Politics, Business & Culture in the Americas

Innovating and Creating Shared Value Get Respect

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Just recently, I came across an article in the Harvard Business Review written by renowned professors Michael E. Porter and Mark R. Kramer.  The authors lament the increasingly negative views toward business and capitalism of recent years and argue that companies must lead the effort to bring business and society back together.  In their view, those who use corporate social responsibility to enhance reputations, recognition and respect miss the point.  Porter and Kramer claim that businesses will gain the most respect if they embrace the concept of shared value, in which the creation of economic value meets social progress.  Furthermore, this concept has the greatest potential for launching the next era of growth and innovation.

Porter and Kramer acknowledge that adherence to shared value is far from the norm in business today.  While they offer examples of companies moving in the direction of combining economic and societal progress in their business models, such as Wal-Mart, General Electric and Nestle, they argue there is still much to change with education in business schools.

Listening to the recent State of the Union speech by President Obama convinced me that preparing for—or as he says—“winning” the future will require more than short-term job stimulus and deficit/debt-reduction measures.  It will require a new mindset very much in line with the Porter-Kramer vision.  Redefining productivity and profit, developing new products and markets that provide both economic profit and social progress, and making local clusters development an essential ingredient to improve productivity and creating jobs—the very features of the concept of shared value—will go a long way in providing a brighter future.

For instance, building infrastructure, developing renewable and clean energy sources, and emphasizing outcomes as the value barometer for healthcare have the greatest potential to make the concept of shared value the new norm in effective capitalism.  Infrastructure such as high-speed rail is not just a commodity that shortens the duration of a trip.  It brings economic benefits, including but not limited to jobs creation; adds environmental value, such as a reduced carbon footprint; and draws communities closer together.

Renewable and clean energy also reinforce shared value by bringing down the environmental costs borne by society at large, providing more stable and competitive costs for businesses and reducing the need for stringent regulatory measures—creating jobs all along the way.  The development of hydro, solar, wind, nuclear and biomass energy sources all offer opportunities in these areas.

In the healthcare sector, new organizational models that promote integrated healthcare and advance wellness through preventive measures represent a promising path to reducing costs and delivering positive results for patients without affecting accessibility.  Lower healthcare costs and healthier citizens, in turn, help business and communities grow.

The challenge facing business and political leaders in developed and emerging economies alike is to find the political will and economic incentives to move away from existing business models in which economic growth and social progress do not connect.  Making a profit is fundamental to business.  Making products that advance social progress can be a win-win proposition.  Policy makers must regulate in ways that promote the creation of shared value by developing market incentives to further societal goals.

The current debates in North America around building high-speed rail, revamping our aging infrastructures, searching for alternative energy sources, and making our population healthier represent the surest path to more sustainable innovation and growth.  And that will mean greater respect for business.

*John Parisella is a guest blogger to AQ Online. He is Québec’s Delegate General in New York, the province’s top ranking position in the United States.


John Parisella is the former Québec delegate general in New York and currently a visiting professor at the University of Montréal’s International Relations Center. He is also a Member of the Board of Directors of The Montreal Council on Foreign Relations.

Tags: Alternative energy and renewables, Economic Policy, Health care, Sustainable development
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