Thursday, April 23, 2015

Create a Shared Value

Businesses have begun to embrace Corporate Social Responsibility, but to what extent? According to many companies, Creating Value means optimizing short-term financial performance. Companies view Value created as just a formula, ‘Revenue - Cost’. They ignore the several influences that determine their long term success. Only Companies that have customer-centric approach can add more value by differentiating themselves from competitors who do not offer the same experience. According to porter, the concept of ‘shared value can be defined as policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the community in which it operates ’. Companies like Ben and Jerry Ice-cream have been successful because of creating a shared value. They committed to the development of local Vermont farmers and the company mutually benefited from the community growth.

I would like to discuss about one such organization that created a big difference for their community members through business. ‘Dabbawala’ , an Indian organization that collects food in lunch boxes from the residences of workers in the late morning and delivers the lunch box to the workplace and returns the boxes back to customer’s residence. The organization handles nearly 200,000 customers and delivers with a high precision. They operate in one of India’s densely populated city without the help of any technology. They make their delivery by using a simple color coding system on the boxes. For their delivery system, they efficiently use the public transportation and bicycles. The organization charges a very nominal fee of less than $10 per month. It is claimed that Dabbawalas make less than one mistake in every six million deliveries. The organization employs illiterate people from a particular sect of people called ‘Varkari’. The company supports 4500 to 5000 poor families in India. As a new social initiative the organization launched ‘share a sticker’ program by which the customers could paste a sticker on their lunch box. The Dabbawalas separate the boxes with stickers on them and deliver the leftover food to the poor children. Each day they serve 16 tonnes of leftover food to the poor people.

Because of their popularity and reach, Microsoft partnered with the organization to spread awareness among the people. Recently the organization joined hands with Flipkart (Indian version of Amazon) to deliver the online products within a day. Top Business schools in India have featured a case study on their efficient supply chain management. In 2010, Harvard Business school added the case study, ‘The Dabbawala System: On-Time Delivery, Every Time’ for its high level of service with a low-cost and simple operating system.

1. Creating Shared Value (Porter and Kramer, Harvard Business Review, January-February 2011)

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