Tag Archives: creating shared value

A more beautiful question

For a while now, I’ve been searching for what author and journalist Warren Berger calls ‘a more beautiful question’ – the kind of question that, with elegant simplicity, can encapsulate a wealth of ideas, concepts and possibilities; that can help to shift the way we perceive or think about something; and that has the capacity to spark breakthrough ideas.

While that kind of preamble almost inevitably sets me up to fail, I think I may finally have fashioned one worth sharing, and it goes like this:

What if business reoriented itself as society’s greatest problem solver?

I use the word “fashioned” advisedly, of course. I don’t claim any originality, save perhaps for the particular combination of words. The ideas and concepts that underpin it are many, varied and long-established – the self-same ones that have preoccupied me (and many others) for years now.

While people may choose different labels to describe the conceptual space here – be it sustainability, creating shared value, purpose-led business, inclusive capitalism or whatever – they are fundamentally united by a common set of assumptions:

  1. That, whatever your views on the role of business, and the capitalist system more generally, in creating many of the problems and inequities we see today, it’s also essential to solving them (as evidenced, for example, by the inclusion of business as a key partner in achieving the UN’s 2030 Sustainable Development Goals);
  2. That business, and again capitalism more generally, is perfectly capable of this kind of ‘reboot’ (indeed, as powerfully argued by some smart folks at McKinsey, creating and scaling solutions to human problems may always have been at the heart of how and why capitalism works);
  3. That the fates of business and society are interdependent and it’s in the best interests of both that business steps up to assume this role as a partner of choice in solving social problems (whisper it quietly, but business-based approaches are frequently more effective than government or charitable aid in reducing inequality).

What this all boils down to – what we arguably lost during the cult of maximizing shareholder value, and what we are now slowly rediscovering – is the understanding that the long-term prosperity of business and society go hand-in-hand. Business cannot, and should not, divorce its success from the health and resilience of the social and ecological systems that give it life.

Moreover – in line with Peter Drucker’s famous dictum that the only purpose of business is to create a customer – the idea of seeing business first and foremost as a problem-solving engine, rather than solely a vehicle for maximizing short-term shareholder gain, would seem a much better and broader reflection of what successful companies actually do.

With specific regard to the third point above – and offering an inkling of what reorienting business as society’s greatest problem solver might look like – probably the greatest joy of my current role is the exposure I get to the work of some outstanding social entrepreneurs.

As a firm believer that the sustainability imperative represents the innovation opportunity of a lifetime, understanding and telling their stories (and EY’s role in helping them build the internal capabilities to extend their reach and impact) is something I find endlessly fascinating. After all, in many ways, social entrepreneurs are the purest incarnation of purpose-led business – a mash-up of the social mission of a non-profit with the market-driven approach of business to innovate new products, services or approaches to tackling society’s most pernicious problems.

Take Jibu, for example, a clean water franchise business in East Africa, conceived by brothers Galen and Randy Welsch as a better way to tackle the problem of affordable access to safe, clean drinking water. Its ingenious business model equips local franchisees with advanced, solar-powered filtration equipment that can clean locally sourced water and make it available at a fraction of the price of other bottled water – each franchise effectively becoming a water purification plant for the surrounding community.

More than the question of affordability, the structuring of the business as a franchise also neatly addresses the problem of sustainability (in terms of long-term viability). Whereas donor-funded water schemes often suffer from a lack of local ownership – as a consequence of which, around half of them fail within a couple of years – every Jibu franchise is run by a member of the community it serves.

This puts the very people who benefit from the service in charge of running it, combining their need for clean water with their desire to control their own destinies and build a more prosperous future for their families. It’s a virtuous circle that should see the growth of the business not only provide permanent access to safe water for more than a million people by 2020, but also create 8,000 jobs, in turn providing 8,000 families with a decent and reliable income.

What makes stories like Jibu’s more compelling still is the fact that, more often than not, social entrepreneurs are achieving this kind of success against a backdrop of massive resource constraints. These are master hackers, and you have to wonder what might be achievable if big business took the time to observe, draw inspiration and reverse innovate from their approaches.

Of course, encouraging business-at-large to do so is precisely the purpose behind searching for (and hopefully finding) that more beautiful question in the first place.

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Building a better working world

A lot has been written here and elsewhere about the concept of “thick”/shared value – the reconnection of business strategy to delivering social progress.

As I wrote on the Guardian’s Sustainable Business blog a few months back, business must now operate within a completely different set of frame conditions, encompassing the combined forces not only of climate change, population growth and diminishing natural resources, but also (among others) the ascent of Generation Y and increased public scrutiny in the wake of the financial crisis.

To achieve longevity, business needs to recognise these seismic shifts and re-imagine them, not as constraints on business as usual, but as the perfect opportunity to reconnect with disillusioned customers and employees by designing something better.

More than ever before, the business that wants to achieve long-term success must earth itself in a sure sense of why it exists, what it stands for, and why it matters (beyond making money). And that purpose should be self-evident in the very products and services it provides, how it organises itself, and how it conducts its daily business.

In short…

  • Purpose is the key to creating shared value – not some warm and woolly expression of values, but the ‘north star’ around which to build a strategy for enduring growth, based on improving people’s lives.
  • Purpose is the only sustainable way to recruit, unite and motivate all the people a business touches because – while business models may come and go – it’s that essential ‘reason for being’ that remains constant.
  • And it’s purpose (IMNSHO) that now represents the most powerful lever business leaders can pull to achieve competitive advantage – the single best way to demonstrate relevance in an ever changing world, and to build deeper, more lasting relationships with customers and employees who share your beliefs in their very bones.

