It’s hard to pick up a newspaper or watch TV, without hearing about the need for inclusive growth. Many business leaders are stressing the need for adoption of a new business model. Understanding the need of the hour, FSG (Social impact Consultants) has created a report titled, ‘Creating Shared Value in India’ that shows various examples of Indian companies that are viewing opportunities and taking a systematic intentional approach to creating economic and social value.
So what is Creating Shared Value (CSV)?
CSV is an intentional, systematic way for companies to create lasting competitive advantage. It entails identifying business constraints that are tied to societal problems, and leveraging the core assets of a business to solve those problems in innovative, sustainable and scalable ways. When companies are able to balance creation of both social and economic value, the social impact grows as the business itself grows, strengthening the cycle of impact and generating lasting competitive advantage.
CSV and CSR
CSR (Corporate Social Responsibility) often focuses on corporate philanthropy and/or efforts to make businesses more sustainable by mitigating the resources used in operations. It is often supported by a department of talented and dedicated staff, who are not part of daily strategic and operational business decisions. CSR departments play an important role in promoting and contributing to CSV strategies in a company. But CSV must be integrated to a company’s core business to have the most impact.
What is FSG?
FSG is a nonprofit consulting firm specializing in strategy, evaluation and research. Founded in 2000 as Foundation Strategy Group by Mark Kramer and Michael E. Porter of Harvard Business School, FSG works across sectors worldwide—partnering with foundations, corporations, nonprofits, and governments to develop effective solutions to the world’s most challenging issues.
In India, FSG hopes to contribute to the dialogue, partner with people passionate about creating real change, and share the knowledge and lessons learnt, to improve the effectiveness to a variety of stakeholders. For more information about FSG, check out www.fsg.org.
Veronica Borgonovi, one of the four authors of the FSG report believes that India has tremendous potential for CSV, and vice-versa. She says, “India is a country poised to take CSV by the horns and show the rest of the world how a new form of capitalism can create real, and lasting, competitive advantage and social benefit”. In this interview, Veronica, talks about CSV, CSR and the challenges that companies face while adopting it.
Q. Are companies trying to fill a ‘social needs’ gap by creating shared value?
A. Shared value is about filling a needs gap where social needs meet economic opportunities. It is not about focusing exclusively on social needs – though some companies that focus on meeting social needs will end up creating shared value if they are able to meet these needs profitably. It is about comprehensively assessing business opportunities and practices to ensure meaningful value is being created that is more likely to be sustained in the long run. It’s also about viewing social needs as opportunities that others haven’t yet met.
Q. What are the challenges faced by firms, while incorporating Shared Value?
A. A significant challenge is the perception that “social responsibility” is a cost center, not a revenue center. Yet the biggest reason to adopt shared value is that it’s good for the bottom line. Social problems are business constraints. But, by balancing a view of both the economic and social impact of business decisions, companies are able to create lasting competitive advantage that is less likely to erode.
Successful CSV requires integration into the core business, and this requires strong support from the very top of an organization. CSV must be approached like any other new business strategy – resources need to be dedicated to it, and processes need to change.
Q. What happens to public and social sectors in the long run, if businesses start to become socially inclined?
A. NGOs, government, and social enterprises will all continue to have significant roles to play as businesses work to integrate social considerations into their strategic decisions. Government can play an important role by drafting supportive legislation, by offering incentives to companies that demonstrate social-economic value, and by serving as a large-scale customer for key products and services. Civil society plays an important role, by identifying ways that companies can leverage their assets and ensuring business leaders are aware of ground realities.
Q. How should young businesses adopt CSV?
A. Start with dialogue. Get leadership to talk about why CSV is important, and how this can create real value for the business. Look at examples to determine what you can do. And get started – it’s by launching CSV efforts that companies will learn what works best for them. These initiatives must be tailored to their competencies and business goals for success.
To read the full report ‘Creating Shared Value in India’ please click here.