Economic and Social Development:
The New Learning
Professor Michael E. Porter
Harvard Business School
VII Americas Competitiveness Forum
Panama City, Panama
October 4, 2013
This presentation draws on ideas from Professor Porter’s articles and books, in particular, The Competitive Advantage of Nations (The Free Press, 1990), “Building the Microeconomic
Foundations of Competitiveness,” in The Global Competitiveness Report (World Economic Forum), “Clusters and the New Competitive Agenda for Companies and Governments” in On
Competition (Harvard Business School Press, 2008), “Creating Shared Value” (Harvard Business Review, Jan 2011), the Social Progress Index Report (Social Progress Imperative)
and ongoing related research. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means - electronic, mechanical,
photocopying, recording, or otherwise - without the permission of Michael E. Porter. For further materials, see the website of the Institute for Strategy and Competitiveness
(www.isc.hbs.edu), FSG (www.fsg.org) and the Social Progress Imperative (www.socialprogressimperative.org).
The Dual Challenges of Development
Social
Development
Economic
Development
• There is a powerful connection between economic and social
development, that goes in both directions
• Successful development requires improving the economic and social context
simultaneously
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Copyright 2013 © Professor Michael E. Porter
Economic and Social Development: The New Learning
1. Strategy for Economic Development
2. Measuring Social Development
3. Business as a Driver of Social and Economic
Development
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Copyright 2013 © Professor Michael E. Porter
Prosperity Performance
Latin America and the Caribbean
PPP-Adjusted GDP per
Capita, 2011 ($USD)
$20,000
Average: 4.68%
Bahamas
Mexico
$18,000
Chile
Panama
Argentina
Suriname
(11.79%, $16,670)
St Kitts & Nevis
$16,000
Uruguay
Antigua & Barbuda
$14,000
Venezuela
$12,000
Trinidad and Tobago
Costa Rica
$10,000
Grenada
$8,000
Guatemala
Brazil
St Vincent &
The Grenadines
Dominican Republic
Colombia
Dominica
Ecuador
Belize
St Lucia
Cuba
Peru
Average: $10,583
Guyana
$6,000
El Salvador
Jamaica
Paraguay
Bolivia
$4,000
Nicaragua
$2,000
$0
0.0%
Honduras
Haiti
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Growth in Real GDP per Capita (PPP-adjusted), CAGR, 2001-2011
9.0%
10.0%
Source: EIU (2012), author’s calculations
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Copyright 2013 © Professor Michael E. Porter
Competitiveness and Economic Development
• Successful economic development only occurs by improving competitiveness
A nation (or state) is competitive to the extent that firms operating there are able
to compete successfully in the regional and global economy while supporting
high and rising wages and living standards for the average citizen
• Competitiveness depends on the long-run productivity of a location as a
place to do business
- Productivity of existing firms and workers
- Ability to achieve high participation of working age citizens in the
workforce
• Competitiveness is not:
- Low wages
- A weak currency
- Jobs per se
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Copyright 2013 © Professor Michael E. Porter
What Determines Competitiveness?
Endowments
•
Endowments, including natural resources, geographical location, population, and country size, create
a foundation for prosperity, but true prosperity arises from productivity in the use of endowments
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Copyright 2013 © Professor Michael E. Porter
What Determines Competitiveness?
Macroeconomic Competitiveness
Sound Monetary
and Fiscal Policies
Endowments
• Macroeconomic competitiveness sets the economy-wide context for productivity to emerge, but
is not sufficient to ensure productivity
• Endowments, including natural resources, geographical location, population, and country
size, create a foundation for prosperity, but true prosperity arises from productivity in the use
of endowments
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Copyright 2013 © Professor Michael E. Porter
What Determines Competitiveness?
