Creating Shared Value

Johnson & Johnson Inc. Our Credo We believe our first responsibility is to the doctors, nurses and pa6ents, to mothers and fathers and all others who use our products and services. In mee2ng their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensa2on must be fair and adequate, and working condi2ons clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibili2es. Employees must feel free to make sugges2ons and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their ac2ons must be just and ethical. We are responsible to the communi2es in which we live and work and to the world community as well. We must be good ci2zens -‐ support good works and chari2es and bear our fair share of taxes. We must encourage civic improvements and beJer health and educa2on. We must maintain in good order the property we are privileged to use, protec2ng the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innova2ve programs developed and mistakes paid for. New equipment must be purchased, new facili2es provided and new products launched. Reserves must be created to provide for adverse 2mes. When we operate according to these principles, the stockholders should realize a fair return.

The primary aim of SiG is to create a culture of con2nuous social innova2on – SiG@MaRS brings this work to Ontario

  Innovative enterprises which combine a strong social purpose with sound business principles  Contrast to traditional businesses which are primarily driven by the need to maximize profit or charities only driven to serve a social need  May include both for-profit and non-profit entities Return Con6nuum Target Zone Grant Funded Revenue Social Social Ventures Tradi2onal Non-‐Proﬁt Genera2ng NFP Purpose Business (Charity) (Social Enterprise) Business Social (Charitable) Financial RETURN (Commercial)

  Information and referral  Market Intelligence  Access to mentors  Access to networks  Access to talent  Access to capital  Help with governance  Innovation in program design + delivery  Access to pro bono professional services  Workshops Clusters

In October 2011 – SiG hosted Mark Kramer, co-‐author (along with Michael Porter) of the HBR ar2cle en2tled Crea6ng Shared Value at MaRS Mark’s company FSG is a nonproﬁt consul2ng ﬁrm specializing in strategy, evalua2on, and research, founded in 2000 as Founda2on Strategy Group and celebra2ng a decade of global social impact. HBR January February Edi2on 2011 The following slides summarize Mark’s presenta2on:

The long-‐term compe66veness of companies depends on social condi6ons •  Improving educa2on and skills •  Safe working condi2ons •  Sustainable use of natural resources •  A sense of fairness and equal opportunity Slide by Mark Kramer, FSG, •  A transparent business October 2011 environment

Business has an essen6al role to play in solving social problems •  Only companies can create prosperity that funds government and civil society •  Companies can create sustainable and scalable solu2ons to many social problems in ways that governments and NGOs cannot •  Businesses can overcome constraints that limit their growth Slide by Mark Kramer, FSG, October 2011 Past thinking about sustainability has focused too much on the fric6on between business and society rather than their interdependence

Slide by Mark Kramer, FSG, Shared Value is: October 2011 Policies and prac2ces that enhance the compe22veness of a company while simultaneously advancing the economic and social condi2ons in the communi2es in which it operates. Shared Value is NOT: •  Sharing the value already created •  Philanthropy •  Personal values •  Balancing stakeholder interests

Shared Value goes beyond tradi6onal Corporate Social Responsibility (CSR) •  CSR prac2ces such as ethical behavior, transparency, sustainable use of natural resources, and fair labour condi2ons are essen2al requirements for any successful business •  Shared Value adds addi6onal opportuni6es to improve social and Slide by Mark Kramer, FSG, environmental condi2ons beyond CSR October 2011

Traditional Aligned Shared Value•  Corporate •  Corporate •  Corporate philanthropy is engagement focuses engagement is removed fro the core on themes/issues viewed and managed business related to the as a key component company or of the overall •  The key drivers are leverages company company strategy building community assets/ exper2se goodwill and a “good •  The key drivers are corporate ci2zen” •  However, objec6ves opportuni2es to reputa6on are not 6ed to create shared value company strategy for the business and society •  Key business driver is Slide by Mark Kramer, FSG, October 2011 reputa6on

Social Need…is found at Shared Value Opportunitythe nexus of business opportuni2es, corporate assets and social needs Business Corporate Assets Opportunities and Expertise Slide by Mark Kramer, FSG, October 2011

•  Global customers •  Civil society •  Supplier networks Rela2onships •  Public sector leaders •  Government leaders •  Providers to the base of the pyramid •  Specialized product knowledge •  Needs of the underserved •  Marke2ng and •  Scien2fic and technical Knowledge distribu2on skills knowledge •  Intellectual property •  Opportunity for impact •  Investment capital •  Philanthropic partners •  Influen2al voice Resources •  Influen2al voice •  Philanthropy •  In-‐country programs Slide by Mark Kramer, FSG, October 2011

Habitat for Humanity Interna6onal and The Home Depot Founda6on today announced the na2onal expansion of Partners in Sustainable Building. The $30 million green building program will provide funds and resources over a ﬁve-‐year period to help Habitat aﬃliates build 5,000 homes that meet Energy Star® guidelines or a na2onally recognized green building standard.

Social Impact Business Problem & Innova6on • Over 10,000 Academies established in •  Cisco’s growth is limited by the 165 countries number of trained network administrators worldwide • Over 4,000,000 students have been •  As a result, Cisco established the trained Networking Academy • More than 70% have aWained a new job, •  Developed a distance learning a beWer job, increased responsibility, or program that combines a web-‐ higher salary based curriculum with local Business Impact instructors and lab facili2es •  Partnered with industry peers, • Alleviates a key labor constraint for schools, governments and Cisco customers; Students become universi2es familiar with Cisco products; and •  Focused on economically Strengthened rela6onships with key deprived regions around the suppliers, local businesses and world government

OWawa looks at rewri6ng rules on charitable giving Bill Curry OTTAWA— From Fridays Globe and Mail Published Friday, Oct. 28, 2011 4:30AM EDT “Right now, we ask [chari2es and non-‐proﬁts] to take on these jobs. We give them money to do it. They receive the money whether they achieve their objec2ves or not,” Diane Finley, Minister for Human Resources and Skills Development, told The Globe and Mail. “Now we’re saying, ‘All right, we s2ll want you to do this, but you get more money if you actually achieve the objec2ves.”

•  Does your experience in working with corpora2ons lead you to believe CSV is on the way – or not? •  What do you think this trend could mean for the NFP sector? •  Maybe you think it means nothing •  Maybe you think the sector has to face the fact that we no longer “own” social purpose work and we have to determine how to posi2on ourselves to come to the table as equals •  There is an absolute trend to outcomes – to pay for performance – is this a discussion we should be having?

Allyson HewittDirector, Social Entrepreneurshipand Director, SiG@MaRSahewitt@marsdd.com1.416.673.8410For more information about FSGvisit: www.fsg.org

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Creating Shared Value

by Social Innovation Generation on Nov 18, 2011

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