On that last point, it’s worth drawing attention to the big news at EY last week – the formal accession of Mark Weinberger as Chairman and CEO, accompanied by a rejuvenated brand identity and, in particular, the clearly articulated purpose that forms the new tagline of “Building a better working world”.

Cards on the table, I’m an EY employee, so I’m hardly an impartial observer, but I’m massively excited by this.

An organisation I work for is really putting purpose front and centre – not in a superficial way, but based on deep thought about the essential function of a professional services firm in promoting long-term growth, through providing timely and transparent information that contributes to the critical functioning of the world’s capital markets, for example, and supporting and stimulating entrepreneurship as a key to local economic health.

I hope my colleagues and EY’s clients will feel the same intuitive resonance with this purpose as I do. In any event, I think it’s a bold move that deserves a lot of credit – especially in a heavily regulated industry that naturally tends to inspire a degree of risk aversion and conservatism.

As Simon Sinek hints at in one of my favourite TED talks, most organisations – indeed most people – are perfectly comfortable describing what they do; maybe (at a push) what it is about how they do it that sets them apart from all the rest. But very few nail their colours to the mast of why they do it 

Of course, that’s precisely why it’s such fertile territory for differentiation.

Mo Farah and survival of the ‘fittingest’

Competition. It’s a common enough word, but also one, it turns out, that is frequently misinterpreted. Particularly in business circles, it’s tended to be understood as ‘kill or be killed’; screw over whoever (or whatever) you have to screw over to get ahead of the oppo; survival of the fittest.

Not so.

Watching Mo Farah win an astonishing 10,000 metres gold medal at the London 2012 Olympics tonight, one of the most interesting things about it was actually who came second – not a Kenyan, not an Ethiopian, but Farah’s American training partner, Galan Rupp. It reminded me of something cradle-to-cradle design guru, Bill McDonough, observed in a great TED talk of his – that the word competition stems from the Latin ‘competere’, to ‘strive together’.

Striving together. Getting fit together. Winning together.

In its original sense, that’s what competition is really about, and it puts a very different complexion on what it means to win – not so much survival of the fittest as survival of the ‘fittingest’. It isn’t about competition as we’ve come to understand it – combative, kill or be killed, where your success is predicated on the misfortunes of others; it’s actually much more about collaboration, where people demonstrate the capacity and ingenuity to carve a niche for themselves beyond the world of the zero sum game.

In short, it’s about finding a way to create shared value and increase the size of the pie for everyone, rather than fighting over how to cut it up.

Seven signs that the “Age of Sustainability” is truly upon us

Anyone who doubts that we’ve reached a tipping point where sustainability is concerned would be wise to take a look at the latest news from the Management Innovation Exchange.

Last Friday, those great bastions of left-brained management thinking, Harvard Business School and McKinsey, jointly launched a new leg in their “M-Prize for Management Innovation”.

The Long-Term Capitalism Challenge seeks – and I quote – “to accelerate the shift toward a more principled, patient, and socially accountable capitalism – one that’s truly fit for the long term,” and calls for real-world case studies, progressive practice and bold ideas around “reinventing capitalism for the 21st century”.

This is just the latest in a long line of developments that signal that sustainability as I’ve long been wont to define it – as “a perspective on brand and business strategy that inextricably links long-term success with serving a higher social purpose” – has now well and truly hit the mainstream.

Consider the following, and that these are by no means an exhaustive list of developments. These just happen to be the ones that have most caught my eye over recent years…

  1. 2008 – The emergence of the “low-profit limited liability corporation” (L3C for short) and “B-corporation” marks the birth of new forms of incorporation in the US – ones that enshrine putting long-term value and social impact ahead of short-term economic gain.
  2. 2009 – Jack Welch, erstwhile CEO of GE and poster-boy for the Milton Friedman/Chicago School mantra that a company’s only social responsibility is to increase returns for shareholders, deals a stinging body blow to that whole philosophy when he describes maximising shareholder value as, “the dumbest idea in the world.” (More on that in a great Forbes article by Steve Denning here.)
  3. 2010 – In December, outgoing chairman and chief executive of M&S, Sir Stuart Rose, delivers a stark warning to business – that the combined forces of population growth, diminishing resources and climate change represent a perfect storm that will see those with unsustainable business models dead within 20 years.
  4. 2011 – Just a month later, doyen of competitive strategy, Michael Porter, confidently asserts in an HBR article that “the next great transformation of business thinking” lies in creating shared value – reconnecting company success with social progress. This should no longer be seen as something peripheral to core business, says Porter, but absolutely front and centre.
  5. 2011 – Paul Polman, CEO of Unilever, launches their Sustainable Living Plan. He does so with very carefully chosen words that, “This is not a project to celebrate, but a new business model to implement,” and clearly positions action on sustainability as a critical driver of value creation.
  6. 2012 – In February, Accenture publishes a white paper suggesting that the position of Chief Sustainability Officer is on the wane. Regardless of whether or not you think that’s sensible (and I personally don’t, for reasons described in my previous post), it nevertheless signals a major shift in mindset – the reason for the CSO’s apparent demise being a preoccupation with ensuring that sustainability isn’t seen as a separate agenda, but as an integral part of all aspects of strategy and operations.

And now – because, let’s face it, it deserves repeating – let’s add a seventh sign to that list…

On 2 March 2012, Harvard Business School and McKinsey jointly launch a new “M-Prize” competition on the Management Innovation Exchange. The challenge? To find examples that augur and accelerate the reinvention of capitalism as a force for good in the 21st century.

Yessiree, the times they are a-changin’!