Recap Shared Value Summit 2015

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

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Mark R. Kramer

Reflection on the CSV concept

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.

Suresh Prabhu

Intersection of Government, Business & Society

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.

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Sadhvi Bhagwati Saraswati

A Spiritual Linkage to Shared Value

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.

Pujya Swami Chidanand

Blessings to The Shared Value Summit..

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).

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Suresh Narayan

CSV in The Areas of Nutrition, Water & Rural Development

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.

Mark R. Kramer & Justin Bakule

Why CSV is Becoming a Strategic Imperative For Businesses

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.

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Rahul Gangal

Identifying & Addressing Social Problems Intersecting With Businesses

The concept of shared value encompasses a zone that overlays between households, businesses and governments in a context that is the overriding environment and society. The concept of shared value outlines creating profitable business opportunities that address real social issues. India has grown three times faster than the world, and its growth story is on track. There have been a substantial government impetus in the last one year for inclusive growth that is relevant from mandatory 2% contribution for CSR, Jan Dhan Yojana for financial inclusion, et al.

Shared value is not charity; it is a profitable business, but one needs to find their business model that find opportunities and addresses society by – creating scalable business impact and building local investment clusters. Companies need to make their products and services more contextual regarding social needs.

We need to link economic to social progress. There are a lot of examples from companies like Godrej, GE, Mahindra Finance, et al. in India that have built models that are profitable by addressing needs of the lowest base of the pyramid. These companies have created market disrupted products to cater a relevant local need under a framework that can be primarily classified as shared value. It is not just about CSR but about profitability as well. Shared Value Initiative India that is backed by some of the largest corporates in India is creating awareness at a scalable level across industries on shared value that is the future for businesses

Storytelling Session

Importance of Technology, Social Enterprises & Community Participation in CSV

Technology plays a pivotal role in solving acute needs of the masses in a way that benefits both society and businesses. In India, the vaccines for widespread diseases are free, but awareness among the people about it is low. The Government spent more than $50 million on a program to create awareness, but it could reach only a million people. Companies like Vodafone has committed to reaching 6 million people by offering free awareness videos and paying people to watch the videos.

Organizations like SEWA is helping people at the bottom of the pyramid by training them to earn a source of livelihood. Several women have been provided with a life of dignity by enabling them to learn technology and train other community members of their learnings. Technology is an essential element in empowering people. A SEWA member who earlier sold 10,000 products is now able to sell 50,000 to 1,00,000 products by marketing the products with the use of technology.

Community participation is crucial to solving social issues such as disposal of plastic. We simply cannot outdo plastic as it supplements a lot of natural resources that needs to be conserved. To get rid of the problem we need 100% participation because even if 25% of people don’t recycle plastic, there is trash getting into oceans and landfills.

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Panel Discussion

Creating Shared Value - Profits with Social Benefits

Children are the future of any nation and many organizations in India have started to realize this. Sagar-Mitra is one such social initiative that brings out leadership abilities in students at a very young age by making them responsible for the community development. Children are quick to understand that how their actions could create a negative impact on the environment and society. Sagar-Mitra has participation from 1,20,000 students across five cities that are working to reduce the spread of plastic in the eco-system. The model resembles an ‘ant model’ where each ant is working only in its place, not eating sugar but carrying where it should be carried.

Empowering women will play a critical role in advancing the journey of shared value creation in India. SEWA (Self Employed Women Association) have recognized the need for women empowerment and have been the source of strength and inspiration for thousands of women. It builds leadership skills and capabilities in women that help them earn a livelihood and live a life of dignity.

In India, health has been one of the toughest issues to address. Tuberculosis is a disease that not only has 9 million new cases a year but, is also a huge socio-economic problem. It’s one of the biggest health crisis in India.  One of the major issues that restrict TB patients from completing their treatment is the time and money spent in traveling to commute to the hospitals. Operation Asha addresses this challenge through a low-cost, sustainable solution that offers door-step treatment to TB patients. Deployment of cost-effective technologies such as tablets, fingerprint scanners & e-compliance terminals allow real-time tracking of patients and the volunteers makes sure that a patient completes its treatment.

Microfinance institutions have also been dealing with social issues like sanitation. Sanitation is linked to better health, so if people do not defecate in the open, their health will improve eventually reducing the mortality rates. It will benefit the health insurance companies as the claims would reduce considerably. FINISH Society identified this issue and conceptualized a solution using microfinance as a tool to drive sanitation. The model also integrates financial inclusion by bringing in banks, cooperative financing, microfinance institutions and government subsidies in the supply chain.

Shared value has changed the way companies view partnerships. Companies have started to work with the individual on the ground to find solutions to issues concerning society. Businesses have been bringing partners into their value chain to solve social problems at scale.

