If purpose is the 'why', shared value is the 'how'

The concept of shared value aligns profit with purpose by designing business strategies around addressing societal issues.

Digital Nation spoke to Sarah Downie, CEO of Shared Value Project Australia and NZ to understand how shared value delivers meaningful outcomes for business.

Developed by Harvard Business School Professors Mark Kramer and Michael Porter, Downie says, “Shared value is all about redefining the role of business in society, we believe very deeply that business success and the success of society are interdependent."

“I think 2020 has proved that beyond a doubt, but we also believe that business can thrive by thinking differently about its role and its connection in society, Shared value is a strategy and a framework to help organisations walk their purpose.”

Core business

Michelle Hutton, CEO of Edelman Australia, believes that implementing brand purpose as a core element of a business’ operations is a step organisations can take to garnering shared value.

“For too long, purpose was seen as a bolt on, it was a nice thing to do, versus now, it's a core business strategy. I think there is so much data around the value and impact that it brings when purpose is indeed a business strategy and not an add on,” she says.

“I am optimistic that particularly here in Australia, ESG reporting will totally change, not just the conversation, but the output and the impact of a purposeful strategy.”

One example of a business creating shared value is AIA with its Vitality program.

Articulating a purpose of helping customers live healthier and longer lives, AIA deploys initiatives to underpin the strategy, encouraging their customers to participate in activities that promote physical and mental health.

Downie believes that a positive cycle is created as customers are encouraged to be healthy, with such a lifestyle leading to lower insurance claims.

According to Downie, Michael Porter is considered the guru of competitiveness in strategy, embedding competitive advantage into the concept of shared value.

“At its very heart is the concept of competitive strategy. We think when done well, that's exactly what a purpose should help a company achieve. Purpose is all about trying to find that authentic and genuine role within society,” says Downie.

Asking businesses to consider the materiality of societal and environmental issues to their business can help businesses to not only create positive change but to define and measure how that change leads to better performance.

“If we’re going to shift the needle on any big societal issues we have to find scalable initiatives. If we find that perfect shared value example, we create a kind of investment vehicle, inherent in the initiative.”

“By making that change in improving that societal issue we’re helping businesses continue investing in it, and they’re not going to drop it as soon as something else becomes exciting or in fashion.”

Credit: The video was produced by Josh Lundberg and Matthew Ryan.