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Creating Shared Value vs. Leveraged Social Programs

November 23, 2011

Michael Porter and Mark Kramer, writing in HBR (December, 2006 and January-February, 2011), advance the idea of creating shared value by developing strategies and policies that enhance the competitiveness of the company while advancing social and economic conditions of the community.

An alternative that has similar objectives but may be easier to implement and justify is leveraged social programs — programs that leverage a firm’s assets and skills and have a direct effect on brands and customer relationships.

Shared value can be achieved by offerings that address social needs as GE has done with ecoimagination, by sustainability programs such as those of Walmart, or by enhancing rural development and water conservation for communities where there are local operations as Nestle has done.

Shared value suggests that profits that are imbued with a social purpose can enable companies to grow while advancing society. It frames the enterprise mission and objectives in a new way. All profits are not equal. Those that advance society are better and those that detract from society are inferior. In my view the concept of shared value and its label advance the practice of management by broadening objectives and can potentially change the relative perception of business and its role in creating social good.

However, I also see some practical implementation issues. First, although at a high level of abstraction it works, it is not clear how many decisions would be affected by the shared value concept. If a sustainability program will reduce costs or a local community program will increase productivity, a shared value justification will not be needed. If a societal beneficial product line will have customer support, it can be justified, as it was at GE, without a shared value rationale.

Second, the issues are complex. If a firm has 20 plants in rural areas there will be a host of issues involving water, education, security, etc. and each may be different. Which issues and locations receive priorities? And how can you be sure your programs will not create other problems? Certainly the Body Shop learned this lesson when dealing with third world issues. Third, the concept does not explicitly consider the impact on the brand internally and externally of the decisions stimulated by the shared value thinking.

A leveraged social program provides a contrast and perhaps an alternative. Although less broad in scope, it also has the potential to affect societal problems and to influence strategic choices.

Leveraged social programs:

    • Have substance and impact.
    • Draw upon assets and skills of the firm.
    • Fit with the firm’s business and values.
    • Contribute in part by enhancing the brand both externally and internally.

Leveraged social programs are not random “do-gooder” programs but, rather, leverage the assets and skills of the firm. Further, they are operated professionally with objectives, innovation, and substance to increase the likelihood that the resulting programs will be effective and efficient. The should be managed to enhance the external brand and its customer relationship and the internal brand to provide employees with a tangible and visible demonstration of the firm’s values and a purpose greater than short term profits.

The Avon Breast Cancer Crusade and associated Walk for Breast Cancer illustrate. The program, nearly 20 years old, leverages the sales force and customer base of Avon. The program has real substance, it has raised over 650 million for breast cancer research and stimulated untold screening tests. This substance affects the customer relationship bonds — there is a reason to have an Avon relationship. Further, the program enhances the brand by providing welcome energy and adding a powerful social component as the participants, supporters, and followers all have a social relationship, they are together in fighting breast cancer in a tangible way. It also provides the Avon family a higher-order purpose.

An established, branded external program can be a ready-made leveraged social program. Take, for example, the support of Habitat for Humanity, the program to provide homes for those without, by Home Depot. Home Depot’s employees actually help build homes and get connected to a higher purpose and Home Depot values. The firm donates materials and expertise. It just fits. Over time Habitat for Humanity becomes one of the associations for Home Depot and helps communicate a core value that potentially strengthens the customer link.

The concept of a leveraged social program does not compete with the shared value concept but offers another perspective on business’s efforts to have a nobler purpose and make a difference with respect to the larger society problems. It also elevates and makes explicit the role an enhanced brand plays both externally and internally as a representation of culture, values and a broader mission.

David Aaker

David Aaker is the vice chairman of Prophet and the author of Brand Relevance: Making Competitors Irrelevant. He writes the davidaaker.com blog on branding.

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