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| http://ecopreneurist.com/2012/04/08/an-elevator-pitch-for-creating-shared-value/ |
In Northern California many of the big technology
companies like Google, Oracle and Apple are next door to poor neighborhoods and
homelessness. In the Harvard Business Review article, Creating Shared Value, the concept to reinvent capitalism for the
greater good presents a new approach. Companies like Google have many
philanthropic initiatives like google.org, google ideas, google cultural
institute, google in education, and google green.
On google.org it states they fund, “organizations doing
vital work for society, such as improving education, health and clean water
access in the developing world, leading scientific discoveries about deadly
diseases or incubating new forms of renewable energy.” All of this work and
creation of creating shared value sounds great, but are communities living in
the shadows of these big companies being ignored?
In the Porter and Kramer article they state, “It is not
philanthropy but self-interested behavior to create economic value by creating
societal value.” The article ends by stating, “Shared value offers corporations
the opportunity to utilize their skills, resources, and management capability
to lead social progress in ways that even the best intentioned governmental and
social sector organizations can rarely match. In the progress, business can
earn the respect of society again.” It seems to me that they are creating
shared value to new markets of the world to have their businesses continue thriving,
while the middle class in the United States continues to disappear.
What are companies doing to create “shared
value” opportunities? The following are three ways:
- Change products and markets – Companies can meet social needs while better serving existing markets, accessing new ones, or lowering costs through innovation
- Redefining productivity in the value chain – Companies can improve the quality, quantity, cost, and reliability of inputs and distribution while they simultaneously act as a steward for essential natural resources and drive economic and social development
- Enabling local cluster development – Companies do not operate in isolation from their surroundings. To compete and thrive, for example, they need reliable local suppliers, a functioning infrastructure of roads and telecommunications, access to talent, and an effective and predictable legal system
As a result of this “shared value” popularity, hundreds of top companies have begun to realign their community giving. For instance, initiatives that once received very limited budget in their philanthropy or corporate responsibility are now finally pushing significant marketing dollars support.
All of this is good, but what about the people that are living in the headquarter shadows of Google in northern California; they are not seeing the shared value concept.
“Shared value” is not seen across America. In
California’s Silicon Valley, Apple, Facebook and Google, among others, have
reinvented the Gold Rush. But down the road in the city of San Jose it’s the
Gold rush is not evident. For instance, one fourth of the population earn an
average of about $19,000 dollars a year, rent alone can average more than $20,000
dollars a year, and this high cost of living and low wages adds up to
homelessness.
Fifteen years ago, in the Silicon Valley 15 years ago,
during the first boom, for every five jobs they were adding, they were building
two units of housing. The housing market
changed to have the most expensive housing in the country. Furthermore, people
who had blue-collar jobs were getting paid $10, $15, $20 an hour, and as their
jobs went away they were largely unskilled and could only take jobs that paid
$8 an hour. On this type of wages, rent is too expensive, groceries, and transportation expenses are high. In order to survive families have to live with
three or four families to an apartment, or people move into homeless shelters
or people leave the area completely to find a better job or lower cost of living.
This “shared value” concept will hopefully be implemented
seriously in companies like Google. Silicon Valley has the brainpower and has
the innovative ideas when it comes to poverty throughout the world. However, there
has to be a growing awareness of what is happening to people in the backyard of
Google’s headquarters. If the “shared value” is taken seriously perhaps the
brilliant innovative ideas can take this to the next level to solve the cycle
of poverty in the America. The responsibility will not only be on innovative
technology companies like Google but also the public sector, government leaders
and community leaders have to embrace and create coalitions for “shared value”
strategies.
Read more:
Creating
Shared Value. Porter and Kramer. Harvard Business
Review, January-February 2011
Charts explaining social inequalities in Silicon Valley: http://billmoyers.com/2013/04/12/inequality-in-the-silicon-valley-in-five-charts/
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