By: Misha Pinkhasov | Principal and Co-Founder at NAIR-SAFIR | December 4th, 2014

Early in the days of NAIR-SAFIR, my partner and I identified an important element missing from the CSV model. Experience shows us that notions of value in the business and social spheres tends to pull those two circles apart rather than enhancing the overlap. They are missing a third "atom" to bind the molecule. That third atom is the individual: the component part of both busines and society. 

Our central premise is that shared value creation requires an enabling environment of shared values that can guide business decision making and behavior in the right direction.

While CSV is very strong in looking at operations, it lacks the corporate culture elements of management style, human resource development, purpose/mission integration and communications that can foster stakeholder engagement and motivation at the individual level. Engagement, not just policy, is crucial to integrating shared value with corporate identity and demonstrating how it is a quantum leap beyond sustainability.

We have focused on the role of luxury brands, given their innate relationship to leadership and aspiration, and their ability to shape values and behaviors in both the community and the workplace. Our work in this area (more on that below) directly addresses several questions that the Shared Value Initiative is asking with regard to what's next on the on shared value research agenda. Specifically we have worked on the following:

#3. What does it mean to be a "shared value company”?
#5. How do companies create a shared value brand?
#6. What is the role of different sectors in shared value creation?

For input to these (and other questions), I would like to call your attention to the following: 



Ellen Martin's picture


Thanks for this thoughtful contribution.

Yes - Certainly the "human" aspect is critical to how shared value is created. A leader that has identified her legacy around social purpose, as my colleagues Marc Pfitzer and Valerie Bockstette wrote in "Innovating for Shared Value" (HBR, September 2013), has the power to transform an organization's culture and can make shared value a company's "habit," rather than a special initiative. A manager that authentically brings his values to shared value partnerships will build much deeper connections with stakeholders. A brand that connects with consumers on a social issue that is core to their lives has greater potential to create a transformational relationship and meaningful engagement with those consumers. Thank you for highlighting this aspect.

There's another topic in your post that interests me: How do luxury goods create shared value? In my experience as a shared value advisor and trainer, I find people will have a knee-jerk reaction to whether/how companies in certain industries can create shared value. Healthcare and pharmaceutical companies, for example, have an easier time making shared value core to the business because it's easy to see how these companies can compete by saving lives. Despite legitimate reputational challenges, forward-looking companies in the banking industry can also pretty easily take advantage of shared value opportunities and connect wealth creation to social and environmental progress. More challenging, for some, is the assertion that extractives companies can create shared value. That "knee-jerk," of course, is about brand.

Luxury goods present a similar conundrum. What is the shared value opportunity for luxury brands? I can imagine companies like Gucci, LVMH, Armani, or Dior using their scale and influence to redefine productivity in the value chain or strengthen cluster development. But I find it more challenging to see opportunities for these companies to create shared value through their brands. I would be delighted to learn of examples that illustrate shared value, rather than philanthropy or cause marketing. Please help me get beyond my knee-jerk reaction here.

Thanks for bringing these important topics to the shared value community!

Misha Pinkhasov's picture

Thank you, because you have asked my favorite question: What is the shared value opportunity for luxury brands? In brief, it is leveraging leadership and aspiration to drive values towards a consensus point.

You would be surprised how many people, and how many influential people, within the luxury sector have asked the same question. But the knee-jerk reaction to luxury is just an extension of the knee-jerk reaction that questions business investment in social value. In that sense, it is a reaction to what luxury brands have become, not to what luxury really is.

There is an endless, and largely fruitless, discussion in the luxury world about “What is luxury?” The conclusion always comes down to that the definition of luxury is individual. So the outcome, in discussing luxury, is a familiar vocabulary of terms like heritage, quality, creativity, elegance and exclusivity. More recently we’ve seen words like innovation and sustainability creeping in, though still very tentatively. But these are just descriptors and it is lazy to fall back on the "luxury is individual" argument as an excuse to go no further.

Rather than trying to define luxury by describing it, my partner, Rachna Joshi Nair, and I have focused on identifying how luxury comes about. If the perception of luxury is individual, then you cannot create luxury by aiming for it. Instead, like love, health or happiness, luxury is the result – almost a by-product of – of doing something else right. 

We have identified that something else as comprising two things: First, is being the best in category, because whatever product exists in a luxury form also has a long tail of prosaic counterparts. Second, is being out of the ordinary, because the recognition of luxury is heightened by its contrast with our normal experience. The joy of luxury is that it is an antedote to what ails us. What excited us is that these are the same qualities found in leaders and agents of change. The competence, trust and reputation that comes from being best in category gives one license to question the status quo, break rules and pursue and promote a new vision of how things can be.

The greatest testament to this is that luxury has been the conduit for innovation and progress throughout human history. Today’s basics, such as electricity, automobiles, air travel, domestic appliance, computers, mobile phones, and many others all began within the purview of the rich. This is partly to do with development costs and demand-driven economies of scale, but also to do with the upper classes greater ability to experiment with risk, making the novel not just familiar but also desirable. Both of these factors are crucial to exploiting social value opportunities today, be that developing clean energy or expanding economic inclusion.

