This week the most profound article I’ve read would have to be “The Big Idea: Creating Shared Value.” In it, the author proposes that our current understanding of the relationship between business and society, wherein business objectives are seen as contentious to societal objectives is flawed. He further proposes that the reason for this misalignment is because the general scope of business strategy is often too narrow. As an alternative the author paints a picture of a relationship in which business objectives are more closely aligned with society’s objectives, enabling the creation of value shared by both sides. Our common sense tell us that we need businesses to provide us with goods and services while businesses depend upon society to purchase those goods and services. Business and Society are locked in a relationship wherein the advancement and wellbeing of one is bound to that of the other. We simply need to recognize this as fact and adjust our business strategies to focus on the creation of shared value.
The idea of shared value is not foreign to me, in fact I already try to optimize shared value creation in my day-to-day personal life. For example, I try to purchase as many goods and services from local providers as I can. When I want a bottle of wine I walk around the corner to my local wine shop and purchase a bottle even though I could potentially find the product for cheaper outside of my community. Why, because I know that the act patronizing this local establishment will benefit me more than the money I would save from making my purchase outside of my community. But how do I know this? Well, I know that the store is owned by a young couple who also live in my community. By supporting their business I am helping to drive up their revenue and hopefully increase their profit. This could potentially enable them to expand, creating jobs (They are in the process of hiring a new manager because of the success they have experienced in their first year) and bringing even more money into our community. More money for the business equates to more business taxes which should bring about better public services like education. Better education tends to lead to lower crime and lower crime helps improve the property values which benefits me (not to mention the convenience of having a fabulous wine store within walking distance of my home). To the author’s point, had I narrowed my consideration to just price, I would not have purchased the wine locally. However, by fully understanding the breadth of consequences associated with my actions, I was able to see how the simple act of purchasing locally would afford me greater value in the long run.
While I was already practicing shared-value creation in my personal life I was not educated on the theory enough to champion this type of thinking in my professional life as well. However, armed with this article I am excited to explore new ways to do just that.