Mark Kramer, profesor de Harvard, el autor- junto al profesor Michael Porter-, de la Creación de Valor Compartido. Estuvo presente en el 22 Encuentro Empresarial: Inspira desarrollado por la Cámara Regional de Comercio de Valparaíso los días 6 y 7 de Junio del 2018, en Viña del Mar.

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Creating Shared Value:
Competitive Advantage through Social Impact
7 JUNE 2018
Mark Kramer
Harvard Business School

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What is different about
Creating Shared Value?

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“Giving Back”
Business must fulfill
community
obligations
Business can engage with society in three ways
Shared ValueCorporate
Philanthropy
“Finding business
opportunities in
social problems”
Meeting social needs
can be a source of
profit and
competitive
advantage
“Minimizing harm to
society and the
company”
Business should be
responsible
Corporate
Responsibility
Past efforts have emphasized the friction
between business and society instead of the synergy

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• The long-term competitiveness of companies depends on social
conditions
− An educated and skilled workforce
− Safe working conditions
− Sustainable use of natural resources
− A flourishing local economy
− Affordable housing
• Business has an essential role to play in solving social problems
− Only companies can create prosperity that funds government and civil
society
− Companies can create solutions to many social problems in ways that
governments and NGOs cannot
− Companies have the incentive to take risk
− Competitions fuels innovation, efficiency, and adoption
− For-profit models are scalable and sustainable
Societal and corporate success are inextricably linked

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The resources of capitalism vastly exceed other
sources of social innovation
$1.2
$3.1
$23.1
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
Gross Non-Profit Output Total Government Spending Estimated Total Corporate
Revenue
Economic Activity by Sector, U.S. (2013)
($ in trillions)
Note: Corporate revenue was estimated based on the 9.1% average annual net profit margin for U.S. private companies.
Source: Bureau of Economic Analysis, 2013, Sageworks Private Company Indicator
$1.2 Trillion
$3.1 Trillion
$23.1 Trillion
Trillions
of Dollars

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• Shared Value is NOT:
‒ Sharing the value already created
‒ Personal values
‒ Balancing stakeholder interests
• Shared Value IS:
‒ A competitive strategy that
simultaneously create value for the
business and for society
What is Shared Value?

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Shared Value is Self-Sustaining and Scalable
CSR and Philanthropy Creating Shared Value
• Redistribution of economic
value to meet societal needs
• Impact limited by finite
resources
• Meeting societal needs that
expand opportunities for
the business
• Scalable social impact because
shared value is self sustaining

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Shared value creates a virtuous cycle

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Shifting the market failure frontier
Business
Government
and NGOs
Market
Failures
Shared
Value
Most companies operate on business models developed long ago –
before we understood the full impact of social and environmental issues

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Company
Productivity
and
Success
• Societal deficits and environmental impacts create economic costs
for companies
• Community weaknesses affect company productivity
• Social needs represent the largest unserved market opportunities
The Opportunity for Shared Value
Environmental
Improvement
Energy
Efficiency
Water Use
Economic
Development
Affordable
Housing
Worker
Safety
Health
Workforce
Skills
Education
Jobs for Lower
Income Citizens

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What makes Shared Value a
competitive strategy?

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Strategy is about serving a particular set of
customers uniquely well
• There is no one best way to compete
• The worst error in strategy is to compete with rivals
on the same dimensions
Competing
to be
the best
Competing
to be
unique

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• Creating a unique competitive
position
• Assimilating and extending
best practices
Operational
Effectiveness
Operational effectiveness versus strategic positioning
Doing things well Doing things differently to
deliver distinctive value
Strategic
Positioning

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Defining the Value Proposition
What Relative
Price?
What
Customers?
Which Needs?
• What end users?
• What channels?
• Which products?
• Which features?
• Which services?
• Finding a unique value proposition often involves identifying new needs, new
ways of segmenting, or innovation in the product/service approach
• A novel value proposition often expands the market
• Premium? Parity?
Discount?
14

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Product
• Higher priced, fully assembled products
• Customization of fabrics, colors, finishes, and
sizes
• Design driven by image, materials, varieties
Value Chain
• Source some or all lines from outside suppliers
• Medium sized showrooms with limited portion of
available models on display
• Limited inventories / order with lead time
• Extensive sales assistance
• Traditional retail hours
• Delivery part of product
Product
• Low-priced, modular, ready-to-assemble designs
• No custom options
• Furniture design driven by style, compactness,
manufacturing cost and assembly simplicity
Value Chain
• Centralized, in-house design of all products
• All styles on display in huge warehouse stores
• Large on-site inventories
• Limited sales help, but extensive customer
information
• Long hours of operation
• No delivery included
IKEA Typical Furniture Retailer
• Tradeoffs create the need for choice
• Tradeoffs make a strategy sustainable against imitation by established
rivals
Positioning Tradeoffs
IKEA, Sweden
15

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• A unique value proposition compared to competitors
• A distinctive value chain involving clear choices about how
the company will operate differently to deliver its value
proposition
• Making clear tradeoffs, and choosing what not to do
• Integrating choices across the value chain so that activities
fit together and reinforce each other
• Continuity of strategic direction, with continuous
improvement in realizing the unique value proposition
Shared value is a competitive strategy
The essence of strategy is making choices

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Applying Shared Value
to strategy

