Even as Indians are doing great business, senior fellows at Harvard – Mark R Kramer and Michael E Portar – feel there is still something amiss, something which companies here and world over are failing to recognize that can ultimately prove to become a major threat to their so-called sustainable business models.
“It’s the need for Creating Shared Value (CSV),” Mark Kramer said at ‘Shared Value Summit 2015’ in Gurgaon’s Leela hotel on Friday. CSV is an approach that takes into account social problems which intersect with businesses and makes it a major part of the core business strategy of a company. This becomes increasingly important for countries like India by virtue of the fact that society here is ridden by several social issues like poverty, illiteracy, unemployment etc which need to be addressed.
“You cannot have a successful business in a failing society. We are very used to thinking business as being the enemy, as something that takes away from the society but for them to succeed, society must also succeed. Companies can play a big role in this regard as they have tremendous tools to solve social problems like knowledge, technology, technical know-how, access to global markets, training and skill-set,” he says, adding this is the way forward to see a growing and evolving India.
In 2011 Harvard Review article “Creating Shared Value”, Porter and Kramer defined their understanding of the new approach as finding the synergy or overlap between a successful business and a successful society. The article points at 3 different ways of doing it: reconceive products or markets, redefine productivity in value chain or strengthen clusters.
He says, for the CSV model to become a part of corporate hygiene anywhere needs major mindset change where “we embrace a problem solving approach that goes beyond thinking what we can do in our company alone to also what we can do for society that we operate in.” Note this – societies that we operate in. This means there is no universal CSV formula. Shared value concept changes from region to region, country to country and so on. It depends on the industries that are strongest, on social issues that are unique in a particular region, the culture there and the role of government.
“We are finding around the world that shared value is being initiated so that local businesses can learn from each other on how to create this model around the specific opportunities and issues that are unique to their region,” says Kramer.
Also, he adds, that the entire point of this approach is defeated if it is merely included as a peripheral agenda like the CSR. It’s important to understand that CSV does not replace CSR or Philanthropy, but can be in addition to them, such that businesses can find new opportunities for competitive advantage by beginning to think about these social issues as part of their overall corporate strategy.
With several global companies like Nestle and Novartis adopting the CSV approach, Kramer points at reasons why this concept is extremely important for India. “It is because the 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 low income population to their ambit and serving their needs to curb social issues is key to the success of India’s future.”
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