I have to give you historic examples because contemporary ones are in woefully short supply. Even in discussing today’s leading luxury brands, we have to look at their origins.

First we can look at mid 19th century brands such as the Orient Express, Louis Vuitton and Ritz hotels. The magic of the Orient Express was in marrying cutting-edge American rail technology with old-school European understanding of comfort and security to remove the anxiety from long-distance travel just as technology was kicking globalization into high gear. Similarly, Louis Vuitton, which still uses the tagline “The Art of Packing”, innovated trunk-making in order to make the cumbersome lifestyles of the Gilded Age elite more efficiently portable. During the same period, Cesar Ritz rolled out a standard for hospitality at cosmopolitan destinations. Like the Orient Express, Ritz combined reassuring aspects of palatial luxury with technological advances such as elevators and electricity at a time when these were rare even in the baronial homes of the hotels’ guests and when the “black magic” of these new technologies was even quite frightening to many people. The combined effect of these brands and others, like the Cunard Line, which took luxury to sea, enhanced global mobility and interconnection.

Next, we can look at early 20th century brands like Chanel and Madeleine Vionnet. Chanel and Vionnet were vocal feminists – in addition to which Vionnet was an ardent supporter of workers’ rights – at the time of the first wave of feminism, the suffrage movement, and when socialist influences were agitating the debate about economic justice. On the one hand, they gave women a new sartorial vocabulary, physically and metaphorically liberating women from the corset of social pressures. In addition to this, Vionnet (much bigger than Chanel at the time) built a cutting-edge manufacturing facility designed to promote the comfort, health and well-being of her employees, in addition to providing paid leave, child care and health care on site, decades before these were common practice among employers. But her reasoning was not just philanthropic. Rather, she felt that you simply cannot create exceptional product in less than exceptional conditions.

In the 1960’s, Yves Saint Laurent picked up the feminist thread and added his own influences. Saint Laurent is remembered for having created the first pants for women. In fact this is false: other brands had included pants in their women’s collections before, but they differed little from the menswear and played on the provocative nature of designer fashion. Saint Laurent’s approach was different: he moved the darts and seems to create a silhouette that flattered women’s curves rather than flattening them, like men’ pants would. So, as with the corset before him, Saint Laurent gave women a tool that was both beautiful and practical just at the time that the feminist movement was putting more women in the workplace. (One could even argue that he foreshadowed post-feminism by making it possible for women to assert parity with men without having to masculinize themselves to do so.) He was also the first, at the time of the Civil Rights movement, to include models of different races in his fashion shows and brand imagery. And he did this without exploiting the exoticism of it, presenting the diversity as normal. Both in terms of gender and race, he picked up tense popular movements, packaged them in beauty and luxury, and presented them to the Establishment powers. The aspirational element allowed them to gain acceptance and even desirability among a broader audience.

What is really interesting is the role these brands played in helping society conquer its fears. In the case of the Orient Express, Louis Vuitton and the Ritz hotels, it was the fear of modernization and industrialization. In the case of Chanel and Yves Saint Laurent, it was the fear of gender parity and racial integration.

So to answer your question – What is the shared value opportunity for luxury brands today? – we have to look at the fears holding society back from addressing urgent challenges and embracing progress. What keeps us clinging to familiar practices even as we recognize their shortcomings? What can be ennobled in order to change hesitation into aspiration, ambition and desire? Where do we need leadership?

The list is long, but to name a few: Business is deathly afraid of giving up short-term profits for long-term benefit. This trickles down into employees’ fear of taking ownership of risk and innovation, and it keeps workers from advocating for changes in business practice that the desire as citizens. On the consumer side, there is a fear of imperfection, be it in terms of body image, aging, our homes and possessions. We have an almost adolescent fear of not having the latest or the coolest. Like business' fear of missing out on profit opportunities, we are afraid of being left out. This translates into a rampant consumerism that delivers short-term comfort at long-term costs. As a society, we are afraid of sharing, we are afraid of welfare programs to support the neediest even as we are afraid of poverty. The American terror of health insurance is incomprehensible to most of the world. All of this combines to create a broad-based social fear of favoring quality over quantity, which is at the root of developing sustainable and socially valuable business models. 

In a sense, as a society, we are afraid of shared value itself, because it is a new and unfamiliar paradigm that most people just cannot get their heads around. How do we move from a voracious culture of more to a tempered culture of better? How do we replace the economic dependence on growth with one of progress? How do we redefine success in terms of contributing to collective well-being rather than of building individual wealth? Or better yet: How do we tie the building of individual wealth to the contribution to collective well-being? We know it is possible, but it seems we just cannot find the will.

