Post 5: Creating Shared Value

As there is more pressure for businesses to prove their impact and increase transparency of externalities and negative effects, the shared value model will likely become more mainstream. As Porter and Kramer state in their article Creating Shared Value, companies can create shared value by “preconceiving products and markets, by redefining productivity in the value chain, and by enabling local cluster development (Porter, 5).” In order to create a different kind of model that creates this type of shared value, businesses are redefining their structure. There is a clear push for this “blurring of profit/nonprofit boundary” lines with the new emergence of business entities like the L3C and B-Corps. It is becoming more common for businesses to structure themselves so they have a positive impact beyond generating profits.

An example of a business like this is Ben and Jerry’s, which follows the concept of “linked prosperity.” They claim to do this through “our livable wage policy, our ongoing support for family dairy farms and sustainable agricultural practices, our support for smallholder agricultural producers around the world through the purchase of Fairtrade-certified ingredients, and our values-led sourcing partnerships with social enterprises(Michalak).” They blur the lines of for-profit and non-profit boundaries by raising money to local charities and awareness to other local non-profits. This model has definitely paid off for them, claiming that “Ben & Jerry’s fans who know and understand our values-led business model are more than twice as loyal than those who don’t know about it (Michalak).” By creating shared value, they are increasing customer loyalty and in turn, benefiting as a company.

This idea of shared value can be extended beyond for-profit corporations to non-profits or government entities. The U.S. Peace Corps is an example of this. This type of program builds shared value for both the partner country and the U.S., helping to build strong international relations and bonds. Having served in the Peace Corps in Thailand, I could see that they were using elements of the shared value model by “enabling local cluster development.” During my first year, they strategically placed volunteers in clusters to strengthen those areas. Because the mission of the Peace Corps is to build sustainability by collaborating with locals, this allowed those areas of the country to strengthen their resources and have a greater impact. In doing so, this created greater shared value as both the volunteers and host country had a deeper experience with more resources to succeed.

In the future, this concept of shared value will help me as I set up my own business. I will be more aware of ways this can be built directly into the structure. The idea of clustering development could be very effective in this context as well.

Outside Reference:

Rob Michalak, “This Key Metric is How Ben and Jerry’s Measure Success,” Fast Company, January 5, 2019, https://www.fastcompany.com/90287777/this-key-metric-is-how-ben-jerrys-measures-success.