Blog #5 - Measuring Shared Value

Porter and Kramer's paper on creating shared value is theoretically interesting, but seems to lack real-world value. The problem I see with the idea is how businesses would measure or otherwise quantify the amount of shared value they are creating.

Fundamentally, for profit businesses will care about the bottom line (ie whether they are making or losing money). Further, almost all businesses have a group of investors (public or private) to which they have to justify their existence and request further investment. Those investment bodies, without having a tangible metric, I feel are unlikely to support the creation of shared value.

What I also found interesting was authors' assertion that non-profit organizations are beginning to become more like for profit companies. To me this affirms my assumptions that investors want to have concrete metrics that show how their money is being used to benefit society.

The notion that businesses should become more of a hybrid (between non-profit and profit) is the most likely outcome, to me. I believe what is most realistic is for large organizations to create a small team of people that will curate, emphasize, and monitor external/shared value produced by the company. In this way, the large organization is "sponsoring" a non-profit organization, both for their own means and potentially others as well.

In a way, this sort of business is already happening. For example, the company I used to work for would pay you to do 8 hours of community service/volunteering once a quarter. While this is not a full-team of people working on the problem, it pushed a lot of people to take go out and help their communities.

Another important point, not mentioned by the authors, are the regulations that local and federal governments will place on these "shared value" organizations. As far as I am aware, these organizations are currently only regulated by for profit laws. If such organizations are as important as the authors believe, then lawmakers may need to take the first steps in creating legislation that supports the organizations. The most obvious example would be for shared value organizations to have a tax write-off for their societal contributions. However, I am sure there are other ways to incentivize their growth as well.