Commercial Brands' Framework For Driving Purpose

Shared Value: The Evolution of Your CSR Efforts: Commercial Brands' Framework For Driving Purpose
5 Minutes
Ali Hashemi
July 10, 2022

A shared value is a combination of economical and social values that your business provides for both stakeholders and shareholders; From metrics like how much revenue your business is generating? All the way to how much your business gives back to the communities around it. The concept of creating a shared value was first introduced by Michael E. Porter, a Harvard strategy professor back in 2011. Since then corporates giants like Unilever and Dove have been implementing the concept at the core of their business strategy. He defines shared value as “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. Shared value creation focuses on identifying and expanding the connections between societal and economic progress.”

In the past when a company wanted to help society, they could leverage on a philanthropy program, where each business would donate a small portion of their profit to the communities around them. Philanthropy - however, a good act - is not a sustainable help for communities; an actual fund without a proper infrastructure for the community to use can even create a negative impact to that society.

Then the CSR (Corporate Social Responsibility) concept came in, where corporates were in charge of giving back to the communities around them in a more sustainable way, where the business creates an opportunity for different communities to be involved either in the process of manufacturing, distribution or even marketing. A CSR program has many pros; communities can vastly benefit from the impact the private sector provides in the forms of grants, and corporate volunteering to the society via their CSR programs, however, it is still a separate department, a separate initiative with a separate budget in most of the business structures.

This is where a shared value comes in. A shared value is a next step to the CSR activity, it encourages the business to consistently think about the communities around them whilst crafting their own business strategies. A value that can be beneficial both in an economic and societal sense.

A Shared value operates on 3 levels;

  1. Reconceiving products and markets in ways that meet customers' needs but also contributing to society. the best example here would be General Electric's Healthy Imagination program where they develop and provide quality, low-cost help to mothers in developing countries.
  2. Redefining productivity in your value chain through social or environmental innovation. take IHG Intercontinental Hotel Groups, for instance, they developed Green Engage, an innovative online tool to efficiently control each hotel's energy consumption.
  3. Cluster Development; supporting the well-being of industries related to your own, in ways that improve societal conditions. The best example here would be Nestle, where they provide assistance for farmers and distributors by providing education for them in different fields of farming, distribution, and even marketing.

But can consumers' purchase intent be impacted by the shared value that the business carries?

Yes! Consumers have been evolving as well; consumers in the SEA region are not following the same behavior of consumption compared to 10 years ago; based on a study done by Taylor Brianne from Texas Technology University the research data shows that if a brand has a commitment to a particular cause, than the intent to purchase would be higher by 70%

Consumers are more conscious of where they spend their money, they would prefer buying from brands that are creating a shared value for their communities, the simplest case study would be Grab, where consumers are preferring to purchase from the app simply because it gives back to the small local businesses and empowers everyone to be more economically active for the greater good of the country.

In conclusion, shared value is not a marketing campaign nor an event that your company hosts yearly, but rather an ongoing process that ties your economical values to every possible societal value in the communities around your business. It deserves a larger share of the conversation at the decision-making table. It will create profit for your shareholders and positively impact your stakeholder's community.

At REISE we offer consultancy on how to create a shared value for your business, schedule a call with us today to find out more