Business Sustainability Through Shared Value This article will address how people can benefit while businesses succeed as we maintain our environmental consciousness. Addressing People People are a significant contributor to sus-tainable development, and considering the impacts to human capital and communities is important to the overall success of any business. One way that social issues are often ad-dressed is through the concept of social justice. Social justice is defined by the United Na-tions as “the fair and compassionate distri-bution of the fruits of economic growth.” Candidly, I am not a proponent of this concept. Who determines what is fair and compas-sionate? What are the benefits to a business to dis-tribute, or redistribute, the fruits of its eco-nomic growth? From the perspective of a business own-er, I think there is a far more productive viewpoint to consider — that of mutual benefit. Common Desires What is a common desire of all stakeholders in a business? Employees, customers, owners, partners, vendors and regulators should all want to make a positive impact on our community through business growth. Businesses have been suffering from a general lack of public trust and credibility for many years. They are seen as seeking short-term gains and quarterly profits frequently at the ex-pense of society at large. This is an unfair view since most often businesses attempt to grow but merely manage to survive due to growing costs related to social, environmental and regula-tory requirements. The best way we can correct this misper-ception is to call attention to the immense value our industry provides to our custom-ers, our shareholders and our communities. Shared Value Finding value that we can share is the key. Shared value is implicitly more beneficial to stakeholders. In shared value, businesses create eco-nomic growth in a way that must also create increasing value for society by addressing its needs and challenges. Shared value creation focuses on identi-fying and expanding the connections be-tween societal and economic progress. Shared value places the responsibility for “doing good” on the side of business and managers. Companies create measurable business value (again, this is economic value … or profit) by identifying and addressing social problems that affect their business. The sustainability concept of shared value is based on the idea that both economic and social progress must be addressed using “value” principles. Value is the relationship between ben-efits relative to costs, not just benefits alone. Value creation is an idea that has long been recognized in business, where profit is easily understood as revenues earned from customers minus the costs. However, businesses have rarely ap-proached societal issues from the perspec-tive of “value.” Nostalgically we think back to the small town business running a tab for local cus-tomers, extending credit based on the good word of a neighbor or doctors making house calls. In modern times, businesses have more often treated these societal or community issues as outside concerns, beyond their management or interest. This has confused or hurt the connections between businesses and people. The concept of shared value can be put to work as operating practices that increase the competitiveness of a company while at the same time advancing the economic and social conditions in the communities in which it operates. Shared value links the two entities; they are mutually dependent upon each other just as the triple bottom line connects peo-ple, planet and profit. In society, thinking in value terms is less common than in business. June 2014 Social organizations and government agencies seem to see success in terms of the benefits achieved or the money ex-pended. If governments and non-governmental organizations (NGOs) begin to think more in value terms, their interest in collaborating with business will inevitably grow. NGO’s such as CARE and Save the Children have helped companies in the cleaning in-dustry develop new or expand the markets for the products they sell. The shared value concept will leverage the power of market-based competition in addressing social problems rather than turn-ing to the “the fair and compassionate distri-bution of the fruits of economic growth” of social justice. Shared value is relatively new as a formal concept and was defined in the Harvard Business Review article “Creating Shared Value” (January/February 2011), by Michael E. Porter and Mark R. Kramer. Creating Shared Value The authors identified three ways in which shared value can be created. It can first be done by re-conceiving prod-ucts and markets. This means that markets are evaluated in terms of unmet needs or social ills, busi-nesses then develop profitable products or services that remedy these conditions. Second, businesses redefine productivity in the value chain; businesses increase the productivity of the company or its suppliers by addressing the social and environmental constraints in its value chain. Third, shared value is achieved with local cluster development. By this, a company strengthens itself in important geographic regions in ways that contribute to the company’s growth and productivity. Shared value is not about redistribut-ing value created through philanthropy or about including stakeholders’ values in your corporate decisions. Shared value instead focuses on the creation of meaningful economic and so-cial value by your company that is greater than the costs to both your business and society. 34 CM/Cleaning & Maintenance Management ®
CMM – Archives June 2014: 34