Microeconomic Competitiveness
Quality of the
Business
Environment
State of Cluster
Development
Sophistication
of Company
Operations and
Strategy
Macroeconomic Competitiveness
Sound Monetary
and Fiscal Policies
Endowments
• Productivity ultimately depends on improving the microeconomic capability of the economy and
the sophistication of local competition revealed at the level of firms, clusters, and regions
• Macroeconomic competitiveness sets the economy-wide context for productivity to emerge, but
is not sufficient to ensure productivity
• Endowments, including natural resources, geographical location, population, and country
size, create a foundation for prosperity, but true prosperity arises from productivity in the use
of endowments
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Copyright 2013 © Professor Michael E. Porter
Improving the Quality of the Business Environment
Context for
Firm Strategy
and Rivalry
• Local rules and incentives that
encourage investment and productivity
Factor
(Input)
Conditions
• Access to high quality business
inputs
–
–
–
–
Qualified human resources
Capital availability
Physical infrastructure
Scientific and technological
infrastructure
– e.g. incentives for capital investments,
IP protection, sound corporate
governance standards
Demand
Conditions
• Open and vigorous local competition
− Openness to foreign competition
− Strict competition laws
• Sophisticated and demanding local
needs
Related and
Supporting
Industries
– e.g., Strict quality, safety, and
environmental standards
• Availability and quality of suppliers and
supporting industries
• Many things matter for competitiveness
• Successful economic development is a process of successive upgrading, in which the
business environment improves to enable increasingly sophisticated ways of competing
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Developing Clusters
Tourism in Cairns, Australia
Public Relations &
Market Research
Services
Travel Agents
Tour Operators
Food
Suppliers
Attractions and
Activities
Hotels
Government Agencies
e.g., Australian Tourism
Commission,
Great Barrier Reef Authority
Local
Transportation
e.g., theme parks,
casinos, sports
Souvenirs,
Duty Free
Property
Services
Maintenance
Services
Local Retail,
Health Care, and
Other Services
Airlines,
Cruise Ships
Restaurants
Banks,
Foreign
Exchange
Educational Institutions
Industry Groups
e.g., James Cook University,
Cairns College of TAFE
e.g., Queensland Tourism
Industry Council
Sources: HBS student team research (2003) - Peter Tynan, Chai McConnell, Alexandra West, Jean Hayden
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What Determines Competitiveness?
Microeconomic Competitiveness
Quality of the
Business
Environment
State of Cluster
Development
Sophistication
of Company
Operations and
Strategy
Macroeconomic Competitiveness
Human Development
and Effective
Political Institutions
Sound Monetary
and Fiscal Policies
Endowments
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Copyright 2013 © Professor Michael E. Porter
Geographic Influences on Competitiveness
Nation
Regions and Cities
• Regions are the most important economic unit for competitiveness in larger countries,
especially countries beyond subsistence development
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Copyright 2013 © Professor Michael E. Porter
Prosperity of Mexican States
$180,000
Campeche
Mexico Real Growth
Rate of GDP per Capita:
1.36%
(-4.9%, $333,700)
$160,000
Distrito Federal
Nuevo Leon
Gross Domestic Product per Capita , 2010
(in constant 2003 Mexican Pesos)
$140,000
$120,000
Tabasco
Coahuila
$100,000
Baja California Sur
Querétaro
Aguascalientes
Sonora
Quintana Roo
Tamaulipas
Colima
Chihuahua
$80,000
Jalisco
Baja California
Durango
Guanajuato
Yucatán
Morelos
$60,000
Mexico GDP per Capita:
$77,212
Sinaloa
San Luis Potosí
México
Puebla
Michoacán
Nayarit
Veracruz
Zacatecas
Hidalgo
Tlaxcala
Chiapas
$40,000
Guerrero
Oaxaca
$20,000
$0
-1.5%
-0.5%
0.5%
1.5%
2.5%
3.5%
4.5%
Real Growth Rate of GDP per capita, 2003-2010
Source: INEGI. Sistema de Cuentas Nacionales de México
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Copyright 2013 © Professor Michael E. Porter
Traded Cluster Composition of the Puebla Economy
16.0%
Overall change in the Puebla Share of
Mexican Traded Employment: +0.09%
14.0%
Construction
Materials
Textiles
Puebla’s national employment share, 2008
Apparel
12.0%
Automotive
10.0%
Employment
2003-2008
Added Jobs
8.0%
Building Fixtures,
Equipment and Services
Lost Jobs
Processed
Food
Furniture
6.0%
Education and
Knowledge Creation
4.0%
Leather and
Related Products
Forest Products
Puebla Overall Share of Mexican
Traded Employment: 4.20%
Distribution Services
Heavy Machinery
2.0%
0.0%
-2.0%
Information
Technology
Chemical
Products
-1.0%
0.0%
1.0%
Change in Puebla’s share of National Employment, 2003 to 2008
2.0%
3.0%
Employees 5,000 =
Source: Prof. Michael E. Porter, Cluster Mapping Project, Institute for Strategy and Competitiveness, Harvard Business School; Richard Bryden, Project Director. Contributions by Prof. Niels Ketelhohn.