Panel Discussion

Can Shared Value Save the World from Economic, Environmental & Social Collapse

Shared value is about value creation, cost absorption, re-imagination and reframing a product. The price tag of products should also reflect the cost it would have on the environment and society. Regarding climate change, when one starts pricing externalities that a product would have, it would indicate the amount of energy consumed by a machine and the amount of carbon dioxide emitted by it.

The world needs to have a radical new vision as to how marketing needs to operate in a new world. The current ways of production and marketing are not sustainable for the long term. Marketing is about connecting people with the right kind of ideas that leads to positive changes in consumer behavior. The world should shift from a zero-sum mind where we operate out of fear & insecurity to a non-zero world vision that allows us to operate from a place of hope & optimism. There is an enormous surplus on this planet, and we are not even scratching the surface of it. Technology and a mindset of open source will allow the businesses to tap and unlock new opportunities.

The original purpose of the business that is to create value that leads to profit is mixed with the flawed system that emphasizes more on profit and less on people. Designing businesses for profit will result in systematic problems that are visible today. We have a food system where the food producers are exploited leading to suicide by farmers. Shared value is trying to figure out where the businesses have gone wrong, and it promotes the idea of creating profitable business models that serve the society’s needs. At present, there is a need to change the way business works to address social and economic problems. Shared value looks at creating value for society and companies and is based on three things – reimagining products and markets, enhancing productivity in the value chain and enabling local cluster development.

There can be different ways to create environmental, social and economic profits at the bottom of the pyramid – by ensuring transparency while procuring goods, investing and working directly with people at the bottom of the pyramid. It will create more value for the society and profit for the company. Bringing in the principle of design thinking wherein needs of the masses are taken into consideration before designing a product, will increase the value of product. The principle of design thinking is led by two fundamental tenets – empathy & creativity. Connecting empathy and creativity will unleash Alchemy. Creating shared value is about abundance that is created when a shift in mindset is brought by inspiring and connecting people. The shift in mindset can be achieved more swiftly by adopting the principles of design thinking.

Many companies have set-up a separate social business entity in the rural areas of the country that acts as an innovation hub and design solutions for the problems of society. Social business is non-dividend business and works specifically in addressing social needs and issues. It unleashes a lot of innovation as creating value for people is their primary aim rather than profit maximization. Many innovations have resulted by designing business models that cater to societal needs and creates value not only for shareholders but also for company and society.

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Panel Discussion

Making Financial Inclusion a Reality Through Shared Value

India is moving towards financial inclusion with the Prime Minister himself pushing the agenda forward for empowering people financially through Jan Dhan Yojana. The need of the hour is financial literacy, enabling technology, measuring the impact of financial inclusion and making it profitable for the commercial banks.

The objective of financial inclusion is to improve credit delivery, understand the financial access and implement it at a manageable cost. People need to be educated about the role of financial integration at a young age as almost 24-30% of the people are below the age of 15. Tools that promote financial literacy needs to be built so that it is not only available for people with the low-income group, but also people with reasonable income group can access knowledge on financial inclusion. Rural people are more concerned about wealth generation than access, literacy, and inclusion. Wealth generation is not about money and has many other values associated with it. Even non-literate people can manage finance as the Mann Deshi Bank has 310,000 women banking with them in two states. The banking sector needs to listen to customer needs. Chetna Sinha, founder of Mann Deshi Bank, referred to the doorstep banking initiative of her bank as women often don’t come to the bank branch fearing loss of a working day

Financial inclusion doesn’t make sense for commercial banks because the cost to maintain an account where there is no money and no transaction is very high. The accounts not necessarily making money are rather a loss making proposition. We need to take steps in the right direction as any wrong step would push back the dream of financial inclusion. To make financial inclusion a success, it is critical to have direct benefits transfers pushed through the banking systems. Commercial banks can create shared value by training the marginalized section of society with necessary tools and skills on financial inclusion and capacity building.

Measuring the impact of a shared value initiative will help in quantifying the social impact of investment and allow businesses to further scale their initiatives. Impact investing is about making a social and environmental impact along with financial returns. Impact investing needs to be linked with empathy to make it successful at the bottom of the pyramid. Linking both will help in a better understanding of the market. A big change will happen in India when financial institutions and successful businesses are involved in impact investing as it is also a paddle for innovation.

Achieving financial inclusion by opening brick and mortar branches will not be possible. One way to achieve financial inclusion is to supplement it with other products on the same platform to make it more attractive and efficient. Out of the entire population of India, nearly 70% of people in India have access to mobile phones and linking financial inclusion with technology will help in increasing the impact. Impact investment and financial inclusion, when linked together, will assist in the assessment of where the money borrowed by weaker sections of society is used; the impact of what they are using the money for and the financial architecture.  The availability of technology and evolution of new financial products should be favorable for financial inclusion.

