As consumers become more aware and vocal about social issues, they are also starting to hold companies accountable for how their business practices affect society and the environment. Marketers have great influence over the brands they work with and can be drivers of change, which is why they need to adopt a Shared Value approach, in order to keep up with consumer trends.
What is Shared Value?
Shared Value is a competitive business strategy that reconnects profit with social progress, allowing a business to find a social issue that intersects with its operations and address it in a way that makes it a more sustainable and profitable business.
Earlier this year at the Shared Value Leadership Summit held in New York, Prof Michael Porter, widely recognized as the world’s foremost expert on Shared Value, elaborated on its importance and integration into business strategy. Porter defines Shared Value as “policies and practices that enhance the competitiveness of the company while simultaneously advancing social and economic conditions in the communities in which it operates”. As such, Shared Value is about creating value for both the company and broader society.
Tiekie Barnard, CEO and Founder of the Shared Value Africa Initiative (SVAI) says, “It is no longer good enough for companies to only focus on profit. Today it’s about creating Profit with Purpose. Doing good while doing good business: that is the true ethos behind creating Shared Value.”
Ensuring profit with a common purpose
The Shared Value Africa Initiative is building Africa’s most powerful Shared Value business network by enabling brands to collaborate and form partnerships across border lines to drive collective social impact at scale. This can increase commercial returns for business while addressing social challenges in the communities in which businesses operate. It also creates awareness and educates businesses about the Shared Value business model and its ability to drive change for both businesses and society.
Businesses do not operate in a vacuum and, as executives, entrepreneurs and human beings, we have a moral obligation to take on the challenges facing the world. Many mission-led businesses enjoy a competitive advantage, thanks to improved operations, employee engagement and customer loyalty.
At the recent Loeries Shared Value MasterClass, Barnard, explained the importance of creating Shared Value to ensure brand loyalty with today’s socially-conscious consumers.
“Shared Value is created at the intersection of profit and purpose. Brands need to be as deliberate in their focus on the long-term sustainable value they are creating for society and the environment, as they are in driving economic value because a brand’s true value exists beyond the numbers,” says Barnard.
More than just a campaign
Purpose has to become a part of the core business strategy in order to create true change. In order to position yourself as a market leader and gain true growth, specialisation of a new kind is required. This includes finding new ways of doing things that will be more ethical and less harmful to the environment, reaching underserved populations, and ensuring that current and future employees are able to deliver at their best.
“Shared Value is a business strategy and in many areas is conflated with Corporate Social Responsibility and philanthropy. In advertising and marketing, there may be a disconnect that Shared Value is considered a campaign. An understanding that Shared Value is the consideration of long-term value rather than short-term campaign-driven success will help to embed Shared Value thinking in the industry,” says Barnard.
Companies need to take reputation into account when devising their strategy, as customers are savvier and have more options than ever. Marketers have the flexibility to try new ways of doing things and they can be catalysts for change in the rest of the business operations.
“We are seeing a change of perspective for both consumers and businesses, the move to being purpose driven, whether it is in how we make purchasing decisions or whether we decide to invest in creating a product or service”, Barnard says. “The key to success for brands such as Unilever, Safaricom and Discovery has come through placing purpose at the centre of these fundamental decisions.”
It is no longer enough for a business to do some good on Mandela Day and then go back to business as usual. Brands need to be able to demonstrate that they have a purpose which involves actively finding ways to improve the lives of its customers. Embracing Shared Value is the key to long-term sustainability, enabling businesses to survive and thrive in a changing business climate.