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1 2 3
• Improving skills, supplier
base, and supporting
institutions in the
communities where a
company operates
• Driving productivity
through better utilizing
resource, employees, and
business partners
• Meeting societal needs
through products
• Addressing underserved
customers
Redefining
Productivity in the
Value Chain
Enabling Local Cluster
Development
Reconceiving Needs,
Products, and
Customers
Shared value operates at three levels
These levels are overlapping and mutually reinforcing

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• BCI launched in 2007 the “Nace” fund to provide credit to scale entrepreneurs who did
not qualify for conventional financing
• Unique lending criteria targeted entrepreneurs with a high level of commitment and
perseverance, as well as high quality business plans
• In addition to capital, Nace provides tools and advice to clients for business planning
and networking
• In its first 7 years, the program extended $160 million in credit to 7,500 entrepreneurs
with a comparable default rate to BCI’s conventional SME clients
• BCI estimates that most of these customers would not have received credit from
another bank
• An estimated 15,000 new jobs have been created
• Nace profits have grown by a factor of 25 and the program is considered to be an
important opportunity for continued growth at the bank
Banco de Crédito e Inversiones (BCI), Chile

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© 2010 FSG20
FSG.ORG
CSV Investment
Walmart is reducing transportation costs and helping sustain
the livelihoods of small-scale farmers in the US and emerging
markets by working to source produce for its stores locally and by
providing training and support to farmers near store locations.
Source: Company websites and reports, news
Social Goals
• Increase income of small and medium farm
suppliers by 10 – 15%
• Reduce waste and carbon emissions
• Provide low-cost, healthy food for Walmart
customers – goal is to sell $1B in locally-
grown produce by 2015
Business Goals
• Reduce transportation costs –in the US
Walmart has already cut 100 million miles
from delivery routes saving the company
$200M in fuel costs
• Reduce food waste - goal of 15% in
emerging markets and 10% in US by 2015
Walmart

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SABMiller, Latin America
• SABMiller is the world's second-largest brewer and a major bottler of Coca-Cola
• In 2013, the company started “Camino al Progreso” a program with the goal of creating social
transformation and business impact by offering training and support to Tiendas (mom and
pop shops)
• The program aims to build community leadership, develop business skills and modernize
40,000 Tiendas in 6 countries of Latin America (El Salvador, Honduras, Panamá, Perú, Colombia
and Ecuador)
• Through improved retailer operations, SABMiller aims to increase sales of its products by 10%,
build customer loyalty and increase reputation
• The program will support income growth for 40, 000 shop owners and their families,
preserving local jobs
• Leadership training and increased stability will help advance small-scale shop owners as
community leaders, creating community services reaching in total ~ 2 million homes (or about
10 million people)

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The Ecosystem of Shared Value

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Such complex social issues can only be addressed
through the broader shared value ecosystem
Companies need to team up with governments, NGOs and even rivals to
improve the policies, informal rules and behaviors that define the
operating environment
Products
Company value chain
Operating environment
Supply
services
Beyond companies’
operations
Delivery
services
Policies & Informal rulesInput provider
norms &
behaviors
Consumer
norms &
behaviors

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Companies have begun to take leadership
in transforming their entire ecosystem
Transforming the Chinese
dairy sector to serve the
nutrition needs of a multi-billion
USD market in China
Creating local knowledge,
capabilities and resources to
drive economic development
and improve quality of life in
mining communities
Creating a new market for
fertilizers across Africa by
connecting farmers to input
and output markets
Tackling systems barriers to
increase access to health for
BOP customers in Kenya
Mobilizing communities and
the healthcare system to
reduce healthcare costs by
20% in the USA
Improving access and the
quality of diabetes care for
11.8 million people in
Indonesia
Engaging communities to turn
decommissioned power
plants into drivers of local
economic development
Enabling access to markets,
finance, crop insurance and
farm inputs for 100,000 corn
farmers in Indonesia

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Collective impact offers a model for effective
cross-sector collaboration
• Common Agenda: All participants share a vision for change that includes a
common understanding of the problem and a joint approach to solving the
problem
• Shared Measurement System: All participating organizations agree on a short
list of common indicators identified, measured and reported to support learning
and improvement.
• Mutually Reinforcing Activities: Participants coordinate a set of differentiated
activities through a mutually reinforcing plan of action.
• Continuous Communication: All players engage in frequent and structured
open communication to build trust, assure mutual objectives, and create
common motivation.
• Backbone Support: An independent, funded staff provides ongoing support by
guiding the initiative’s vision and strategy, supporting aligned activities,
establishing shared measurement practices, building public will, advancing
policy, and mobilizing funding.
Collective impact depends on 5 conditions:

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The challenge ahead

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Four Challenges of Creating Shared Value
• Shifting the mindset
– Applying business discipline to social problems
– Leading change throughout the organization
• Seeing beyond conventional boundaries
– Identifying opportunities and understanding new customers
– Finding strategic opportunities in the larger ecosystem
• Measurement & reporting
– Restructuring incentive compensation
– Communicating with investors
• Cross-sector and competitive partnerships
– Exerting influence without control

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All profit is not equal
2
• Profit involving shared value enables society to advance and
companies to grow faster
• Profit at the expenses of society is self-defeating
• Incorporating societal issues into strategy and operations is the next
major transformation in management thinking
Shared value thinking represents
the next competitive frontier of capitalism

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