Creating Shared Value


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Allyson discusses Shared Value, the concept first popularized by Michael Porter and Mark Kramer in their Harvard Business Review article, and shape the discussion around the impact & import for the non-profit sector.

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Allyson Hewitt is the Director of Social Entrepreneurship at the MaRS Discovery District and Director of SiG@MaRS.

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Creating Shared Value

  1. 1. 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.  
  2. 2. The  primary  aim  of  SiG  is  to  create  a  culture  of  con2nuous  social  innova2on  –  SiG@MaRS  brings  this  work  to  Ontario  
  3. 3.   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)  
  4. 4.   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  
  5. 5. 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:  
  6. 6. 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  
  7. 7. 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  
  8. 8. 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      
  9. 9. 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  
  10. 10. 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  
  11. 11. 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  
  12. 12. •  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  
  13. 13. 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.  
  14. 14. 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  
  15. 15. 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.”    
  16. 16. •  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?  
  17. 17. Allyson HewittDirector, Social Entrepreneurshipand Director, SiG@MaRSahewitt@marsdd.com1.416.673.8410For more information about FSGvisit: