From Bolted-On to Built-In: Corporate Responsibility

The article Creating Shared Value by Michael E. Porter and Mark R. Kramer calls for a “reinvention” of capitalism, necessitated by the growing disconnect between business and society. This restructuring focuses on the concept of “shared value,” recognizing that what is good for society is also good for business. While most businesses do now have an aspect of corporate responsibility, it is often a siloed department separate from the core operations of the business. Porter and Kramer present three areas in which businesses can integrate this idea of shared value within the core strategy of a business: reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters.

It is important to recognize that the concept presented signifies a fundamental shift in business operations. Essentially, the authors are suggesting integrating the idea of shared value into the core operations of the business, as opposed to an add-on strategy (corporate responsibility practices).

This is very reminiscent of the diversity integration strategy presented in the HBR article From Bolted-on to Built-in by Candi Castleberry-Singleton. In this article, Ms. Castleberry-Singleton asserts that companies that are better at embracing diversity and inclusion have inclusion strategies “built-in” or integrated into every aspect of the business. This is in contrast to those that have diversity initiatives “bolted-on” as a separate division or as part of the HR Department. This signifies to stakeholders that diversity is a core value of the organization, and thus lends to more integrated inclusion.

For businesses to truly show that they are invested in creating shared value, it must be integrated into the overall strategy of the business and embraced as a core value. The three methods presented by Porter and Kramer: reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters, are exemplary ways of integrating the strategy across business functions.

Placing social value at the core of a business is nothing new to nonprofit organizations, and as the authors suggest, there may be a move toward a hybrid-type industry that combines the economic valued, profit-focused businesses with the social-focused nonprofit sector. I would contend that nonprofit organizations are not quite as inept at creating economic value as the authors suggest. Nonprofits are often very value-driven as they are often trying to squeeze every bit of impact out of limited resources. While there are always exceptions, it seems that nonprofits generally have a very conservative, lean thinking approach to cost savings associated with nonprofit governance. This could be another advantage to future cooperation between these sectors.

Whatever the approach, this concept of shared value will hopefully be embraced by more businesses, and likely will be essential to sustainable models in the future.

Castleberry-Singleton, C., From Bolted-on to Built-in Diversity Management and Intergroup Leadership in U.S. Corporations, excerpted from “Crossing the Divide: Intergroup Leadership in a World of Difference,” Harvard Business School Publishing Corporation, 2009