Two of the first articles I remember reading in my MBA strategy class (and I think the same two read by most MBA students today…) were “Five Forces” and “What is Strategy?” by Harvard Business School professor Michael Porter. Today, Porter is still talking about business strategy, but through a different lens. Porter is now focusing on how businesses can create “shared value” for both their shareholders and for society by developing new strategies to solve global challenges by harnessing the full assets and expertise of their organizations.
Three years ago, I attended the first “Shared Value Summit,” a small gathering in Boston with Professor Porter and the firm FSG, to discuss the concept and begin the conversation of what it would take to meaningfully move from theory to practice. At the time, there was a heated debate in CSR circles around whether this concept really was new—whether it was as different from corporate social responsibility (CSR) as Porter and Kramer were claiming it was. The truth was that while there were some companies already moving down this path—companies that were already approaching CSR more as a business strategy than pure philanthropy—many others were still viewing CSR as primarily philanthropy and not integrated at all across their businesses.
Fast forward to this year. Last week I attended the 2014 Shared Value Summit—which has grown to close to 400 attendees from around the world. The discussion has also expanded to include more foundations, NGOs, investors, government representatives, given the growing recognition that companies cannot pursue shared value strategies in a vacuum—that developing new ways of collaborating, measuring, and incentivizing the right behaviors will be critical to driving positive and scalable outcomes. Much of the discussions over the two days focused on the “how” of shared value—how companies are building the concept of societal impact into their vision statements and executive compensation, organizing differently to increase internal collaboration and work toward shared goals, and collaborating in new ways with external stakeholders.
There were also discussions that explored in greater detail how companies can collaborate on specific global challenges. I had the opportunity to speak on a panel on the role of shared value in education, building upon a recent report published by FSG called “The New Role of Business in Global Education.” The session discussed the critical importance of collaboration not only with governments, but also with other companies. Measurement was also repeatedly referenced as one of the most important—and most challenging—aspects of operationalizing shared value. I discussed work that we are doing at Intel to apply shared value measurement methodologies and other impact measurement pilots as part of our education strategies, including our programs to empower girls and women through education and technology.
One of the main takeaways of the summit was that as companies move into the implementation phase of shared value, it will be important for companies to share best practices, challenges, and case studies to advance learning. To this end, Intel just finished up two new case studies on shared value—including one on our Intel Education Service Corps and another on our Code for Good program. There was a call to action for participants to sign up to participate in the Shared Value Initiative online community, and document and share their learnings.
As evidenced by the conversations last week, the concept of shared value is gaining the attention of more and more companies and stakeholders. Porter relayed that in the relatively short amount of time since he and Mark Kramer published the paper “Creating Shared Value: Redefining Capitalism and the Role of the Corporation in Society,” it has become the third most downloaded article after those first two strategy articles. But perhaps the most promising signal according to Porter is the shift he is seeing daily in the responses of his business school students who increasingly are saying that they want to do more with their careers than just “maximize shareholder value.” As Porter argued in “What is Strategy?”, strategy was about the “creation of a unique and valuable position, involving a different set of activities” to create sustainable competitive advantage. For the business leaders of tomorrow—perhaps when they think about “What is Strategy?” they will be looking at how they can differentiate themselves in a new way—to understand where they can uniquely contribute to solving global social challenges in order to maximize not only shareholder value, but also shared value.