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Copyright 2013 © Professor Michael E. Porter
The Role of Regions in Economic Development
• Many essential levers of competitiveness reside at the regional level
• Regions specialize in different sets of clusters
• Regions are a critical unit in competitiveness
• Each region needs its own distinctive strategy and action agenda
– Business environment improvement
– Cluster upgrading
– Improving institutional effectiveness
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Copyright 2013 © Professor Michael E. Porter
Geographic Influences on Competitiveness
Neighboring Countries
Nation
Regions and Cities
• Economic coordination and integration with neighboring countries is a major force of
productivity and competitiveness
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Copyright 2013 © Professor Michael E. Porter
Economic and Social Development: The New Learning
1. Strategy for Economic Development
2. Measuring Social Development
3. Business as a Driver of Social and Economic
Development
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Copyright 2013 © Professor Michael E. Porter
Social Development
What is Social Progress?
Social progress is the capacity of a society to meet the basic
human needs of its citizens, establish the building blocks that
allow citizens and communities to enhance and sustain the
quality of their lives, and create the conditions for all
individuals to reach their full potential
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Copyright 2013 © Professor Michael E. Porter
Driving Social Development
• Economic progress has a positive impact on social progress, but
rising GDP per Capita does not guarantee social progress
• We must measure social progress directly in order to understand
performance and inform improvement
• The Social Progress Index is a new tool to do so
− Separate from economic indicators
− Holistic framework
− Outcomes rather than inputs
− Relevant to all countries
• By separating social and economic progress, we can better
understand overall country performance and how social and
economic performance are linked
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Copyright 2013 © Professor Michael E. Porter
Social Progress Index Model
Social Progress Index
Basic Human Needs
Foundations of Wellbeing
Opportunity
Nutrition and Basic Medical Care
Access to Basic Knowledge
Personal Rights
Air, Water, and Sanitation
Access to Information and
Communications
Personal Freedom and Choice
Shelter
Health and Wellness
Inclusion and Equity of Opportunity
Personal Safety
Ecosystem Sustainability
Access to Higher Education
Does a country provide
for its people’s most
essential needs?
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Are the building blocks in
place for individuals and
communities to enhance
and sustain wellbeing?
20
Is there opportunity for
all individuals to reach
their full potential?
Copyright 2013 © Professor Michael E. Porter
Social Progress Index: 2013 Rankings
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
Sweden
United Kingdom
Switzerland
Canada
Germany
United States
Australia
Japan
France
Spain
Korea, Rep.
Costa Rica
Poland
Chile
Argentina
Israel
Bulgaria
Brazil
United Arab Emirates
Turkey
Dominican Republic
Colombia
Thailand
Peru
Mexico
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26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
21
Philippines
Paraguay
Tunisia
Georgia
Viet Nam
Jordan
China
Russian Federation
Kazakhstan
Botswana
Sri Lanka
Morocco
Indonesia
South Africa
Egypt, Arab Rep.
Ghana
Bangladesh
India
Senegal
Kenya
Rwanda
Mozambique
Uganda
Nigeria
Ethiopia
Copyright 2013 © Professor Michael E. Porter
Social Progress Index vs. GDP per Capita
70
Sweden
65
United Kingdom
Social Progress Index
South Korea
60
Costa Rica
Spain
Japan
France
Chile
Switzerland
Canada
United States
Germany
Australia
Poland
Israel
Argentina
Bulgaria
55
Dominican Republic
Thailand
Brazil
Paraguay
Colombia
Turkey
50 Philippines Jordan
Peru
Mexico
Georgia
Tunisia
Russia
Vietnam
China
Kazakhstan
Sri
Lanka
Morocco
Botswana
45 Indonesia
Egypt
Ghana
South Africa
Senegal
40
India
35
Kenya Bangladesh
Rwanda
Mozambique
Uganda
Nigeria
Ethiopia
