Shared Value Workshop
Richard Welford
Erin Lyon
CSR Asia
“Shared value is not philanthropy,
or sustainability, but a new way to
achieve economic success”
Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review, January-February 2011
“Shared value holds the key
to unlocking the next wave of
business innovation and growth”
Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review, January-February 2011
Meeting social needs
Focus:
Giving to
communities
Investing in
communities
Commercial
activities in
communities
Tools:
Philanthropy
Community
investment
Shared
value
Return:
Recognition
Brand
Reputation
Trust
Profit
Measuring impacts
Shared Value: Introduction
Shared Value is:
Business
Opportunities &
Challenges
Policies and practices that
enhance the competitiveness of
a company while
simultaneously advancing the
economic, environmental and
social conditions in the
communities in which it
operates
Shared Value is NOT:
Social
Needs
Corporate
Assets &
Expertise
• Sharing the value already
created (philanthropy)
• Personal values
• Giving back
• Compliance
Shared Value Initiative Design
Business
Opportunities &
Challenges
 The overlap between the three
circles defines the shared
value opportunity set
 Shared value initiatives must
be designed to:
• Provide a business return
Social
Needs
Corporate
Assets &
Expertise
• Address a specific social need
• Efficiently and effectively
leverage corporate assets
Shared Value Portfolio Framework
Shared Value Initiatives
Social Impact
Social Business Initiatives
Philanthropy
Business First
Business Impact
Responsible companies can have investments in each quadrant
Portfolio Framework
Community-focused
Goals
• Social impact
• Employee engagement
• Community goodwill
Areas of community or
Priority
funding areas employee interest
Business and
Community Aligned
Shared Value
• Brand and reputation
• Social impact
• Employee engagement
• Community goodwill
• Business value creation
• Addressing social needs
• Measured impact
Priority areas that have
clear alignment with the
business
Priority areas that drive
direct business value in
parallel with a social need
Non-financial
tools
deployed
• Employee volunteering
(skilled or non-skilled)
• Physical assets
• Knowledge sharing
• Skills-based employee
volunteering
• Physical assets
• Knowledge sharing
• Advocacy
• Thought leadership
Structure
• Guidelines and budgets
set centrally
• Grant decisions made
centrally and locally
• Strategy and budget set
centrally
• Community investment
decisions made centrally
with local stakeholders
• Strategy, budget and
decisions set centrally
• Dedicated resources
needed locally
Three Levels of Shared Value Creation
Reconceiving
Products and Markets
Redefining
Productivity in Value
Chains
• Design products and
services to address
societal needs
• Societal problems can
create economic costs
in the firm’s value chain
• Open new markets by
serving unmet needs in
underserved
communities
• Synergy increases when
firms approach societal
issues from a shared
value perspective and
invent new ways of
operating to address
them
• Marketing solutions to
social problems
Enabling Local Cluster
Development
• A strong local cluster with
capable local suppliers
and institutions improves
company productivity
• Companies, working
collaboratively, can
catalyze major
improvements in the local
cluster and business
environment
• Strengthens the link
between a company’s and
community’s success
Shared Value Opportunities
Reconceiving Products
and Markets
Redefining Productivity
in Value Chains
Energy &
resource
efficiency
Financial
access
Health and
nutrition
improvement
Energy efficient
product
development
Reaching
underserved
markets
Education
and learning
product
development
Community
development
Agricultural
& rural
development
Limiting
emissions
and waste
Value-added
procurement
Worker
safety and
health
Supply
chain
resilience
Workforce
development
Education
and skills
building
Local
sourcing
Affordable
housing
Enabling Local Cluster
Development
Local institution
and governance
capacitybuilding
Behaviorchange
campaigns
Human rights
strengthening
Common Shared Value Initiatives
Reconceiving Products
and Markets
Redefining Productivity
in Value Chains
Environmental
initiatives
Product
redesign
New models for
delivering
products &
services
Initiatives to
reach
underserved
consumers
Affordability
Enabling Local Cluster
Development
Worker skills
training
Shared value
purchasing
practices
Local
distribution
channel
development
Employee
wellness
initiatives
Materials
reuse &
recycling
programs
Worker
productivity
improvements
Supplier
development
Support for
innovation and
entrepreneurship
Collaboration on
regional business
environment
improvement
Regional small
business
development
Shared Value Across Industries
Reconceiving
Products and Markets
• R&D for drugs, vaccines,
or devices for unmet needs
Pharma &
Med Tech
• Tailored product offerings
to meet local market
conditions
• R&D for alternative, clean
energy sources
Extractives
• Adaptation of existing
products to reduce
negative health impacts
Food &
Agric.
