Alberto Pezzi, Presentation TCI2018 European Conference Sofia
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This document discusses the natural alliance between shared value and clusters. It begins by introducing shared value and defining it as policies and practices that enhance competitiveness and advance economic and social conditions. Clusters are identified as an ideal ground for implementing shared value initiatives due to their focus on collaboration and community. Examples are provided of potential shared value projects within clusters, such as supply chain optimization and developing new business models to meet social needs. The document concludes by arguing that promoting shared value can help recover clusters' original social component and that clusters provide opportunities to identify, design and implement shared value initiatives.
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Alberto Pezzi, Presentation TCI2018 European Conference Sofia
- 2. Clusters and Shared Value: a natural alliance Alberto Pezzi Director of Clusters Member of TCI Network Board of Directors
- 3. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 4. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 6. INEQUALITY AND ITS CONSEQUENCES ARE BECOMING THE HOTTEST TOPIC IN SOCIO-ECONOMIC DEBATE ENVIRONMENTAL AND SOCIETAL CONCERNS REMAIN ALSO AROUND ... WELL-BEING IS INCREASINGLY BEING MEASURED WITH NON- ECONOMIC INDICATORS
- 7. BEYOND GDP 1920 Source: Adapted from Marsé M. with data of http://www.wikiprogress.org/images/Chronical_evolution_of_related_measures_of_progress.pdf 7 1930 1960 PIB (1934) – Simon Kuznets FIB (1976) National Happiness Bhutan EWI (1972) Economic well-being index SWBI (1989) Sustainable well being index Index 1990 HDI (1990) Human Development Index - UNDP GPI (1995) Genuine Progress Index IDG/IAG (1995) Gender development index UNDP IIG (2010) UNDP BLI - Better life index (2011) OECD 2000 2010 IPH (1998) Human poverty index - C IPH (2010) Multi-dim. human poverty index - UNDP SPI (2013) Social progress Index Happy Planet Index (2006) - New Economics Foundation Material scenario Economic indicators Social scenario Economic + social indicators Global scenario Economic, social and environmental indicators IQFV (1979) Quality of life index - David Morris IQV (1995) Quality of life Index – Ed Diener SHI (1986) Index de Social Health Marc Miringof IBE (1998) Well-being economic Index - Lars Osberg and Andrew Sharpe CIW (2011) Canadian Index of Wellbeing
- 8. EXAMPLE: CANADIAN INDEX OF WELL-BEING Source: uwaterloo.ca/canadian-index-wellbeing/
- 9. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 10. SHARED VALUE: A NEW BIG IDEA? 2011 2011
- 11. SHARED VALUE: DEFINITION SV is about creating a common ground for economic and societal values SV is not anecdotic, it should be embedded in firm strategy But how is Shared Value created? “... policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates” M.E. Porter and M. Kramer, HBR, 1-2, 2011
- 12. THREE WAYS TO CREATE SHARED VALUE Conceiving new products and markets Redefining productivity in the value chain Building supportive industry clusters at the company’s location Source: Adapted fromPorter, Michael and Kramer, Mark (January 2011): Creating Shared Value, Harvard Business Review, Boston. • Products and services better aligned with societal needs • Providing products and services to disadvantaged communities • … • Better and more efficient use of scarce natural resources • New business models that take into account specific societal needs • … • Developing skills of local suppliers • Improving local business environment • …
- 13. CSV implies a change of mindset It is a long term strategy It is not a marketing campaign for the company It implies to find a social value that has an economic value for the company Social value becomes a key element in firm strategy SHARED VALUE CSR Citizenship, philanthropy, sustainability Discretionary or in response to external pressure Separate from profit maximization Agenda is determined by external reporting and personal preferences Impact limited by corporate footprint and CSR budget CSV Joint company and community value creation Integral to competing Integral to profit maximization Agenda is company-specific and internally generated Realigns the entire company budget Source: Adapted fromPorter, Michael and Kramer, Mark (January 2011): Creating Shared Value, Harvard Business Review, Boston. 13 SHARED VALUE AND CORPORATE SOCIAL RESPONSABILITY
- 14. CSR CSV • Re-Distribution of value for social needs • Limited impact due to limited financial resources • Expanding business opportunities by identifying social needs • Scalable social impact: social value embedded in the business model Source: Adapted from J. Wilson, internatl presentation, 2017. Example: Transforming procurement to increase quality and profit Example: Fair trade purchase