United Arab Emirates
30
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
PPP-Adjusted GDP per Capita, 2011 ($USD)
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Copyright 2013 © Professor Michael E. Porter
Brazil Social Progress Scorecard
Overall Rank 18
Basic Human Needs
30
Foundations of Wellbeing
20
Opportunity
16
Nutrition and Basic Medical Care
27
Access to Basic Knowledge
26
Personal Rights
15
Undernourishment
Depth of food deficit
Maternal mortality rate
Stillbirth rate
Child mortality rate
Prevalence of tuberculosis
29
31
25
23
24
24
Adult literacy rate
Primary school enrollment
Secondary school enrollment
Women's mean years in school
32
25
19
30
Political rights
Freedom of speech
Freedom of assembly/association
Private property rights
Women's property rights
17
12
1
18
1
Air, Water and Sanitation
28
Access to Information and Communications
20
Personal Freedom and Choice
16
Indoor air pollution attributable deaths
Outdoor air pollution attributable deaths
Access to piped water
Rural/urban access to improved water source
Access to improved sanitation facilities
Access to wastewater treatment
31
18
16
34
29
24
Mobile telephone subscriptions
Internet users
Fixed broadband subscriptions
Press Freedom Index
14
20
22
17
Basic religious freedoms
Contraceptive prevalence rate
Access to childcare
Freedom over life choices
26
3
17
13
Shelter
23
Health and Wellness
31
Inclusion and Equity of Opportunity
Availability of affordable housing
Access to electricity
28
22
Personal Safety
46
Homicide rate
Level of violent crime
Perceived criminality
Political terror
47
39
36
38
Life Expectancy
Obesity
Cancer death rate
Deaths from cardiovascular disease & diabetes
Deaths from HIV
Availability of quality healthcare
27
27
27
22
45
Equity of opportunity for ethnic minorities
Women treated with respect
Community safety net
Tolerance of immigrants
Tolerance for homosexuals
1
43
9
13
6
Ecosystem Sustainability
21
Access to Higher Education
33
Ecological footprint of consumption
CO2 emissions per capita
Energy efficiency (use per $1,000 GDP)
Water withdrawals per capita
29
20
29
20
Tertiary school enrollment
Female tertiary enrollment
33
31
*
2
Brazil GDP per capita rank is 24th among
sample of 50 countries
*Safety net, tolerance and respect for minorities, women, and disadvantaged
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Copyright 2013 © Professor Michael E. Porter
Social Progress vs. Government Expenditure (% of GDP)
70
65
Switzerland
Sweden
Canada
United States
Social Progress Index
60
Australia
Costa Rica
55
Dominican
Republic
Peru
50
Philippines
45
Chile
Bulgaria
Thailand
Colombia
Turkey
Georgia
Mexico
Tunisia
China
Jordan
Viet
Nam
Kazakhstan
Botswana
Sri Lanka
South Africa
Morocco
France
Spain
Poland
Israel
Brazil
Paraguay
Indonesia
India
40
Japan
Argentina
United Arab Emirates
United Kingdom
Germany
Korea, Rep.
Bangladesh
Ghana
Egypt, Arab Rep.
Senegal
Kenya
Rwanda
Uganda
35
Russian Federation
Mozambique
Nigeria
Ethiopia
30
25
20
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
60%
Government Expenditure (% GDP)
Government Expenditure Source: 2013 Index of Economic Freedom
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Copyright 2013 © Professor Michael E. Porter
The Social Progress Index: Key Findings
• Economic development is necessary but not sufficient as a
measure of national performance
• Just as economic development helps social progress, social
progress can enable sustainable economic development
• Some approaches to economic development are less effective
than others in advancing social progress, and even
counterproductive, and vice versa
• The amount of government spending (as a percent GDP) is an
incomplete explanation for social progress performance
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Copyright 2013 © Professor Michael E. Porter
The Social Progress Imperative:
Driving to Action
The Social Progress Imperative is not just an Index, but a global
effort designed to catalyze action at the country level. It aims
to form and support National Committees of leaders and
stakeholders in each country, and work jointly with them to
mobilize policy changes and private sector initiatives to
advance social progress.
