Celebrating Shared Value (CSV)

Since the first day that I started working in corporate social responsibility (CSR) in the late 1980’s – under the wise tutelage of Reynold Levy, then president of the AT&T Foundation – I both learned and asserted that the purpose of any good corporate philanthropy or CSR program was to find the intersection between societal needs and the business interests of the company and to create real impact for both -- paying attention to a company’s various stakeholders and conducting your business in a responsible manner with an eye on the long-term value for business and society.

In 2011, Harvard Business School professors Michael Porter and Mark Kramer shook up the CSR world by codifying a new way of looking at the corporate strategy behind this kind of work. Calling their new model Creating Shared Value (CSV), Porter and Kramer took aim at “traditional” CSR programs as “a reaction to external pressure...largely to improve firms’ reputations and ... as a necessary expense.” They suggested a higher purpose of “creating economic value in a way that also creates value for society by addressing its needs and challenges.” And, they asserted that this could be done in three ways: “by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company’s locations.”

At the time, I expressed a great deal of skepticism about this new approach – feeling that it was just a restatement of the purpose of many corporate philanthropy and CSR programs since the 1980s. I also bristled at the notion that “CSV should supersede CSR in guiding the investments of companies in their communities,” and that the value of CSR programs is “doing good” while CSV is “joint company and community value creation.” (See my CSR Now! postings of August 8 and October 3, 2011.)

So, when given an opportunity to hear from Professors Porter and Kramer at a Harvard Business School Executive Education course (Creating Shared Value: Competitive Advantage through Social Impact) recently, I cautiously accepted the chance to hear about CSV directly from its creators.

While the three-day course was chock full of case studies, the real learnings for me came from the lectures on strategy and the company responses to the case studies –often delivered by the CEOs of the companies themselves. My chief takeaway from these sessions is that CSV is most successful when it is viewed as a corporate strategy embraced by the CEO and senior managers – an umbrella strategy for the overall company with real scope and synergy – rather than as a business unit strategy on how to compete in individual lines of business. It’s competing with a unique corporate value proposition, not competing to be “the best in class.” It’s a way of achieving a competitive advantage, not adopting “best practices” in your industry.

Viewed in this way, CSV is not a substitute for, or even an evolution of, CSR. It’s a corporate-wide strategy that gives a competitive advantage to early adopters, and measures the economic value to the company at the same time that it’s measuring the social value to communities.

Taking an in-depth look at companies like Discovery (South African health insurer), Intercorp (one of Peru’s largest business groups), Becton Dickinson (U.S. medical technology firm), Yara (Norway’s leading producer of fertilizer), Nestle (Swiss food and beverage company), Enel (Italian energy company), and Walmart (U.S. retailer) proved instructive from both a strategic and execution standpoint, but some of the cases also bred a certain amount of healthy skepticism from class participants that CSV is really the driving force behind the decision-making of some of these firms. And, the only kind of economic value that Professors Porter and Kramer seemed interested in is profits when there are other kinds of economic value that firms generate – including brand awareness and loyalty, reputation, recruitment and retention of employees, cost control and efficiencies, and reduced risk.

Nonetheless, if the end result of CSV is a strategy that companies use to pay more attention to the impact of their products and services on communities and the planet, and that makes a real attempt to create lasting value for themselves and society with their business practices, it’s a positive movement for all of us and something worth celebrating and supporting. So, count me in as a convert to CSV as a corporate strategy, not as a substitute for CSR.

If you have a question or comment, please follow me on Twitter at @timmcclimon and start a conversation there. Thanks for reading and sharing this blog posting with friends and colleagues.