Panel Discussion

Redefining Value Chain in the Health & Food Industry

There is an increase in Malnutrition worldwide as well as in India. There is a need for multi-stakeholder partnerships to forge solutions. There are three areas where the industry, partners, and government can work together – Access, Awareness, & Empowerment. If businesses can triangulate access, habit changing education and empowerment together, then a lot can be done in the area of making healthy food accessible to people in this country. It will eventually address the issue of malnutrition resulting in a healthy population.

Nutrition is something that is not directly visible. Hence, it needs to be included in the food that people daily consume. Cargill introduced fortification of edible oil with vitamin A, D & E to help address the issue of malnutrition. Edible oil being the largest staple food penetrating into Indian homes enhances the food with additional nutrients. The competitors and new entrants would be forced to include fortification of their products for a substantial stake in the market that in turn will make it an industry practice benefiting the consumer and the company. Consumers should also be made aware of healthy products by marketing in a way that the consumer understand. Fortification is a very relevant concept but businesses also need to make sure that people can afford food and not die of starvation. According to statistics, 52% of the food in the US gets wasted. The cost of food can be brought down by the inclusion of better technologies, and that should be the primary objective for the industry.

Healthcare is not separated from nutrition and technology. Three things that matter in the healthcare industry are cost, quality, and access. Nearly 60% of the population of India lives in rural areas, and it has only 50,000 doctors. Businesses are trying to empower people in suburban and rural areas by selling them solutions to their problem. For example – Philips has a solution ‘Mobile Obstetrics’ that monitors women from the time they conceive to the end of their delivery tracking everything from their hemoglobin to blood pressure. A more holistic approach is now being taken by the healthcare providers and equipment manufacturers rather than being looked at in silos.

Businesses have come up with innovative models that bridge the gap of healthcare facilities in rural areas. Vaatsalya is a chain of hospitals that is enabling to access to medical care in the rural areas. The hospitals attract doctors with a rural background working in the urban areas. It is resource allocation that makes sure to send a doctor where ever there is a patient. In the medical practice there have been trends on the medical side which can be classified as ‘VIP of health’ – Virtual approach, Integrated approach, & Personalized approach. The future trends for businesses are supposed to be – making nutrients as the core of healthcare system, bringing various stakeholders together, and understanding the behaviour of consumers & ways to influence it.

A positive impact on society can be created redefining value chains if businesses focus on – empowering society with technology and education, commitment from enterprises to make a difference to society and coming up with solutions that address issues at the ground level.

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Panel Discussion

Future of Shared Value in India

India is in a unique position to demonstrate the role of shared value to the world. It is the first country in the world to have made CSR as a mandatory requirement for corporates. There is an overlap between sustainability, CSR and shared value with shared value being a notch ahead of the other two concepts. Presently, CSR is more relevant in the Indian context as sustainability is an inward looking approach for companies wherein they try to improve their efficiencies. The shared value lies at the center of both these concepts. There are three distinct dimensions to shared value – supply, demand & ecosystem.  The dimension represents opportunities for companies to engage local community as an important stakeholder, build strong and long lasting relationship with suppliers and impact society by creating shared value.

Indian corporations go beyond their call of duty to create an impact on their employees and communities but fails to make a substantial impact on addressing social problems of the country. Doing well and creating value should not be looked at separately rather businesses should create value by doing good. Companies need to move into an entirely different direction to secure the future that would involve moving beyond the barriers that hinders inclusive development. Shared value is how we collaborate and innovate to shape programs & projects that target areas of – women empowerment, women livelihood, education, water, skill development, etc. The collaboration will help in increasing market share and size.

CSR model in India is a tool to incorporate private sector efficiencies, private sector innovation, and private sector strategy contemplation to link India’s development story. Indian CSR model coincides with the concept of shared value that links social good and strategic acumen. The idea of connecting civil society, organizations and NGOs have appealed widely to the Indian corporates. The idea of CSR as a form of impact investing can be complemented by pooling of resources from like-minded people who wish to work on a particular theme and in a given geography. A model can be created by working with different stakeholders that is almost like impact investing but with an SROI (Social Return on Investment) in mind.

The shared value concept is gaining momentum in India. Currently, companies are more focussed on fulfilling the 2% requirement for CSR, which is mandated by law. If the companies remain stuck at CSR they won’t be able to make much progress but, shared value is something that goes beyond CSR. Shared value views business and society through a single lens. Creating shared value takes care of the 98% of company’s revenue that is ignored by CSR. The link between CSR and shared value is that both the concepts are concerned with social and environmental benefits, but shared value is aligned to a company’s business strategy.

Watch a short coverage of the summit that was showcased on ET Now

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