- 15. SOME COMPANIES INVOLVED IN SHARED VALUE INITIATIVES
- 16. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 17. •EARLY IDEAS •Based on the observation of early industrial development in England 1800s •INDUSTRIAL DISTRICTS •Territorial competitiveness of “third” Italy •Silicon Valley vital intangible 1980s •CLUSTERS •Competitive advantage in innovation, business creation, •Concept became mainstream 1990s CLUSTER AND INDUSTRIAL DISTRICT’S CONCEPTUAL ROOTS Source: Adapted from Konstantynova & Wilson (2017)
- 18. Source: Konstantynova & Wilson (2017), based on Becattini (1990; 2002), Bellandi (1997 “A socio-economic entity which is characterised by the active presence of both a community of people and a population of firms in one naturally and historically bounded area” Prof. Giacomo Becattini (1927-2017) CLUSTER AND INDUSTRIAL DISTRICT’S CONCEPTUAL ROOTS
- 19. CLUSTERS AND SHARED VALUE COMMUNILITIES AND OPPORTUNITIES CLUSTERS • Presence of different stakeholders with common strategic challenges • Potential improvements from business environment and firm strategy • Increasing opportunities from inter- cluster / sectorial cooperation SHARED VALUE • Possible source of CSV mainly from: – Value chain optimization – Definition of new business model • Change of mindset as a key element for CSV • Possible initiatives to be leaded by community leaders • Long term vision CSV CLUSTER STRATEGY BUSINESS OPPORTUNITIES SOCIETAL NEEDS
- 20. EXAMPLE OF INTER-CLUSTER COOPERATION PROJECT WITH SV COMPONENT Leather tanning workshops in Igualada (Barcelona) begin XVIII century Source: J. Nadal, Atlas de la Industrialización en España 1750-2000, Barcelona 2003 Barcelona Igualada Increase of firm competitiveness through economies of scale and supply chain efficiency Improvement of local environment by reducing water contamination
- 21. Problem Intensive use of water in pork meat industry in Catalonia: implications at environmental and cost level Answer/solution Revision of water treatment plants (EDAR) and optimization of operating cycles ResultswithSVcomponent Operational improvements with saving up to 50.000 € / year. Power and water savings between 10% and 35%. 21 EXAMPLE OF INTER-CLUSTER COOPERATION PROJECT WITH SV COMPONENT Source: ACCIÓ, CWP, Innovacc
- 22. Design and manufacturing of a specific low-cost device, “Aerofeeder” ACCIÓ connects FEMAC and Aquiplus cluster Low productivity for insufficient water oxygenation in low income fish farmers EXAMPLE OF INTER-CLUSTER COOPERATION PROJECT WITH SV COMPONENT
- 23. CLUSTERS AND SHARED VALUE – TERRITORIAL COMPETITIVENESS IMPLIES LOOKING BEYOND SIMPLE ECONOMIC PRODUCTIVITY – STRATEGY AND BUSINESS ENVIRONMENT ARE THE KEY ELEMENTS OF CLUSTER COMPETITIVENESS – CLUSTERS HAVE A STRONG SOCIAL VALUE THAT HAS BEEN PROGRESSIVELY FORGOTTEN BY POLICY MAKERS – HORIZONTAL COOPERATION INITIATIVES OFTEN HAVE A SOCIAL VALUE BECAUSE THEY COMBINE BUSINESS AND SOCIAL OBJECTIVES WITH POSITIVE EFFECTS IN A SPECIFIC COMMUNITY – HUMAN COMPONENT (LEADERSHIP, STRATEGIC CHANGE, ETC.) IS KEY IN CLUSTER DEVELOPMENT CLUSTERS ARE THE IDEAL GROUND FOR CREATING SHARED VALUE
- 24. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 25. Source: Konstantynova & Wilson (2017) Industrialdistrict Level 2: Institutional environment Level 1: Social embeddeness Level 4: Resource allocation P2: components of social embedded cluster development approaches P1: components of traditional cluster development approaches Cluster policy Cluster programme Programmes supporting collaboration or specific groups of related companies & other organisations Policy instruments Direct support for collaboration, innovation, etc. Cluster organisations Cluster population of firms & other organisation from same & related sectors Community cultural complexity including informal instituition, norms, traditions, customs Level 3: Institutions of Governance Institutional theory context Widening the scope of cluster development PROMOTING SV AT CLUSTER LEVEL
- 26. · Strategic Analysis · Specialized training · Social needs and challenges to be tackled from the cluster perspective · Mapping of cluster associations potentially interested in the project · Identification of short and long-term goals (cluster level) · Assessment of key stakeholders · Definition of the methodological framework · KPIs and control metrics definition · Identification and implementation of SV projects, both collaborative and at single-cluster level STAGE IISTAGE I STAGE III Cluster associations considered for roll-outs Training sessions Focus groups Working Plan Guidelines for Project certification Project Implementation Source: ACCIÓ, 2017 DEVELOPING A METHODOLOGY FOR CSV AT CLUSTER LEVEL 10-15 CLUSTERS INTERESTED PILOT INITIATIVES SELECTED IN 3 CLUSTERS LOCAL AND CROSS- BORDER IMPLEMENTATION 2017 2018 2019
