Welcome Guest [Log In] [Register]
Add Reply
10.2 Creating Shared Value
Topic Started: Aug 1 2012, 11:20 AM (65 Views)
mikesale

10.2. Porter, M. E. & Kramer, M. P. 2011. Creating shared value: How to reinvent
capitalism and unleash a wave of innovation and growth. Harvard Business Review.
Article Reviewed by Mike Sale – 7/31/2012

This relatively recent article (2011) written by Porter and Kramer attempts to better define “shared value”, and strip away some negative perceptions of businesses by explaining how businesses can do both what is right and beneficial for their shareholders while collaborating with their local communities through a common goal of innovation. Shared value is defined 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. The authors identify three distinct ways that companies can create shared value opportunities:

1) Reconceive products or markets: Companies can utilize their products or core skill sets to meet previously unconsidered and unmet needs that largely benefit society (i.e. Wells Fargo providing unique solutions for budgeting and managing debt)
2) Redefine Productivity in the Value Chain: Removing waste from any part of a company’s process can save time and money while benefitting the local area, employees, or the environment (i.e. Johnson and Johnson’s smoking cessation program)
3) Enable Local Cluster Development: When companies identify needs in the local area (including institutional voids), they can build components that will help fulfill this gap and better the society where they work (i.e. Nestle working to strengthen all components of their supply chain)

Overall this paper was very valuable to read and attempt to look at some business decisions from a different perspective. The main points are clear, and the authors lend validity to their claims by introducing numerous examples and data into the paper to further validate their claims. I found one of the most interesting data points was the initial disagreement with fair trade principles. The practice was designed with the best of intentions in ensuring farmers were paid a fair wage for their efforts, but in effect limited the innovation that could contribute to shared value that could wildly increase the farmer’s wages.

I can personally relate most closely to the segment on redefining productivity in the value chain. When I worked with Ingersoll Rand I was involved in a series of projects that were targeted for both the benefit of our company but that had shared value opportunities for our community. At a local level I worked with a team to redesign the product, branding and packaging of a popular product line. The result was a smaller product that would fit in a smaller package and deliver cost savings to our company. The positive externalities included reduced paper and plastic as well as reduced shipping space required in transit. On a small scale, a project that was a very positive opportunity for the company also helped benefit the conditions of our environment.

The most interesting segment from my reading was the section on local cluster development. This seems to most relate to some of our global opportunities discussed in class, including the development of new systems to fill institutional voids. Any of these methods could be applied globally, but this one in particular seems to appeal to a potential emerging market where certain institutions may not be built as strongly as they are in the US. When Ingersoll Rand began looking at extending their Hussmann refrigeration business into India they realized that they could not make money by supplying the freezers alone. The entire cold chain of food had gaps where the goods could be damaged before making it to the freezer from the farm. Investments in infrastructure (roads, trucks, distributors) would turn out to be beneficial to both our company and to the society overall as new methods to transport fresh food were uncovered.

As a class I think there are strong opportunities to think about these three concepts in our current business platform. The authors want to shake the perception that businesses are in it “for a quick buck” and show that through innovating products and processes there are several different methods to improve the company’s profitability while sharing the value with the local community.
Attached to this post:
Attachments: Mike_Sale_Article_Review___10.2_Creating_Shared_Value.docx (13.42 KB)
Offline Profile Quote Post Goto Top
 
1 user reading this topic (1 Guest and 0 Anonymous)
« Previous Topic · Session 10 | Leadership and Global Ethics: Universal Values in a Pluralistic Society · Next Topic »
Add Reply


Theme by Rae of the ZetaBoardsThemeZone.