Share Value Concept – An Alternative Strategic Business ModelBy Dr. Ashoke Mehra
The Share value concept was coined by Michael E. Porter and Mark Kramer in 2011 and the concept was first published at the Harvard Business Review under the title ‘Creating Shared Value’. The concept advocates the business to change its outlook to address human needs and to understand both internal and societal cost which arises from not addressing the social and environmental cost.
The concept understands and acknowledges the contribution of a business entity with its capital, however, it also recognizes that the present functioning of large MNC has to be changed by the creation of mutual value for itself and its stakeholders through the company’s asset creation, product and service delivery, and investment. That will create new business opportunities, new market, competitive advantage to a company as well as will solve society’s problem. Shared value can be created through a business’s various function such as sales, supply chain management, research & development, and through community engagement. Therefore, the adoption of a centralized share value business strategy is a prudent business decision so that the value system is embedded in the business’s planning, functions, projects, and into employees’ role.
Three ways to Create Shared value Reconceiving Products and Markets:
Conceiving new products or services for existing or new markets based on collaboration with customers and community stakeholders to address societal challenges.
Redefining productivity in the value chain: Engaging with suppliers and internal/external stakeholders to improve processes, quality, sustainability, productivity, social outcomes, and competitive advantage.
Enabling local cluster development: Enabling the collective as well as sustainable development of the market and geographic environments in which the company operates through community involvement.
However, share value is not about sharing the value which already exists or personal value or employee engagement, or managing balancing stakeholder interests. At the same time, shared value is not corporate social responsibility. Share value can only be created when company place solving to a society’s problem as it’s core business objective. Whereas CSR is a sense of obligation to pay back to society, reputation management through disclosure practice or investment in a social project with an expectation of reputation management. At the same time, the involvement in the social program is not the business’s core growth strategy.