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Copyright 2013 © Professor Michael E. Porter
Economic and Social Development: The New Learning
1. Strategy for Economic Development
2. Measuring Social Development
3. Business as a Driver of Social and Economic
Development
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Copyright 2013 © Professor Michael E. Porter
The Role of Business in Society
• Only business can create wealth and prosperity
• Business is facing growing scrutiny as the cause or contributor to
many of today’s societal challenges, not the solution
• Corporate social responsibility efforts are greater than ever, but the
legitimacy of business has fallen
• Government and NGO’s alone lack sufficient resources and
capabilities to fully meet social challenges
We need a new approach
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The Role of Business in Society
Evolving Approaches
Philanthropy
• Donations to worthy
social causes
• Volunteering
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Copyright 2013 © Professor Michael E. Porter
The Role of Business in Society
Evolving Approaches
Philanthropy
Corporate Social
Responsibility
(CSR)
• Donations to worthy
social causes
• Compliance with
community standards
• Volunteering
• Good corporate
citizenship
• “Sustainability”
• Mitigate risk and
harm
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Copyright 2013 © Professor Michael E. Porter
The Role of Business in Society
Evolving Approaches
Corporate Social
Responsibility
(CSR)
Creating Shared
Value
(CSV)
• Donations to worthy
social causes
• Compliance with
community standards
• Volunteering
• Good corporate
citizenship
• Address societal needs
and challenges with a
business model
Philanthropy
• “Sustainability”
• Mitigate risk and
harm
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Copyright 2013 © Professor Michael E. Porter
CSR versus Shared Value
Fair Trade
CSR
CSV
Fair Trade
Transforming Procurement
• Paying a higher price to farmers
for the same products
• Collaborate with farmers to
improve quality and yield
• Certification as a fair trade
company
• Supporting investments in
technology and inputs
• Higher prices for better quality
• Higher yield increases
quantity produced
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Social Needs and Economic Value Creation
Environmental
Improvement
Energy
Efficiency
Education
Water Use
Company
Productivity
Community
Economic
Development
Workforce
Skills
Health
Affordable
Housing
Worker Safety
• Social deficits and environmental impact create economic costs for companies
• Community weaknesses affect company productivity
• Social needs represent the largest market opportunities
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Copyright 2013 © Professor Michael E. Porter
Levels of Shared Value
I. Meeting social needs through products and underserved
customers
II. Redefining productivity in the value chain
III. Improving the local and regional business environment
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Copyright 2013 © Professor Michael E. Porter
Creating Shared Value in Products and Markets
Jain Irrigation Systems
• Drip irrigation equipment for small farmers in Africa and India
• Serves more than 4 million farmers worldwide as of 2012
• Reduces water use by over 40%
• Enables higher crop yields that improve food security while raising
farmers’ income
• Jain is now a $820 million company that is rapidly growing
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Copyright 2013 © Professor Michael E. Porter
Creating Shared Value in Products and Markets
Becton Dickinson Health Worker Safety
• There is pressing need to protect health workers from needle stick
injuries that spread HIV and other infections
• BD redesigned syringes to prevent accidental sticks
• Substantial reduction in health worker injuries
• $2 billion in revenues in 2012, representing 25% of the company’s
revenues
• Largest source of company growth over the past two decades
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Shared Value in the Value Chain
Fibria, Brazil
• Fibria, the world’s leading manufacturer of chemical pulp, utilizes planted
eucalyptus trees rather than native and old growth forests, and cultivation
methods that incorporate partial native habitat
• The company also encourages small-scale producers near its mills to plant
eucalyptus in conjunction with other crops, assisting them with technical
training and inputs
• Fibria achieves far greater land and water efficiency versus old growth forest
production and traditional methods
• Small scale producers currently contribute 27% of the raw materials utilized in
Fibria mills, improving efficiency
• 4000 households have significantly increased their income
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Shared Value in the Value Chain
Consorcio Panamá Frío, Panamá
• Consorcio Panamá Frío, the largest food supplier in Panamá, is committed to
strengthening the cold value chain while improving the productivity of its
suppliers
• The company provides technical assistance to farmers to enable them to meet
minimum quality standards and efficient flow of products to Consorcio’s
collection centers
• The company has reduced waste of perishable food products and improved
quality
• Farmers have achieved an average of 21% improvement in good
agriculture practices, 26% improvement in proper use of agricultural
supplies and 68% improvement in cash management
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Improving the Business Environment: Upgrading Channels
Arca Continental
• Arca Continental is the second largest bottling company in Latin America,
and one of the largest Coca-Cola bottlers in the world
• Arca Continental established a program to train and invest in the microentrepreneur retailers who sell more than 60% of the Company’s products,
including management, sales and marketing and merchandising
• Invests in low energy use coolers and fixture improvements