• New products designed to
improve health & wellness
Redefining Productivity
in Value Chains
Enabling Local Cluster
Development
• Locally adapted distribution
to penetrate new markets
and better meet patient
needs
• Health system
strengthening to enable
delivery of needed
products and services
• Employee health and
wellness to boost
productivity and reduce the
spread of diseases like
HIV/AIDS and TB
• Local supplier and
workforce development to
support production
• Local supply chains and
manufacturing to reduce
production costs
• Investments in farmer
productivity and farming
communities
• Local market development
in emerging markets
Important Success Factors
Make the business
case for investment
by demonstrating
potential business
and social value
Engage external
partners for scale,
efficiency, and
continuous learning
and improvement
Identify shared
value opportunities
that link to social
need with business
investments
Measure both
social and
business results
Structure internal
resources and
management to
support initiative
delivery
Shared Value Assessment Criteria
Primary Criteria
Creates
Social
Impact
Delivers
Business
Value
Is Feasible for
the Company
to Achieve
Common Secondary Criteria
Leverages the
Firm’s Assets
Engages
Employees
Engages Key
Stakeholders
Establishes the
Firm as a Leader
Potential Ability to
Scale
Partnership
Opportunities
Reputational
Impacts
Level of Risk
Involved
Shared value can originate from a firm’s philanthropic or community
investment initiatives or from core business activities
Shared Value Project Process
Goals
Identify 2-3 priority issues to address in significant ways to create shared value
Distinguish shared value efforts from other philanthropic investments and initiatives
Process (2-3 months)
1
2
Review Existing
Investments
 Interview initiative
leaders for each
existing initiative
Develop a
Landscape of
Issues
3
Identify
Assessment
Criteria
4
Prioritize Shared
Value Opportunities
 Engage senior
managers on critical
business issues and
link to social issues
 Develop set of
priority
assessment
criteria
 Develop a high level
plan of potential
activities and business
and social impacts
 Assess initiatives
against business
opportunities and
social value
 Conduct external
interviews with
stakeholders
 Evaluate and
finalize 4–5 priority
criteria
 Conduct a workshop
to prioritize 2-3 shared
value opportunities to
pursue
 Conduct working
session with
management
 Develop list of
issues with shared
value potential
 Consider
indicators of
success
 Begin implementation
Typical Project Implementation
Goals
Develop business plans for priority shared value initiatives identified in the previous phase
Provide guidance on business and social outcomes, key activities, internal assets and capabilities
leveraged, and external partners for a 3+ year time horizon
Process (2-5 months)
1
2
Facilitate an Initial
Workshop
3
Define the Need and
Leverage Points
 Develop high level
sketch and
hypotheses for the
SV initiative
 Conduct secondary
research and
interviews or field
visits
 Refine key
questions, research
paths, and
stakeholder
engagement plans
 Conduct interviews
with business leaders
 Conduct working
session with client
 Refine high-level
sketch to reflect new
findings
4
Research Model
Programs
 Interview program
sponsors of similar
programs and / or
issue experts and
develop case studies
of similar programs
 Model expected
business and social
impacts
 Review case studies
and refine design
Develop Final
Business Plan
 Profile and engage
potential partners
 Facilitate workshop to
for a detailed
implementation
strategy
 Develop final business
plan, including
targeted outcomes,
activities, budgets and
risk mitigation plans
Case Study: Godrej
• Large Indian conglomerate headquartered in Mumbai
• Operates in diverse sectors such as real estate, consumer products,
industrial engineering, appliances, furniture, security and agricultural
products, amongst others
• 2012 revenue of US$70B; market capitalization of US$96B
Shared Value Opportunities
Existing social programs and new shared value ideas were
assessed by the social and business value they created
>100,000 individuals meaningfully impacted
Wellness
@ work
BOP
products
Flat-packed
products
Engineer
technical
training
Three priority areas emerged from
the analysis
Rural
electrification
1
Farmer
services
Zero
asbestos
Ensuring Employability
Engine
fuel
efficiency
2
Creating a Greener
India
Social Impact
HIV/AIDS
Awareness
3
Public
gardens
Business Impact
Existing Godrej Initiatives
Water
conservation
>5% increase in revenue or >5%
reduction in costs
New Initiative Ideas from Focus Groups
Innovating for Social
and Environmental
Impact
External Research and Validation
1
2
Ensuring Employability
Vocational training for 1M
underserved rural and
urban youth in strategic
business areas
3
Creating a Greener India
Achieve zero waste, carbon
neutrality, positive water
balance and advocate for
better practices among
industry SMEs
Innovation
Introduce products that help
make progress towards the
Millennium Development Goals
or that improve environmental
impact relative to alternate
products on the market
Internal and External Context
Business Issues
• Shortage of skilled workers in key Godrej
Group industries – need 500-1000 skilled
workers/year for the next 10 years
• Signatory to Confederation of Indian
Industry (CII) Mission on Sustainable
Growth (MSG)
• Growth from new and innovative sources –
e.g., growing awareness of and demand for
green products, huge market opportunity at
bottom of pyramid
Social trends
• Youth un/underemployment
• Unsustainable SME business practices
• Major environmental issues in India: water,
energy, pollution
• Unmet needs at the bottom of the pyramid
Access to clean water
Prevention of infectious disease
Access to renewable electricity and
cooking fuel sources
Low cost and durable housing solutions
Measuring Shared Value
FOCUS
Shared Value
Sustainability
Impact
Assessment
Reputation
Compliance
WHAT TO
MEASURE?
