On power & evolution: Exploring 'shared value'

As a na?ve optimist, I immediately latched on to the concept of ‘shared value’ and its promise of ‘win-win’ situations for business and society. Porter & Kramer launched the concept of ‘shared value’ into the mainstream in a 2011 Harvard Business Review article introducing it as “creating economic value in a way that also creates value for society by addressing its needs and challenges.” Porter & Kramer go on to outline how companies benefit financially when they benefit the society/ies in which they operate, redefining the purpose of corporations as creating this shared value, instead of just profit. This, they argue, is the new view of capitalism that escapes from the "old, narrow view of capitalism" that Friedman touted. Intrigue…

I agree that shared value is possible, and there are situations where one can see its success. For example, Olam International opened local processing plants and trained workers in four African countries which enabled them to cut processing and shipping costs by as much as 25%. This reduced carbon emissions, and also helped them provide direct employment to 17,000 people – most of whom being women. However, shared value is not feasible in all contexts, as not every situation yields win-win results. Indeed, it can lead to – as critics of shared value have illustrated – companies cherry picking easy win-win situations instead of tackling more complex social and economic challenges. Furthermore, corporations may simplify the complexity of social and environmental issues, and promote the impression complex problems have been transformed while problems of systemic injustice remain unsolved.

I also find that Porter / Kramer contradict themselves in their shared value argument. They claim that shared value escapes the narrow view of capitalism that the purpose of business is profit, but they go on to say that involving social purpose represents a higher form of capitalism that enables society to advance more rapidly and companies to grow more. Here, profit remains the end motive. The only thing that has changed is that in shared value, doing social good is seen as a means to achieving the most profit long term.

Perhaps my biggest gripe is related to the concept of power. Many of the problems corporations try to deal with on a local, controlled level are systemic problems of injustice that need broader solutions with all stakeholders involved in more of a democratic process. Companies inadvertently may try to address these challenges through their own perspectives and by selecting partners, thus maintaining ownership of the identified solution. In this, there remains a skewed power dynamic with societies being influenced by corporations and perhaps even dependent on them.

I am admittedly a na?ve optimistic turned skeptic. However, I still remain excited about what this idea can generate. I like the fact that it pushes for community ('cluster') development, and that it involves heightened form of collaboration with NGO and government partners. I think there is space to continue to build and innovate on the idea of shared value. In particular, I like the concept of taking holistic approaches to building shared value and integrating stakeholder involvement. In the women’s empowerment sector, for example, BSR and ICRW have launched an Investing in Women initiative in February 2016 that promotes a framework with eight building blocks for companies to support women’s economic empowerment. This framework require companies to think of the various assets they can employ to develop a holistic strategy that addresses all eight building blocks, and integrates local stakeholders throughout the process. 

In particular, I remain excited about the idea of shared value as becoming the norm in the realm of start-ups. What if start-ups developed with a sense of shared value in their DNA? In this, I envision start-ups co-designing their approach with local community members and stakeholders in order to optimize their social impact in a way that is aligned with their business goals. Perhaps this is the beginning of an evolution of business.

There I go again, always a naive optimist at heart. 

This is a post in a series of posts for a UC Berkeley MBA course. #StudentVoices @BerkeleyHaas #MBA292C1 @robertgstrand