The document discusses the evolution of corporate social impact from philanthropy to creating shared value. It outlines different levels of shared value from improving productivity to reconceiving needs and customers. Examples are provided of companies like Discovery, Mahindra, and Walmart that have created shared value through their products, value chains and local business environments. The purpose of business is defined as creating economic value in a way that also creates shared value for society.

1. This presentation draws on ideas from Professor Porter’s books and articles, in particular, Competitive Strategy (The Free Press, 1980); Competitive Advantage (The Free Press, 1985); “What is Strategy?”
(Harvard Business Review, Nov/Dec 1996); On Competition (Harvard Business School Press, 2008); and “Creating Shared Value” (Harvard Business Review, Jan 2011). No part of this publication may be
reproduced, stored in a retrieval system, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Michael E. Porter. For further
materials, see the website of the Institute for Strategy and Competitiveness, www.isc.hbs.edu, and FSG website, www.fsg.org.
Professor Michael E. Porter
Porter Prize India
October 17, 2019
The Pursuit of Purpose:
The Journey of Business
in Advancing Society

2. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 2
• Societies everywhere are facing significant social, environmental and
economic opportunity challenges
• Government and NGOs lack sufficient resources and capabilities themselves
to fully address these challenges
• Business has the resources and capabilities, and can address needs at scale,
while simultaneously creating jobs and income
• Business involvement in social issues has been growing for decades
• Yet, scrutiny of company impact on societal issues continues to rise, and the
legitimacy of business, and of capitalism itself, is declining
– Many now believe that profit is taking away from social impact, not enabling the
ability to meet societal needs
The Role of Business in Society
How should business be involved in social issues?
How do we raise the bar in business practice?

3. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 3
The Evolution of Corporate Social Impact
• Donations to worthy
social causes
• Volunteering
• Powerful philanthropy
focuses on a few areas
where the company can
make a difference
• Contribute more than
just money
Philanthropy

4. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
The Evolution of Corporate Social Impact
4
Corporate Social
Responsibility
(CSR)
• Compliance with ethical
and community standards
• Corporate citizenship
• “Sustainability” initiatives
• Certifications
– e.g. codes of conduct
• Reducing risk and
harm
• Building trust
• Enhancing reputation
• License to operate
• Donations to worthy
social causes
• Volunteering
Philanthropy
• Powerful philanthropy
focuses on a few areas
where the company can
make a difference
• Contribute more than
just money

5. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
The Evolution of Corporate Social Impact
5
Corporate Social
Responsibility
(CSR)
• Compliance with ethical
and community standards
• Corporate citizenship
• “Sustainability” initiatives
• Certifications
– e.g. codes of conduct
• Reducing risk and
harm
• Building trust
• Enhancing reputation
• License to operate
Philanthropy
• Donations to worthy
social causes
• Volunteering
• Powerful philanthropy
focuses on a few
areas where the
company can make a
difference
• Contribute more than
just money
• Achieve good scores
on environmental,
social, and
governance (ESG)
standards, as well as
Global Reporting
Initiative (GRI)
measures
Investor Driven
Social Impact
Measurement
• Checking all the
boxes

6. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
The Evolution of Corporate Social Impact
6
Corporate Social
Responsibility
(CSR)
• Compliance with ethical
and community standards
• Corporate citizenship
• “Sustainability”
initiatives
• Certifications
– e.g. codes of conduct
• Reducing risk and
harm
• Building trust
• Enhancing
reputation
• License to operate
A Corporate
Social Purpose
Philanthropy
• Donations to worthy
social causes
• Volunteering
• Powerful philanthropy
focuses on a few
areas where the
company can make a
difference
• Contribute more than
just money
• Achieve good scores
on environmental,
social, and
governance (ESG)
standards, as well as
Global Reporting
Initiative (GRI)
measures
Investor Driven
Social Impact
Measurement
• Checking all the
boxes
BlackRock:
• The fundamental
reason for being

7. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 7
• “Purpose is not a mere tagline or marketing campaign;
it is a company’s fundamental reason for being –
what it does every day to create value for its stakeholders.”
• “Purpose is not the sole pursuit of profits, but the
animating force for achieving them.”
• “Profits are in no way inconsistent with purpose - in fact,
profits and purpose are inextricably linked.”
• “When a company truly understands and expresses its
purpose, it functions with the focus and strategic
discipline that drive long-term profitability.”
• “Purpose guides culture, provides a framework for
consistent decision-making, and, ultimately, helps sustain
long-term financial returns for the shareholders of your
company.”
2019
Purpose and Profit
2018
A Sense of Purpose
Corporate Purpose
BlackRock Annual Letter to CEOs
• “Without a sense of purpose, no company, either
public or private, can achieve its full potential.”
• “It will ultimately lose the license to operate from
key stakeholders”.
• “It will succumb to short-term pressures to
distribute earnings and sacrifice investments in
employee development, innovation, and capital
expenditures that are necessary for long-term
growth.”
• “The company will remain exposed to activist
campaigns that articulate a clearer goal, even if
that goal serves only the shortest and narrowest of
objectives.”

8. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
The Evolution of Corporate Social Impact
Corporate Social
Responsibility
(CSR)
• Compliance with ethical
and community standards
• Corporate citizenship
• “Sustainability”
initiatives
• Certifications
– e.g. codes of conduct
• Reducing risk and
harm
• Building trust
• Enhancing reputation
• License to operate
A Corporate
Social Purpose
BlackRock:
• The fundamental
reason for being
Business Roundtable:
• Creating value for all
stakeholders
Philanthropy
• Donations to worthy
social causes
• Volunteering
• Powerful philanthropy
focuses on a few
areas where the
company can make a
difference
• Contribute more than
just money
• Achieve good scores
on environmental,
social, and
governance (ESG)
standards, as well as
Global Reporting
Initiative (GRI)
measures
Investor Driven
Social Impact
Measurement
• Checking all the
boxes
8

9. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
Statement on the Purpose of a Corporation
Business Roundtable
9
• Americans deserve an economy that allows each person to succeed
through hard work and creativity to lead a life of meaning and dignity
• While each of our individual companies serves its own corporate
purpose, we share a fundamental commitment to all of our stakeholders
• We commit to:
− Delivering value to our customers
− Investing in our employees
− Dealing fairly and ethically with our
suppliers
− Supporting the communities in
which we work, with sustainable
practices
− Long-term transparent value for
shareholders

10. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 10
Creating Shared Value
(CSV)
Creating Corporate Social Impact That Matters
• Profit is not inconsistent with
positive social impact.
• The most advanced form of
capitalism is one where
business integrates social
impact into core strategy
• Shared value is addressing
societal needs and challenges
through the business itself,
with a business model
Corporate Social Purpose
• How to make purpose powerful:
• How to link social purpose to
business action
Porter, Michael E. and Mark Kramer, “Creating Shared Value,” Harvard Business Review, January-February 2011.

11. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 11
• Many have believed that there is a tradeoff between business success and social success
• Instead, there is synergy
• Societal problems, and environmental impacts, create economic costs for companies
• Weaknesses in the business environments in which a company operates affects its
productivity and profitability
The Opportunity for Shared Value
Company
Growth,
Productivity
and Success
Environmental
Improvement
Energy
Efficiency
Water Use
Economic
Development
Affordable
Housing
Worker
Safety
Employee
Health
Workforce
Skills
EducationJobs for Lower
Income Citizens
Financial Access
and Inclusion

12. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 12
Levels of Shared Value
• Every company touches social issues / challenges
• Pursuing a shared value strategy starts with asking two key questions:
• What social issues does my business touch?
• What social conditions does my business depend on?
• Accessing and utilizing
resources, energy, supplier
inputs, logistics, and
employees differently and
more productively
Redefining Productivity in
the Value Chain
• E.g., improving available
skills, local suppliers,
supporting institutions,
and business
infrastructure in the
locations in which the
company operates
• Enhancing cluster
development that benefits
the region while improving
the company’s business
environment
Improving the Local Business
Environment/ Ecosystem
• Products and services that
meet important societal
needs
• Creating new markets by
designing and delivering
products to unserved or
underserved customers,
and communities
Reconceiving Needs,
Products, and Customers
2 31

13. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 13
Shared Value Through the Product
TO DO THIS:
• Discovery pioneered the concept of pairing a health plan with a wellness
incentive program, called Vitality, which on behavioral economics ideas
• Combining health coverage with Vitality membership led to Discovery
customers achieving better health results, which enabled pricing of health
coverage at lower premiums
• Discovery is one of the world’s fastest growing and most profitable health
insurance companies globally
• Discovery has also applied its shared value insurance model to other kinds
of insurance and financial services, such as life insurance (better health),
auto insurance, safe driving, and credit cards (vitality cash back).
CORPORATE PURPOSE
To make people healthier and
enhance and protect their lives

14. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 14
Shared Value in the Value Chain
Mahindra and Mahindra
Mahindra Corporate Purpose
• Mahindra and Mahindra is federation of companies, bound by one
purpose: to Rise
“We’ve made humanity’s innate desire to rise our driving purpose”
• This purpose is why we exist, come to work every day, and strive
continuously in delivering our promise
• Mahindra’s purpose has three pillars:
– Challenge Conventional Thinking
– Innovative Use of Our Resources
– We Enable Stakeholders to Rise

15. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India
Walmart’s Shared Value Journey
15
• The leader in organic, fresh and
healthy foods at lower prices
• Sited 240 smaller “neighborhood
markets” sited in food deserts
• Low cost financial services for
unbanked and underbanked families
• Low cost in-store health clinics,
generic drugs, and other
diagnostics and health services for
lower income and uninsured
families
Reconceiving Needs, Products,
and Customers
1
• Resources: Comprehensive programs
to reduce energy usage, expand
renewable sources, reduce water and
packaging, plus other resource use
and minimize waste. Resulted in
billions in savings per year
• Employees: Raised starting wages and
a career path to more responsible jobs
for lower income associates, and to
higher wages and benefits. Retention
improved substantially.
• The leader in employee health and
wellness programs, that enhances the
health of employees and their families
and reducing the cost of poor health
• Prioritize local sourcing, including
from women-owned businesses
improving local economies
• Created Sustainable Value
Networks with suppliers to
collaborate on sourcing to improve
efficiency, product quality, and
sustainability
• Lead retail sector collaboration to
foster workforce development,
improve access to skilled
employees, and increase
employee retention
Redefining Productivity
in the Value Chain
2
Improving the Local Business
Environment/ Ecosystem
3

16. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 16
Fortune Change the World List 2019
1. Qualcomm
2. MasterCard
3. BYD
4. TE Connectivity
5. Walmart
6. Santander Brasil
7. Centene
8. Bank of America
9. Schneider Electric
10.TerraCycle
11.Go-Jek
12.Viasat
13.Walgreens
14.EY
15.BD
16.Apple
17.EsilorLuxottica
18.Chr. Hansen
19.Anheuser Busch
20.Skanska
21.Accenture
22.IBM
23.Xylem
24.Intel
25.Vodacom
26.Dow, Inc.
27.GoodRx
28.MOD Pizza
29.L'Oréal
30.Prudential Financial
31.Lloyds Banking Group
32.Best Buy
33.Narayana Health
34.Poet
35.Illumina
36.Duolingo
16
37.Alibaba
38.JPMorgan Chase
39.Baidu
40.Corvus Energy
41.Hilton
42.Etsy
43.Philips
44.Vinte Vivienas
Integrales
45.Land O’Lakes
46.NTT
47.Icon Group
48.Patagonia
49.Salesforce
50.eBay
51.Impossible Foods
52.Beyond Meat
Companies That Do Well By Doing Good

17. Copyright 2019 © Professor Michael E. Porter20191017 – Porter Prize India 17
The Purpose of Business
• The purpose of business is to create economic value in a way that
also creates shared value for society
• Businesses acting as businesses, not as charitable givers, are the most
powerful force for addressing many of society’s pressing issues
• Purpose that is powerful involves creating shared value
• Shared value leverages the synergistic connection between excellence in
business performance and important social impact
• A high quality purpose statement should include the specific ways a
company will create social impact, and how this creates self-reinforcing
benefits for both society and for the growth / performance of the business