WHY
MEASURE?
FOR
WHOM?
• Joint business and social
value creation
• Grow the total shared value
created
• Primarily for management
• Efficiency in the use of input
factors and improved product
and community impacts
• Minimize negative externalities
and augment positive impacts
• Management
• The long term social and
economic development
impacts of operations and/or
philanthropy
• Track progress on social and
economic development impact
• How societal impacts
contribute to company
reputation
• Manage reputation
• Primarily for management
• Compliance with laws and
voluntary policies, standards,
and codes
• Ensure adoption and
compliance
• Management
• Maintain a license to operate
• Maintain a license to operate
• Maintain a license to operate
• Targeted communications
to external stakeholders
• Communication to external
stakeholders
• Communication to external
stakeholders and often
regulators
• Communication to external
stakeholders
Measurement Framework
Business and Social Outcomes
LEVELS OF SHARED VALUE
Reconceiving products
and markets
Redefining productivity
in the value chain
BUSINESS RESULTS
• Increased revenue
• Improved health
• Increased market share
• Reduced carbon footprint
• Increased market growth
• Improved nutrition
• Improved profitability
• Improved education
• Improved productivity
• Reduced energy use
• Reduced operating costs
• Reduced water use
• Secured supply
• Reduced raw materials
• Improved quality
• Improved job skills
• Improved profitability
• Improved employee incomes
• Reduced costs
• Secured supply
Enabling cluster
development
SOCIAL RESULTS
• Improved distribution
• Improved workforce access
• Improved profitability
• Improved education
• Increased job creation
• Improved health
• Improved incomes
Creating a Shared Value Enterprise
Five Key Ingredients for Shared Value Innovation
Purpose
1
Elevate the purpose of the
business and integrate it into the
company’s competitive positioning
Defined Need
2
Identify and understand specific
needs that the company is well
placed to address at scale
Co-Creation
3
Integrate partners with unique
expertise in the social problem
throughout the innovation cycle
Measurement
4
All ingredients
are needed;
each reinforces
the others
Anticipate, validate and continuously
measure the link between social
and business outcomes
Structure
5
Integrate or shield innovation
structures based on the maturity
of other ingredients
Enabling Conditions
Set a shared value strategy and
goals beyond “doing well by doing
good”
Leverage internal and external
communications to build a culture
where shared value is recognized
and valued, in dialogue with society
Design enterprise-wide
structures to manage and govern
shared value activities
Recruit shared value talent with
business acumen, passion to make
a difference, and experience in
solving social problems
Motivate and incentivize
individuals to seek shared value
opportunities and maximize their
success
Case Study: Nutrition
Nestle’s Nutrient Product Strategy
Issue
Malnutrition:
An urgent social
need requiring a
business
response
70% of women and
57% of children
anemic in India
Nestle’s Solution
MicronutrientReinforced Spices
Includes iron, iodine,
and vitamin A
Results

138M servings sold

87% growth

Targeted studies
that track the
specific nutritional
and health impact
of Nestlé fortified
foods
Case Study: Nestlé
1
2
3
4
5
Purpose
Defined Need
Co-Creation
Purpose is embedded in corporate strategy
“A nutrition, health and wellness company”
Top issues guide innovation and investment focus
“Rural development, water and nutrition”
Internal, external advisory councils guide strategy
“CSV alignment board, external CSV advisory council”
Measurement
Measurement unlocks value and informs investors
“Insights have allowed us to increase milk supply…”
Structure
Managers are incentivized to find new opportunities
“Our 2013 plans to meet nutrition needs of India”
“The purpose of the
corporation must be
redefined as creating
shared value…”
Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review, January-February 2011