Is Shared Value a Sustainable Strategy?

"Creating Shared Value" by Michael Porter and Mark Kramer, lays out a bold new path for corporations forging strategy in the 21st century. The authors present a framework for avoiding the pitfalls of environmental degradation and PR criticism common in top business activities of the 80's, 90's, and today. The "shared value" rests on three pillars: reshaping products and markets, increasing productivity of supply chain, and building interconnected "clusters" of industry in specific geographic areas.

At first, second, and maybe even third glance, the shared value paradigm seems to be an excellent idea and the article makes a very convincing case for shared value being a viable way forward for corporate responsibility and civic engagement. The article backs up its explanations of shared value with many examples across many types of business, but after a while, and especially in the context of the ITC case study also assigned this week, a somewhat worrying trend appears: virtually all of their examples are either from developing countries or are fairly run-of-the-mill process improvements that often literally coincidentally happen to fit the mold of a shared value improvement.

This in itself is not a terrible thing; still developing economies can use newer technologies to great effect while skipping over their more wasteful intermediaries (such as the proliferation of cell phones over landlines, and like solar and wind over centralized power plants). Several continents worth of businesses cropping up with a less myopic focus on short term gains would certainly lead to a healthier planet and population than a world full of 1980s Wall Street, but it does raise the question of what to do with all the businesses and cultures that survived 1980s Wall Street into today.

Many of those structures, people, and cultures still exist today, and the way we think about business is still very much rooted in that paradigm. It seems to me, beyond the provably cost saving measures involved in productivity increase, the recommendations in SVR incur moderate to significant short to mid term costs that would disadvantage a first world business in a field full of competitors not currently paying that cost.

The benefits seem to pale in developed economies as well. Almost if not all of the massive success stories (of which there are laudably many) discussed in this paradigm involve companies using modern technology to get humongous first mover advantages in spaces and places that previously have had very little technological involvement. That strategy doesn't scale well into an economy that developed the technology in the first place.