near glacial pace).

Then there are many who are replacing the CSR name plate but not the strategy. They are retelling an old story hoping to cash in on the zeitgeist.

It doesn't have to be that way. The decision to adopt the creation of shared value as a business strategy does not have to be a "leap of the cliff" moment.

Adjustments to existing business systems and tools will steer the business toward shared value creation.

New and different people need to be in the room, but the power of this new approach is that it makes sense to more professions than CSR did. Although they are critical to its success, it is not the sole domain of the sustainability and corporate affairs teams. More people will own its success.

Getting them across the line requires education on two different perspectives. Firstly, that social value creation is good (and maybe even transformative) business. Secondly, that they don't have to change what they do, just the questions they ask.

In developing our Social Thinking model, we have found existing systems that, reoriented or subtly augmented, will create shared value. Here are three of them.

1. Product innovation

We know that 50 percent of consumers will pay more for products and services created by a company that gives back to society. So when approaching product and service design it pays to consider the social dimension: the unmet social needs of people in regional locations and the social impact of the production and distribution process.

We also know that micro-iterations of products will render a company uncompetitive when facing the disruptive innovation, rapid prototyping and fast market release of commercialized ideas and designs. From darling to dinosaur in a matter of months. To be sustainable medium- to long-term, a company has to find ways of solving large problems at scale or find ways to build a brand admired for its contribution to society.

Fortunately the Human Centered Design model has been around for many years, and we can be confident it works. It applies a brilliantly simple process and framework that places people and their needs at the start of the design process, as well as testing viability and capacity.

2. Sponsorship

The spending on sponsorship globally in 2011 was estimated by the World Bank's Independent Evaluation Group (IEG) to be $46.3 billion. Contrast that with OECD estimates of the value of aid investment in 2013 of $100.5 billion being spent trying to solve social and economic problems. The world spends the equivalent of almost half its total aid budget on sponsoring football matches, festivals and celebrities.

Just imagine the impact we can generate by redirecting sponsorship investment to social causes.

  • ¾ Turning short-term PR and brand awareness into long term reputation and brand equity
  • ¾ Attracting a new audience of socially-aware consumers who will be willing advocates for the brand
  • ¾ Higher employee engagement as they take pride in the company's change in strategy
  • ¾ Measurable impact on social issues the company can contribute to solving

It's time to look at sponsorship criteria. Commercial sponsorship evaluation models are sophisticated but are missing opportunities. The ROI metrics include brand awareness, market access, customer acquisition, etc. -- most with a genuine attempt at dollar values. What about social impact and the potential to furl new products and services as social entrepreneurs seek out the company.

Who would you rather sponsor? The Kardashians or celebrities with social brand power like these?

Moving from a cash for awareness model to a cash for impact model still builds brand equity while delivering other benefits.

That's not aid or community relations, it is smart economics. It leads to measurable and sustainable, long-term growth beyond traditional market cycles. It attracts shareholder investment and government support.

3. Lean thinking

Lean manufacturing, which originated as the Toyota Production System, is a management philosophy that aims to identify and eliminate any part of the production and delivery process that does not add value to the end customer. Manufacturing Lean is now common in government, health and infrastructure contexts.

Lean has two guiding principles: never-ending alignment with the customer, and a never-ending quest to identify and solve problems.

Today, consumers are increasingly insisting on products and services that not only meet quality, delivery and cost requirements, but also social and environmental standards.

By redefining "customer value," the lean cycle can create social and economic benefit along the value chain, such as re-evaluating how the design of the production system (logistics, engineering, operational policy) not only results in higher quality, labour efficiency, inventory levels, lead times, etc. but also drives improvements in resource consumption, pollution, employment, availability of internal and external skills, and external societal impacts, etc.

It comes down to the questions asked at the beginning of the lean journey and the capacity of staff to see opportunities.

Every business has a positive social impact. Once you measure it, the evidence supports further exploration and investment. Start small, dream large.

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