Shared Value applied to KaBOOM

In this blog post, I will compare the strategies of ITC and KaBOOM. Although ITC is a for-profit corporation, and KaBOOM is non-profit, there are several similarities between their strategies and how they create shared value. Additionally, I will summarize the arguments against shared value and its limitations.

Shared Value applied to KaBOOM

            Both ITC and KaBOOM serve underserved or overlooked markets: ITC has targeted poor pulp farmers in India, while KaBOOM targeted poor American neighborhoods without safe play spaces for kids. By catering to poorer farmers or neighborhoods, both companies are targeting sizeable markets that may have been overlooked by other companies. At the same time, both companies are improving the quality of life of their target markets, creating shared value.

            Another similarity between the two companies is how they organized a workforce to carry out specific tasks. In the case of ITC, they organized workers into self-sustaining groups for their paperboard initiative. By organizing pulpwood farmers, ITC was able to increase its supply of raw materials for paperboard production. At the same time, ITC’s initiative benefited the farmers and the environment. After training, farmers were able to rotate crops on their land, increasing their earnings. Additionally, they farmed crops on land that was previously unusable. KaBOOM organizes communities to work on playground builds. KaBOOM provided training and instruction manuals to community leaders. KaBOOM would also receive grants from local companies, such as Home Depot to fund its operations. As a result, children in communities with KaBOOM’s playgrounds would be healthier and happier. In both cases, each company’s strategy benefited both themselves and the communities they targeted, creating shared value.

Arguments Against Shared Value

One argument against creating shared value is that shared value encourages companies to focus on easily solvable social problems, instead of tackling long-term, difficult problems in society. Thomas Dyllick suggests that some problems are better solved by industry-wide initiatives, instead of the smaller-scale organizational changes proposed by the shared value article [1]. An example of this are the government initiatives to increase the fuel efficiency of cars. Left alone, companies would likely choose to not dramatically increase fuel efficiency of cars due to increased R&D costs. Additionally, many fuel efficient cars are smaller, meaning they are cheaper. Therefore, companies are less willing to sell cheaper cars due to their lower returns. However, government or industry-wide initiatives can push car companies to innovate and increase fuel efficiency by using hybrid technology.

Sources:

[1] https://www.ft.com/content/88013970-b34d-11e3-b09d-00144feabdc0