"If we can tackle societal needs with a business model, we've achieved the most powerful force we'll ever get in changing the world." Michael Porter gave this advice at the 2015 Shared Value Leadership Summit, held last month in New York. The Harvard Business School strategy guru coined the term "shared value" back in 2011 to refer to business activities that create both business and social value, which in his mind is just good corporate strategy.
"This is not about being good," he says. "This is about thinking strategically and creating more value — which allows you to be profitable, grow, and gain market share. That's what shared value is all about."
At the Summit, Porter presented on shared value in the context of his classic business school strategy lecture. He explained that delivering on outcomes for both business and society differentiates a company in the market — creating something uniquely valuable to a customer base that cares more and more about social impact. What about the customers who could care less? "Strategy is fundamentally about choice," says Porter. "You can't try to serve every customer's need." Successful companies like IKEA are not profitable because they copy the competition, he says, but because they deliver to their specific customer.
The key differentiator of shared value as a concept is its ability to scale social change. When large companies have a stake in changing the world, the impact could be enormous. According to Porter, "We can serve millions and billions of people and solve these problems."
Watch the rest of Porter's strategy talk on shared value:
Prof. Porter will go deeper in the upcoming Creating Shared Value course, to be hosted by the Executive Education program at Harvard Business School on December 9-11, 2015.
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- Shared Value: A New Global Agenda (slide deck)
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- FAQs About Shared Value (video)