WHAT CAN SHARED VALUE DO FOR YOUR NON-PROFIT?
You’ve finally come to grips with your corporate partners’ CSR and sustainability strategy and everyone agrees how well your non-profit fits into the corporate agenda. Great! You start making bold plans for what you think will be your organisation’s biggest legacy in the land of social impact and business-to-purpose partnerships. Not more than six months later, along comes a new social impact model called Creating Shared Value. Not another model, I hear you say… but when the non-profit conferences start spruiking it, there’s no turning back. So what do you do? It’s simple: you become a shared value expert.
So what exactly is Creating Shared Value (also known as CSV or shared value) and why is it so relevant in today’s world?
To understand what is meant by the term shared value, let me take you back to 2011 (though sadly not in a DeLorean) when Mark Kramer from the Kennedy School of Government and Professor Michael Porter from Harvard Business School authored the seminal article ‘Creating Shared Value,’ featured in the Harvard Business Review. At the time, the term was primarily understood only by those behemoths practising it as a means of seeking competitive advantage and improved yields, such as Nestle – a name synonymous with everyday consumables and agricultural cluster development – and big pharma companies like Novo Nordisk.
Kramer and Porter at the time defined shared value as “enhancing the competitiveness of a company, whilst simultaneously advancing the economic and social conditions in the communities in which it operates.” Put simply, shared value is about leveraging the strengths of business to create societal impact and generate business profit – at scale.
To answer the second part of our question relating to relevance, let’s take a helicopter view of the world to understand its underlying pressure points. In particular: the implications of the GFC and the negative impact the financial crisis has had on nearly every national government worldwide; the recently adopted UN Sustainable Development Goals that aim to reduce major disparities in our world; the growing zeitgeist of community-led social change; and the heightened sense of distrust many consumers have for our once-revered multi-nationals. From this altitude, we can more easily grasp the relevance of shared value and understand why the take-up of its models has rapidly dispersed throughout the globe.
Measuring the impact
A big part of shared value theory is the integration of strategy and measurement and adaptation of both from the outset, thereby allowing you to track progress against your social and business goals. This method also identifies hidden value via the insights you’ve gained over time – crucial for any organisation looking to unearth the next big innovation in their sector as insights act as the precursor to unlocking new innovation. This in turn leads to breakthrough development in products and services and their distribution channels.
It’s important to note that shared value can be created in three ways:
- Reconceiving products or markets (Level 1);
- Redefining productivity in the value chain (Level 2);
- Enabling local cluster development (Level 3).
To illustrate the nature of shared value against these levels, each of the health sector examples below incorporate economic benefits alongside the social impact:
- Level 1 - Reconceiving products or markets:
- WHO: Dr Reddy’s Laboratories
- WHAT: Adapting existing products to reduce cost and complexity
- HOW: The ‘Red Heart’ cardiovascular pill combined several products in one and was widely distributed across poorer regions in India for secondary prevention of heart attacks.
- Level 2 - Redefining productivity in the value chain:
- WHO: GSK & Pfizer
- WHAT: Collaborating to establish local R&D centres that reduce cost and development risk
- HOW: GSK and Pfizer created a joint venture to create a viable pipeline of HIV medicines.
- Level 3 - Enabling local cluster development:
- WHO: Novo Nordisk and the World Diabetes Foundation
- WHAT: Partnering with the Chinese Health Ministry to improve diabetes case management guidelines
- HOW: The roll-out of behavioural change programs to healthcare providers improved patient adherence and take-up of medical treatment plans across China.
Source: Shared Value Opportunities in Global Health, FSG, 2015
From a non-profit perspective, awareness of the shared value business model is the first step towards embracing a new way of working. If you represent a non-profit, familiarise yourself with the three levels of shared value and understand that initiatives need to be strategically measured from the outset and scaled to achieve economic benefits.
Shared value and the non-profit sector
When I talk about shared value to prospective clients, I’m regularly asked whether it will replace community grants, regular philanthropy, charity partnerships and workplace giving programs. Honestly, with reduced government funding and business being shown a way forward that actually insists on business profit while making a social impact, shared value is an attractive prospect to many companies worldwide. At the very least, companies are exploring the idea of shared value to better understand its application and at best, swiftly upskilling their key people to work behind the scenes on rolling out these unique initiatives.
At the recent Shared Value Forum in Melbourne, discussions focused on the need for cross-sector collaboration in an effort to shift the needle on societal issues. Local examples of cross-sectoral shared value partnerships include Uniting Care partnering with NAB to deliver the NAB Assist financial hardship program; and Good Shephard Microfinance partnering with Suncorp to develop accessible insurance cover for people on low incomes. Some non-profits, like Save the Children, are going one step further and setting up Shared Value departments, positioning their organisation at the forefront of potential shared value collaborations with the private sector.
According to Helen Steel, executive director of Australia’s Shared Value Project, “Non-profits play a crucial role as they provide on-the-ground expertise and deep understanding of social issues that can be addressed through the shared value framework.”
To take advantage of this paradigm shift, non-profits must become more literate about shared value and its many facets, because without the cross-sector collaboration, many companies will be challenged to get a shared value initiative off the ground. Identifying relevant social issues to target, prioritising them and performing an incubator role for fledgling shared value initiatives are key activities non-profits can undertake that play to their strengths of community trust and expertise in a given social sector.
Q Social Impact is a dedicated shared value and social impact firm.
© Q Social Impact P/L 2016