- 27. 0. Introduction 1. The concept of Shared Value and its origins 2. Shared Value and clusters: a natural alliance 3. How to implement SV in practice at cluster level 4. The way ahead and conclusions
- 28. CONCLUSIONS - SHARED VALUE IS A SIMPLE CONCEPT, BUT HAS THE POTENTIAL TO BECOME A POWERFUL ONE IN THE CURRENT ECONOMIC AND SOCIAL CONTEXT - THE ORIGINAL SOCIAL COMPONENT OF CLUSTERS CONCEPT MUST BE RECOVERED AND ENHANCED IN LINE WITH THE CURRENT NEEDS AND SENSITIVITIES - CLUSTERS ARE THE IDEAL GROUND FOR IDENTIFYING, DESIGNING AND IMPLEMENTING SV INITIATIVES - NEW AGENDAS MUST BE SET FOR COMPANIES, GOVERNMENTS AND CLUSTER ORGANIZATIONS IN ORDER TO RELEASE SHARED VALUE’S FULL POTENTIAL 28
Editor's Notes
- In 2011 we launched the first national index report of the Canadian Index of Wellbeing (CIW). We discovered that between 1994 and 2008, Canada showed robust economic growth, but increases in the wellbeing of Canadians were not nearly comparable. Since then, we are now able to track the significant impact the 2008 recession has had on the quality of life of everyday Canadians. As the gap between Canadians at the top and those at the bottom continues to grow, it is important to recognize that societies with greater inequality are shown to have worse health and wellbeing outcomes. The evidence shows negative impacts are felt by those both at the bottom and top of the socioeconomic ladder, meaning everyone suffers decreased wellbeing in unbalanced societies. The CIW provides a broader depth of understanding that, when partnered with GDP, gives us the evidence needed to help Canadians make decisions that will build a society that responds to the call for greater fairness. The choices we make as a society will determine whether we face a distressed future or a better quality of life.
- According to some Harvard economists – among whom Michael E. Porter and Mark R. Kramer – capitalism as a system is experimenting now a crisis more serious than the usual ones. They maintain that it must be faced with a deep change in the way of conceiving and doing business. Their big idea: “involves creating economic value in a way that also creates value for society by addressing its needs and challenges. Businesses must reconnect company success with social progress. Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success”. Accordingly, companies should tailor their projects in such a way to take account ex ante of implied social costs. The authors emphasize the difference of this approach from the current practice of compensating ex post the places hit by their presence. In this comment, some practical limitations of such a project, and some implications of the approach proposed for economic theorizing, are discussed. - Nella valutazione di un gruppo di economisti di Harvard il capitalismo come sistema attraversa una crisi più seria del solito, che deve essere fronteggiata con un cambiamento del modo di fare impresa. Si tratterebbe, soprattutto per le companies transnazionali, di passare dal commisurare i loro progetti di azione ad una massimizzazione dei ricavi monetari netti su di un periodo abbastanza breve, come oggi accade, ad un approccio che contemperi ex ante i propri ricavi con i costi sociali intravvedibili. In questo commento si sottolineano alcuni limiti di tale progetto e si patrocina una soluzione più radicale del problema con lo spostare apertamente alla fase del progetto di investimento il superamento di eventuali conflitti col bene pubblico dei luoghi investiti, pur senza nascondersi i rilevanti problemi di ri-ordinamento giuridico che ne discenderebbero. Incidentalmente si nota che l’approccio suggerito implica una rimessa in discussione della teoria del valore economico oggi dominante.
- Example of fair trade commerce Vs. change of model in procurement
- Almost all multinationals A great part are American Consumer goods
- Los clústeres proporcionan un marco para organizar la implementación de muchas políticas públicas e inversiones dirigidas al desarrollo económico
- HAVE STRONG LINKAGES WITH THE LOCaL COMMUNITY. ITS CONCEPTUAL ROOTS clusters are the ideal ecosystem for SV initiatives because: They include different stakeholders of the same value chain Thinking at cluster level multiplies the possibilities of identifying SV initiative: - for the implication of different cluster stakeholders sharing common challenges - for the opportunity of detecting and applying diverse business models - for the possibilities given by cluster to cluster collaboration -
- Clusters have a great potential for CSV, but there is a need for systematization of the approach, develop methodology and créate incentives.
- Promote and disseminate the concept at European, National and local level Create methodology and best practice (like cluster concept at the beginning) Define incentives