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Watch: What is ‘Creating Shared Value’?

June 4, 2012

Creating Shared Value (CSV) is a powerful tool and concept for companies to use as they look to conduct business. Ultimately, it’s a strategy for developing the future market while also strengthening economies, the marketplace, communities, and corporate coffers. Yet the term runs the risk of being confused with corporate social responsibility (CSR) or, worse, as being a way to redistribute wealth. To combat this, we are launching a video to illustrate and explain the concept of CSV. 

You see, sometimes it seems that the CSR field is engaged in a lifelong game of the 1970s game show classic, Password. In this version, each of us practitioners tries to guess the next iteration of the naming rights of the field based upon one-word associations.

Your C-Level celebrity and partner utters the acronym “CSR” and you respond “SUSTAINABILITY!” The crowd gives a round of applause and you get a pat on the back. Then it’s on to the next word.

About the last thing the CSR or sustainability field needs is yet another term for itself. A while back, I wrote a blog post about this confusion in an attempt to describe where I stand about this word choice.  And now the field is faced with another term: Creating Shared Value (CSV).

But in conversations with corporate folks, academics, and social media mavens, I find that most meet CSV with some hesitancy. In part, I think this hesitancy is due to understandable resistance to the Password game of terminology, which I jokingly described above.

But CSV shouldn’t be dismissed as yet another round of this game. CSV is a very powerful concept that can serve as a valuable forcing function for companies to think differently about its approach to social and environmental issues. Indeed, major companies, such as Nestle, have begun approaching business explicitly using the CSV framework.

So, while it’s important to understand what is entailed in the concept (more on that later), it’s almost equally important to appreciate the implications of who introduced us to CSV.

Creating Shared Value originates from an article penned by Harvard Professor Michael Porter and Harvard Kennedy School of Government Senior Fellow Mark Kramer.  The authors presented the concept of CSV in a Harvard Business Review article in 2006 and detailed it further in a January 2011 follow-up article.

It is — or at least should be — impossible for anyone to take a business strategy class in a business school and not be introduced to Michael Porter’s work. He created the “Five Forces” analysis model to understand the competiveness and attractiveness of an industry. It’s a profound too,l and Porter is a corporate strategy legend.

Mark Kramer is also responsible for advancing strategic philanthropy. Through a number of articles and books, he’s shaped the thinking that “giving away money is very different than solving a social problem.” This has played a role in getting companies and foundations to think differently about their philanthropic goals, strategy and implementation of the systems and process to achieve those goals.

Again, as I have pointed out, CSR is very different than philanthropy. Indeed, this is true for CSV, as well, and Porter and Kramer make it a point to bluntly state that distinction.

One of my fears is that the term “Creating Shared Value” implies a notion that it is a wealth redistribution game. This is far from the truth. Rather, CSV is a way to grow economies, marketplaces, companies, and communities in a way that is in the long-term interest of businesses (and everyone else).

So take a look at our video and see if you can use some of the CSV concepts we present to help you,, in the words of Apple, think differently. Can your organization use this framework as a way to be innovative? Can you access new markets or expand existing markets? Should your company look at different ways to structure itself to take advantage of cost savings through increased productivity? What is the newest product you should develop to tap an underserved market?

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