There are two ways luxury brands can play a role in this. These are based on the unique physical and metaphysical cocktail of this most emotional of business sectors. One is in the pursuit of sustainable business practices. This is boilerplate. The real opportunity is in the leadership that luxury brands have in communicating and shaping values, both in their own leadership position as best in category, extraordinary products, as well as in their relationship to the leaders in society, the role models that carry and promote their brands. This is the shared value inherent to luxury the way shared value can be inherent to healthcare or information technology or sustainable energy.

The immediate challenge to unlocking the potential is in maneuvering luxury companies themselves into that position. It has become accepted, both inside and outside the sector, that luxury is superfluous and self-indulgent. But that is only because of the marketing choices made by luxury brands in their evolution from small, privately held businesses into global, publicly listed corporations. They have exposed themselves to the same market pressures as other industries that force them into a race to the bottom. But there is an opportunity in that luxury brands are now paying the price for those choices. Having become almost ubiquitous, luxury brands are losing their allure and their growth has been falling precipitously, ironically just as the world recovers from crisis. And luxury brand managers are scrambling for a way to respond.

For me, the poetry in the Shared Value Initiative is your refusal to see business value and social value as polar opposites. The same logic suggests that luxury can be about leadership rather than selfishness. This is why we zeroed in on luxury as a way to speak to individuals, as a way to turn hearts and minds to a culture that supports shared value in opposition to old habits and reflexes. If we can unlock the potential of luxury, it will open a wealth of opportunities.

David Laurel's picture

Hi Ellen and Misha, at the risk of oversimplification, "the proof of the pudding is in the eating".  I am sure Ellen will remember the phrase I used when I presented one of Nestle Philippines' CSV programs "Business on Wheels" that showed that beneficiaries were currently earning incomes that rose to triple the minimum wage in the country's capital.  Where earnings have brought the beneficiaries way above the recorded poverty index.  These metrics have become irrefutable.  Perhaps if the luxury industry could have the same effect, that would begin to change perspective that luxury is  always exclusive.  There is an angle where luxury can become inclusive...


Best regards,


David Laurel's picture

Hi Ellen and Misha, at the risk of oversimplification, "the proof of the pudding is in the eating".  I am sure Ellen will remember the phrase I used when I presented one of Nestle Philippines' CSV programs "Business on Wheels" that showed that beneficiaries were currently earning incomes that rose to triple the minimum wage in the country's capital.  Where earnings have brought the beneficiaries way above the recorded poverty index.  These metrics have become irrefutable.  Perhaps if the luxury industry could have the same effect, that would begin to change perspective that luxury is  always exclusive.  There is an angle where luxury can become inclusive...


Best regards,


Misha Pinkhasov's picture

You are absolutely right, results are the best evidence in favor of CSV. But in your example, I quickly go to two questions: First, what are the growth limits of the BOW program? That is, at what point does the distribution network become saturated and what effect does that have on spreading the benefits further? Second, what are the alternatives for participants in the program? What opportunities do they have outside of the relationship with Nestlé? 

We are very sensitive to the difference between economic empowerment and economic paternalism and, good as the BOW program is, it is vulnerable to manipulation with regard to fair access and fair terms of trade, particularly in communities with week governance traditions or strong traditions of patronage. But before that, to even initiate a program such as BOW, a company has to go through a decision process before there are results to assess. 

That is why we are interested in looking at opportunities for CSV outside of the supply chain, in the cultural elements of a company and its surrounding community that create a fertile environment for investment in shared value.

The other aspect that interests us is developing opportunities for CSV that are endemic to a company’s core business and not just in operational optimization. Ellen cites the examples of pharmaceuticals and healthcare, which could be considered shared value industries because the product itself has social value. I could see extending that logic to information technology-based companies such as social media, and to others. However even in these industries, how the profession is exercised is critical to the realization of shared value. We know there are cases in healthcare, for example, where business value has trumped social value (and even organizational mission) with tragic consequences. So again, CSV needs to be anchored in a culture of shared value to avoid such deviations.

Nestlé is in the food business, and certainly some of its products deliver nutrition as a social value. But Nestlé also makes quite a bit of junk food and other non-essentials like high-priced bottled water, so we cannot really extend shared value to encompass Nestlé as a whole. Even in operational terms, CSV has far from permeated Nestlé’s entire value chain.

What Nestlé has, however, and what it has in common with luxury companies is a respected brand. Not using this asset to foster shared value beyond a company’s activities seems a missed opportunity. The tight control and specifics of a luxury brand also make it difficult to integrate CSV models from other sectors. Of course there is room for improvement in raw materials sourcing and processing. But production and distribution have less flexibility and already operate at a very high standard. And changes in these areas blur the line between CSV and more familiar sustainability, hampering the paradigm shift that would allow CSV to become standard practice.

I agree that luxury must do more to balance product exclusivity with social inclusivity. It is not just a social value issue, but core to luxury's continued high esteem and desirability. So this is a shared value opportunity in the true sense. The purpose of leveraging brand influence and brand communications is to set off viral effects that create demand for shared value practices in our consumer practices, enabling deeper integration into business practice and even public policy.

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