Who Creates Shared Value?

Michael Porter and Mark Kramer’s suggestion of creating shared value sounds great. Who--among citizens feeling they lack agency, local businesses feeling squeezed by the pressures of globalization, or large corporations feeling demonized by the public--doesn’t like the idea of a bigger pie for everyone? Unfortunately, the concept of shared value proves as elusive in practice as the ideals of democracy: on one hand nobody disagrees that we should have better schools for our children, clean air to breathe, or fairly administered taxes; on the other, nobody agrees on how to go about these things and how to run the politics of the process.

The same may be true with shared value--few companies want to be the first to take a hit to this quarter’s bottom line to create positive externalities while their competitors are looking out for themselves. Porter and Kramer’s CSV proposition reads long on good ideas but short on nuts and bolts implementation. Sure, the authors suggest areas for creating shared value--energy use and logistics, resource use, procurement, etc--but how do companies actually get down to implementing a shared value strategy? Does the onus fall on hired consultants? Board presidents? CEOs? Shareholders? Government? Other “cluster” companies? The result of cooperation is better for everyone, but in practical terms, the decision matrix for any given combination of parties here comes out looking very much like a classic prisoner’s dilemma: a better alternative (CSV) exists, but only if multiple parties will act against their rational self-interest.

This is where the Boston Consulting Group’s Twelve Forces That Will Radically Change How Organizations Work gains traction. Both articles (Shared Value and the Twelve Forces) stand up as more descriptive than instructive; however, shifts in supply of and demand for talent, the linchpin of BCG’s Twelve Forces, may turn out to be the silent driver of company transitions to shared value strategies.

Consider the terms of accountability for a corporation. While top executives and corporate boards may not be legally mandated to maximize shareholder profit monstrously at the expense of ethics and the community, money still talks--the next quarterly report looms large and accountability for “rational” pursuit of the company’s best interests persists. Government entities, in a shallow sense, at least, are often constricted by corporate interests that may be invested in preventing regulations encouraging shared value. In this respect, a critical mass of talented, highly sought-after employees may, peculiarly, be the group with the most power to influence the creation of shared value.

As BGC’s Twelve Forces article predicts, “nearly every organizational role will eventually require the use of sophisticated technology,” driving up demand for a technically skilled employee base. That base’s accompanying demand for many corporate goals that Porter and Kramer describe as shared value (indeed, BCG points to a survey finding that “62% of millennials said they want a career with social impact”) may be the ignition other major players don’t have the keys to turn to drive a movement toward creating shared value.

References

Vikram Bhalla , Susanne Dyrchs , and Rainer Strack. “Twelve Forces that Will Radically Change How Organizations Work. Boston Consulting Group. March 27, 2017. Retrieved from https://www.bcg.com/en-us/publications/2017/people-organization-strategy-twelve-forces-radically-change-organizations-work.aspx 

Michael Porter & Mark Kramer. “Creating Shared Value.” (Cambridge, MA: The Harvard Business Review, Jan. 2011)

Lynn Stout. “Corporations Don’t Have to Maximize Profits.” New York Times. April 16, 2015. Retrieved from https://www.nytimes.com/roomfordebate/2015/04/16/what-are-corporations-obligations-to-shareholders/corporations-dont-have-to-maximize-profits