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Creating Shared Value

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Alyssa Piercy

on 5 November 2012

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Transcript of Creating Shared Value

Harvard Business Review Creating Shared Value 3 Key Ways Companies Use to
Create Shared Value 1. Reconceiving Products
and Markets 1. by reconceiving products and markets

2. by redefining productivity in the
value chain

3. by enabling local cluster development policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities
focuses on identifying and expanding the connections between social and economic progress
value- benefits relative to costs, not just benefits alone

Companies that have successfully engaged in the shared value approach by reconceiving the intersection between society and corporate performance:
Google, IBM, Intel, Johnson & Johnson, Nestle, and Wal-Mart What is Shared Value? The Concept of Shared Value a business needs a successful community to create a demand for its products and provide critical public assets and a supportive environment

communities need successful businesses to provide jobs and wealth creation opportunities for the citizens

public policies that undermine the productivity and competitiveness of businesses are self-defeating Roots of Shared Value greatest unmet needs of the global economy
in advanced economies, demand for products and services that meet societal needs are rapidly growing By: Alyssa Piercy and Uny Chan Business at the
Expense of the Community the more businesses embrace corporate responsibility, the more it's blamed for society's failures
Government and society have attempted to stop this trend by attempting to address social weaknesses at the expense of the business
the solution to this surfacing problem lies within shared value, which creates economic value in a way that also creates value for society by addressing its needs and challenges A Corporation's Purpose must be redefined as creating shared value
drive innovation and productivity growth in the global economy
reshape capitalism and its relationship to society
it's the best chance to legitimize business again Capitalism in Business unparalleled vehicle for meeting human needs, improving efficiency, creating jobs, and building wealth

the moment for a new perception of capitalism is now:
society's needs are large and growing
customers, employees, and a new generation are asking more out of businesses recognizes that societal needs are those that define markets
social harms or weaknesses create internal costs for the firm (wasted raw materials, costly accidents, and the need for remedial training)
addressing these internal costs doesn't necessarily raise costs for firms because they can innovate using new technology, operating methods, and management approaches - increases their productivity and expands their markets How Shared Value is Created companies can create economic value by creating societal value

there are 3 ways to do this:
1. reconceiving products and markets
2. redefining productivity in the value chain
3. building supportive industry clusters at the company's locations 2. Redefining Productivity in the Value Chain a company's value chain inevitably affects, and is affected by, numerous societal issues, such as natural resource and water use, health and safety, working conditions, and equal treatment in the workplace 3. Enabling Local Cluster Development clusters include businesses and institutions such as academic programs, trade associations, and standards organizations
clusters a prominent in all successful and growing regional economies and play a crucial role in driving productivity, innovation and competitiveness Examples of
reconceiving products
and markets: Kenya: Vodafone M-PESA, 10M customers, 11% of GDP

India: Thomson Reuters, farmers w/<$2000, 60% income up Examples of
redefining productivity in the value chain Dow Chemical: water consumption 1B down, $4M saved

Hindustan Unilever: Project Shakti - 45000 women entrepreneurs in 100000 villages direct-to-home distribution, 5% revenue Example of cluster development Yara: $60M investment in ports and roads in Mozambique and Tanzania, with financial support from the Norwegian gov. Benefitted 250000 small farmers and created 300000 jobs The big question:
How is CSV different from CSR? CSR: focus on reputation, little connection with core business
CSV: leverages the unique resources and expertise of the company to create economic value by creating social value
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