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Leadership Re-Imagined Seminar: Mark Kramer clarifies the need to create shared value

13 Jun 2014

Mark Kramer The recent Leadership Re-Imagined seminar, partnered by the Business School and Banarra, engaged the expertise of 'Shared Value' specialist Mark Kramer. Mark, who has travelled the world sharing this concept, spoke to an audience of MBA students and the broader business community about this new global business phenomenon.

Mark is the chief and founder of FSG (Foundation Strategy Group) - a not for profit consultant company that helps businesses unlock value in the concept of 'Shared Value'. Mark has done extensive work with Harvard University economics Professor, Michael Porter, and has written some ground-breaking papers. One of their first papers, titled, "Creating Shared Value", was featured in the Harvard Business Review. Richard Boele, Founder and Managing Director, Banarra, described it as a "manifesto for a different corporate future and a different relationship between corporates and society".

The article spoke about the competitive advantage of social philanthropy because companies were starting to realise that social issues mattered to the business.

In the seminar, Mark spoke about the issues of shared value and gave some practical advice for future company leaders. He said, "the key concept is to understand the interdependence of business and society rather than seeing them as opposites. The idea of shared value is simply to create a competitive advantage for the company by improving social and environmental conditions in regions where the company operates".

It's a different way of thinking about business in society;it emphasizes opportunities for growth and greater profitability, which is why it has appealed to management. He views 'Shared Value' on three different levels: new products and under served markets, redefining productivity in the value chain, and strengthening the local cluster of which the company is a part.

It's also about understanding a social or environmental issue that has constrained the company and has limited its growth. Instead of trying to operate within those constraints, it's deciding the company can actually do something about fixing that problem.

Mark went on to give a great example of how 'Shared Value' operates in a company like 'General Electric'. Their Eco Imagination and Healthy Imagination campaigns involve products that are environmentally more efficient and save money. These campaigns bring health care devices to low income populations that would not have had access to them before. This has created hundreds of products and $20 billion extra in revenue for the company, and these new products are growing at twice the rate of their other products. 'General Electric' is committed to saying its future growth is solving the world's problems in the environment and in the health sectors.

Mark explained the concept further saying that companies react with society in three ways:

  1. Philanthropy: meeting community needs to be a good citizen and giving back
  2. Corporate Social Responsibility: mitigating the harms that accompany clauses in its value chain such as no unfair labour practices, reducing our environmental footprint, and reducing harm
  3. Shared Value and Opportunity: you can point an economic benefit back to the company and point to a measurable change on a social issue. Innovating to find new business opportunities to solve social problems

If you focus in on what the material, social or environmental issue is that affects the success of an industry, then it's an important part of what the analysts are now starting to take into account.

Rita Fentener van Vlissingen, Senior Consultant, Banarra, said of the seminar, "I like the notion of 'Shared Value' in core business strategy. Rethinking and reconceiving products and services and using these to unleash innovation and get the business to think about its core purpose is important. These products and services can then be used to solve social problems at a profit".

The key take away message for Associate Dean, Management Education, Professor Richard Hall, in relation to 'Shared Value' was, "by tapping into unmet social needs, you can unlock new opportunities for value creation and ensure that business is more sustainable and contributes more to the society in which its operating. In this way, it can actually be a longer term value proposition". He went onto say that 'Shared Value' is something we try to get our students to think about as part of their business studies".

Mark expressed the need for all MBA students to understand 'Shared Value' in practice because it will become the future of companies, and to do it well you need to develop an understanding of social issues and an ability to work with other sectors, both non-profit and government, to come up with joint solutions. These are skills that future leaders need to succeed.