Shared Value Summit 2015 was a celebrations of ideas around shared value amongst a varied cross-section of practitioners, thought leaders, government leadership and corporate honchos. The summit included interactions, meaningful panel discussions, keynotes from national and international speakers on creating shared value.
Experts Speak on Shared Value
India as a country is an area of tremendous innovation where companies are increasingly finding business models that are more inclusive, and so for them to understand the relevance of bringing the low-income population to their ambit and serving their needs to curb social issues is the key to the success of India’s future. Some of the great examples of creating shared value are from India from companies like Nestle, Novartis, GE, ICICI that have addressed critical needs and challenges of society at a profit.
There are different ways in which businesses engage with society and, philanthropy is one the traditional ways in which business makes money and gives it back to the community. The concept of creating shared value is not philanthropy and corporate-social-responsibility but, a business strategy. Corporate Social Responsibility & Philanthropy cannot have a large scale impact on business and society that can be created by shared value initiatives. Philanthropy may do good and is necessary but, it may not achieve the social impact that comes back to the business that justifies the continued investments. Corporate Philanthropy is about sharing a piece of pie whereas shared value is about making the bigger for everyone. Shared Value is the idea of finding business opportunities in solving social problems using business as a tool for social progress. There are initial challenges of treating social problems as business opportunities, and it takes a different corporate mindset wherein diverse business models are involved. Access to scaled resources, opportunity to innovate, a drive to efficiency and a focus on the products & services gives businesses an incentive to take risks that governments and NGOs are hesitant to take. However, not every social problem can be solved by business alone, and there is an inescapable role for government and social sector enterprises. Shared value creates a new agenda for the government and civil society to support new ways of doing business. Involving NGOs who have a better understanding of population in a certain market help companies create profitable shared value initiatives.
The shared value concept recognizes the interdependence between business and society rather than the friction between them. It supports the concept that long-term success of companies is largely dependent on the social conditions of the regions in which they operate. Educated & healthy workforce, proper infrastructure regarding roads, railways, distribution network and access to travel airport are necessary requirements in regions wherein a company operates. Shared value is created by identifying the intersection between social need, business opportunity, and the assets & expertise a company brings in at three different levels – reconceiving needs, consumer markets and products, redefining productivity in the value chain, enabling local cluster development. CSV business models enable a business to work with government, civil society, and development agencies, but it is fundamentally about competitive strategy and innovation. The essence of strategy is about making choices as to what you do differently to deliver more values to the customers. It is about doing business differently and designing solutions for markets that haven’t been addressed before. By thinking differently, businesses can solve a lot of problems in the next decade than they have in the past 50 years.
The greatest competitive advantage and the next competitive frontier of capitalism will involve figuring out the social and environmental problem that a company is uniquely able to solve at a profit. Business acting as a business and not as charitable donors is the most powerful force in addressing social change.
Businesses significantly contribute to the well-being of society by offering public goods that address needs of people. Business growth and societal development are not two different sides of a coin rather they present the same side of the coin. There is a positive relationship between the role of the government and businesses as the government is responsible for creating an atmosphere where business can contribute effectively towards the growth of society. According to the Hon’ble Minister, India needs sustainable business models under which companies work along with the government to bring prosperity to a large number of people in the country. Government’s role is to create policies that increases the purchasing power of people, and the role of businesses is to focus on creating products and services that are within the reach of people at the bottom of the pyramid. A model where businesses gain and consumer losses can never be successful. There is a need for institutions that protect consumer interest; a need for enlightened minds and leadership and a need for awareness so consumers can make informed choices. Ultimately, aligning business interest to society is better for the long-term growth. It is important for sustainable business models to have an effective outcome and create public social good. Platforms like Shared Value Initiative India are partnering with the right members to create an impact, said the Minister.
Shared value is a beautiful concept that promotes the development of all. The business strategy of stepping on others’ heads to get a head for themselves is not only bad business, but it is anachronistic today. Shared value is about the expansion of profits and not just its redistribution. It is not about what we have and share it; it is about how to use what we have and maximise its impact. Doing well and doing good are not mutually exclusive concepts. Shared Value redefines the model of success and that it is much bigger than making the profit. The value that a product provides is bigger than its price. If a product or service offered by a business doesn’t create a positive impact on its consumers or society, then it’s a failure.
Shared value is about identifying the need and supplying the products to fulfil that need and not greed. It is not only a great model for businesses but should be the only model that creates a better world. It will not only result in sustainable business models but also create a bright, peaceful and positive world for everyone.
There is a need for business to adopt values of acceptance and respect for all. Businesses need to focus on their internal environment and processes to make sure their external activities create a positive impact. The companies need to put their strategies in place so that the results of their activities puts them in peace and not in pieces. The internet plays a vital role in making information accessible and businesses today does not only need information but also inspiration. Business has the power to create a large-scale positive impact on society and promotes values of love, harmony and peace. The world is a one big family comprising businesses as well as society and should possess noble thoughts of respect and acceptance. Innovation and inspiration will foster new ideas for businesses and society such as building toilets instead of temples that will solve needs of people. Adoption of Shared Value practices will lead to CSR becoming HSR (Human Social Responsibility) and MSR (Media Social Responsibility).
Nestle has been present for more than hundred years in India and has a legacy of creating shared value. At Nestlé, creating shared value is based on the understanding that business and long-term social benefits go hand in hand. Any business that thinks long-term and follows sound business principles can create value for society and shareholders through various activities such as creating a livelihood, working with suppliers, contributing to the economy, etc. As a global leader, the company believes it is not only their duty to operate responsibly but it is also an opportunity to create long-term positive value for society. Nutrition, Water and Rural Development are the three areas that have been identified by Nestle to create the greatest possible value for people. On the nutrition front, several initiatives with a special focus on maternal and child health have been launched. The company practices responsible and sustainable management of water catchments to address the issue of depleting water tables in India. Their responsible sourcing guidelines help address the need to build sustainable farming communities, traceability and quality assurance for their consumers.
The idea of shared value has landed at the right moment and found resonance with the companies who could mold it for their good for leading business and social progress. The shared value concept resonates prosperity of society with the success of enterprises. The dialogue for shared value has changed in the last four years from defending the concept to its acceptance to adoption by businesses. The idea has changed tremendously for the better and benefitted the society & companies across all sectors. Increasingly, people are becoming purpose-driven and want to act on the social issues plaguing the nation. This has led to shared value being an imperative for an increasing number of businesses.
The 2% requirement for CSR mandated by law offers a unique opportunity for India to demonstrate the advantage of this model to the world. Companies can partner with NGOs to create a positive impact on society. Philanthropy is not a wrong concept, but it fails to create a self-fulfilling cycle that shared value does, where the contribution goes beyond solving just the immediate needs. There is an opportunity wherein CSR law can become more established and qualify shared value initiatives as a business requirement. In future, the lawmakers should focus more on the results achieved in solving a social problem rather than the amount of money being spent. India can become a world leader provided there is sufficient cooperation and motivation by the government for the corporate sector. The shared value concept strengthens a company’s competitive context that helps the growth of the business over an extended term.