One of the world\u2019s leading business thinkers says companies need to retool their approach to profit by working with society to create \u201cshared value,\u201d and not regarding it as a costly \u201cexternality.\u201d<\/p>\n
Michael Porter,\u00a0the famed author of\u00a0Competitive Strategy<\/em><\/a>,<\/em> says the business sector has become estranged from the rest of the community, even among those who are pro-business, because of its narrow approach to making profit.<\/p>\n He said in\u00a0an interview with the\u00a0BBC<\/em><\/a> that \u201cthere\u2019s a widespread view \u2026 that business today is actually profiting at the expense of social needs and communities.\u201d<\/p>\n \u201cThere\u2019s been this shorter-term view of how to create profitability, and also been this narrowing of what the responsibility of the company is.\u201d<\/p>\n Companies today are trying to \u201cpersuade people to buy more, to buy things that they may not need, that may not even be good for them,\u201d he said.<\/p>\n Where businesses once used to consider they had some responsibility for the welfare of the communities where they operated, they are now \u201ctrapped in a bubble\u201d and don\u2019t understand that these societal factors \u201chave a profound effect on their proficiency and productivity,\u201d Porter says.<\/p>\n He points to firms such as GE, Google, Intel, Johnson & Johnson and Unilever that are creating \u201cshared value by reconceiving the intersection between society and corporate performance.\u201d<\/p>\n \u201cThe purpose of the corporation must be redefined as creating shared value, not just profit per se,\u201d Porter said in a\u00a0Harvard Business Review<\/em> essay he co-authored<\/a>. This means recognizing that \u201csocietal needs, not just conventional economic needs, define markets.\u201d<\/p>\n \u201cIt also recognizes that social harms or weaknesses frequently create\u00a0internal<\/em> costs for firms\u2014such as wasted energy or raw materials, costly accidents, and the need for remedial training to compensate for inadequacies in education,\u201d he writes.<\/p>\n \u201cFood companies that traditionally concentrated on taste and quantity to drive more and more consumption are refocusing on the fundamental need for better nutrition.<\/p>\n \u201cIntel and IBM are both devising ways to help utilities harness digital intelligence in order to economize on power usage. [US bank] Wells Fargo has developed a line of products and tools that help customers budget, manage credit, and pay down debt.<\/p>\n \u201cSales of GE\u2019s\u00a0Ecomagination<\/a> products reached $18 billion in 2009\u2014the size of a\u00a0Fortune<\/em> 150 company. GE now predicts that revenues of Ecomagination products will grow at twice the rate of total company revenues over the next five years.\u201d<\/p>\n Many \u201cso-called externalities\u201d actually create internal costs on the firm, such as excess packaging of products and greenhouse gases, which are costly to the company as well as the environment.<\/p>\n \u201cWal-Mart, for example, was able to address both issues by reducing its packaging and rerouting its trucks to cut 100 million miles from its delivery routes in 2009, saving $200 million even as it shipped more products. Innovation in disposing of plastic used in stores has saved millions in lower disposal costs to landfills.\u201d<\/p>\n Porter says businesses must take the lead in bringing business and society back together.<\/p>\n \u201cThe recognition is there among sophisticated business and thought leaders, and promising elements of a new model are emerging. Yet we still lack an overall framework for guiding these efforts, and most companies remain stuck in a \u2018social responsibility\u2019 mind-set in which societal issues are at the periphery, not the core.\u201d<\/p>\n Source: Green Channel<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" One of the world\u2019s leading business thinkers says companies need to retool their approach to profit by working with society to create \u201cshared value,\u201d and not regarding it as a costly \u201cexternality.\u201d Michael Porter,\u00a0the famed author of\u00a0Competitive Strategy, says the business sector has become estranged from the rest of the community, even among those whoContinue reading “Rethinking business: time for “shared value””<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-585","post","type-post","status-publish","format-standard","hentry","category-working-tips","entry"],"_links":{"self":[{"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/posts\/585"}],"collection":[{"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/comments?post=585"}],"version-history":[{"count":2,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/posts\/585\/revisions"}],"predecessor-version":[{"id":587,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/posts\/585\/revisions\/587"}],"wp:attachment":[{"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/media?parent=585"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/categories?post=585"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.iwayvietnam.com\/tuanta\/wp-json\/wp\/v2\/tags?post=585"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}