• Participating retailers register sales increases of 25% or more, with improved
customer satisfaction, leading to similar increases in the sales of Arca’s
products
• Arca Continental recovers its investment in 6 months or less
• Beginning in Mexico, the program is being extended to Argentina and
Ecuador
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Copyright 2013 © Professor Michael E. Porter
Integrating Across Levels
Novartis in Rural India
Reconceiving Products
and Markets
• Portfolio of the
appropriate and
affordable medicines
from the company’s
patented, generics, and
over-the-counter (OTC)
businesses
• Packaging of OTC
medicines to address
consumers’ limited
ability to spend out-ofpocket on healthcare
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Redefining Productivity
in Value Chain
Enabling Local Cluster
Development
• Local sales teams that
know the culture and
speak the dialect,
understand needs and
reduce mistrust
• A dense network of local
distributors to reduce
stock-outs
• A community health
education program to
address lack of healthseeking behavior
• Frequent health camps
for physicians in rural
areas
• Microfinance partners to
improve healthcare
infrastructure and access
to working capital
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Copyright 2013 © Professor Michael E. Porter
New Stakeholder Roles and Relationships
• The focus on social impact unites the goals of companies, NGOs, and government
• Shared value fosters new relationships between companies, philanthropists, NGOs, and
government in addressing social issues
Traditional Roles
New Roles
NGOs
• Receive grants to deliver
social services
• Partner in implementing new shared value
business models
Governments
• Tax and regulate business;
operate social programs
• Make platform investments and support
shared value strategies; regulate to
encourage shared value solutions
Philanthropists
• Donate to charitable causes
• Partner with companies and NGOs to
catalyze shared value initiatives
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Creating Shared Value: Deciding Where to Concentrate
Nestlé
Nutrition
Rural
Development
Water
• Opportunities to create shared value are inevitably
tied closely to a company’s particular businesses
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Putting Shared Value Into Practice
Dow Chemical
• Dow has a legacy of innovation to solve problems (“solutionism”)
• It recognized that global social issues represent huge market opportunities
• The “Breakthroughs to World Challenges” program was created
– Each business unit is challenged to apply “solutionism” to a range of global
problems inspired by the MDGs
Example
• Dow developed Omega-9 canola and sunflower seeds that produce cooking
oil with no trans fats and low saturated fats
• The technology yields twice the oil per hectare for farmers than soybeans
• The oils have longer shelf life and usage life for food processors
• One of Dow’s biggest selling product lines with total revenues of approximately
$700 million
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Copyright 2013 © Professor Michael E. Porter
Shared Value and Company Strategy
Whole Foods Markets
Value Proposition
•
•
•
Distinctive Activities
•
Natural, fresh, organic, and freshly prepared foods and
health items with excellent service at premium prices
Cater to specialized nutritional requirements (gluten
allergies, vegan, etc.)
Serve educated customers who are passionate about
food and a healthy lifestyle
•
•
•
•
•
•
•
•
•
Well-lit, inviting supermarket store formats with
appealing displays and extensive prepared foods
sections
Produce section as “theater”
Café-style seating areas with wireless internet for
meals and meetings
Each store carries local produce and has the authority
to contract with the local farmers. Company provides
low-interest loans if needed
Nutrition information and education provided to
shoppers along with products
High touch in-store customer service via
knowledgeable, flexible, and highly motivated
personnel
Flat compensation structure
Own seafood procurement and processing facilities to
control quality, sustainability and price from the boat to
the counter
Heavy emphasis on environmental sustainability in all
activities
Emphasis on supporting community development
• Whole Foods is the most economically successful food retailer in North America
• Successful strategies in the future will embody a significant shared value dimension
20131004—Panama Development Presentation—FINAL
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Copyright 2013 © Professor Michael E. Porter
Purpose Based Strategic Positioning
Traditional Positioning
New Positioning
Nestlé
• Food and Beverage
Company
• Nutrition Company
Nike
• Footwear and
Apparel Company
• Health and Fitness Company
Thermo
Fisher
• Scientific and Laboratory
Instruments Company
• Making the World Healthier,
Cleaner, and Safer
• A clear social purpose opens up new opportunities for growth and profitability, while
motivating and attracting consumers, business partners, employees, shareholders, and
the public
20131004—Panama Development Presentation—FINAL
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Copyright 2013 © Professor Michael E. Porter
The Purpose of Business
• Our purpose in business is to create shared value for society, not economic
value for its own sake
• Businesses acting as businesses, not as charitable givers, are arguably the
most powerful force for addressing many of the pressing issues facing our
society
• Shared value will give rise to far broader opportunities for economic value
creation
• Shared value thinking will drive the next wave of innovation, productivity, and
economic growth
• A transformation of business practice around shared value will give purpose to
the corporation and represents our best chance to legitimize business again
20131004—Panama Development Presentation—FINAL
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Copyright 2013 © Professor Michael E. Porter