Written by Sarah Moore
Why write a blog about economic and business theory for Docutribe? What is the connection to storytelling? Over the years, especially after the 2008 financial crisis, I became interested in alternative business models that considered more than profit when making decisions. Shared value, in particular, piqued my interest. Through my years collaborating with Docutribe, I have come to understand that stories are the drivers of change in every sector and walk of life. Bringing these two concepts together, therefore, made perfect sense.
What is Shared Value?
The term shared value was first coined in the early 2000s by Michael Porter and Mark Kramer. In the wake of the 2008 financial crisis and the growing distrust of corporate America and capitalism, Porter and Kramer expanded this term into theory in their 2011 article “Creating Shared Value,” published in the Harvard Business Review. This theory encourages companies to design business models that inherently incorporate a dual focus: creating value both for society and their bottom line–as opposed to being solely profit driven. Porter and Kramer were adamant that shared value is not about increasing philanthropy or corporate social responsibility. Porter in particular encouraged corporations to lean into the capitalist idea that freedom and innovation in business is best for society. Within the creating shared value construct, this “lean” means a commitment to purposefully create structures, procedures, and products that protect the environment and support positive social impact in equal measure to reaping financial gains.
How Does This Relate to Storytelling?
Creating change, especially in the name of social good, is nearly always driven by stories. The impetus to make positive impacts on the world around us, to help our friends, families, communities, and beyond, is born out of empathy. Empathy, in turn, is created through the connection and understanding nurtured through storytelling. Those stories are all around us: from very personal moments with friends, family and loved ones; to a chance meeting with a stranger; or swapping war stories with colleagues. Then there are the stories with a broader reach: the tales spun for us by filmmakers who have a message to share; or the documentaries that expose us to a lived reality often far removed from our own. Not to mention the countless books, television programs, TedTalks and podcasts that strive to share a message and inspire us to act. These are all places where inspiration is waiting to spark, and where the solutions that can help make the world a better place begin to form.
How Does Storytelling Help To Implement Shared Value?
How do companies shift from business as usual to embracing the theory of creating shared value? Just looking at raw data and cost comparison will always make the argument for the cheapest and easiest solution. It is the empathy and connection forged in stories that leads to a deeper understanding of what is needed to:
ideate better products that serve a purpose/need
create a distribution chain that is effective and efficient, as well as respectful and protective of the world it moves through
commit to supporting local communities by honoring their histories and needs while building for the future together.
creating work environments that serve and respect employees
Ideas for change may germinate from data and information, but they are cemented in stories.
Shared Value and Shared Stories
What kinds of stories can inspire a business shift to creating shared value? Where can they be found? The answers are any story that is heartfelt and well told can inspire–and they can be found anywhere. The following are a few real world examples:
A major sneaker brand was approached by local investors with a story about health issues in their country–stemming in large part from the high poverty rate and its population inability to afford footwear to protect them from many diseases. This story inspired the sneaker brand to find a solution. They partnered with the local investors to develop a new line of shoes that is affordable for the people who need them most. The effort to find this solution also encouraged research into new methods of production, which lowered costs for the company and the consumer, and opened up new markets for the business.
At another company, executives were looking for ways to save money and streamline their distribution chain. They asked managers and front line workers for input. Stories flooded in about outdated procedures that waste energy and water and keep costs high for no reason. The changes necessary to fix these problems required a substantial investment upfront. The positive impact on the environment and the long term savings to the company made the cost a worthy expense.
A corporation looking to build a new factory in a small, midwestern city, met with local leaders and listened to stories about their community. The company’s advance team took the time to learn how their business could truly help the small city and surrounding area. With these stories in mind, they sourced all possible materials locally, and planned their build to minimize the impact on surrounding environs. The business also partnered with local schools and libraries to run training programs in advance, to help strengthen and grow the potential workforce–present and future. While many of these efforts meant higher start up costs, they quickly helped lift the local economy and built a strong local customer base and loyal employee roster.
These three scenarios (and the stories that inspired them) are examples of the main tenets of creating shared value:
Reconceiving Products and Markets
- Creating a new, affordable shoe line that helps save lives.
Redefining Productivity in the Value Chain
- Saving energy and water that saves money and protects the environment.
Enabling Local Cluster Development
- Supporting local communities benefits the community and the business.
Another crucial piece of the shared value puzzle is Porter and Kramer’s admonition to businesses that make decisions based solely upon short-term financial gains. Creating shared value often means committing to higher upfront costs to ensure product safety and quality, environmentally sound procedures and community betterment. But as the three stories illustrate, investment in social good is also ultimately positive for the company’s bottom line.
Why is Shared Value Still Struggling to Break Through?
Since its introduction, the theory of shared value has attracted many proponents. Numerous businesses, including some of the largest international multi-conglomerates, have embraced shared value in their company mission and practices. The theory utilization has mostly been limited, however, to only one specific sector or product.
This narrow implementation is a focus of shared value’s detractors. Other criticisms of the theory include:
that it wasn’t and isn’t a new idea, just a new name
the cost and effort to realize full implementation is seen as daunting and unrealistic
skepticism that social good and long term gains will ever win over short-term profit forecasts
that corporations doing good should not be tied to profits in the first place.
These criticisms all have validity. So why is the theory still being considered, debated, and utilized in some measure by so many? Because the choice to truly create shared value comes from a place of connection and inspiration–much like the stories I propound will help eventually encourage more businesses to embrace it. Investing in shared value means businesses are listening to their better angels. It shows that a company understands that the decisions it makes will have a direct effect on the world around it–and that it chooses to make positive ones.
It can be easily argued that support for shared value requires a naively optimistic, even utopian view of how business would be willing to change for sustained social good. According to the musical Cabaret, “money makes the world go around.” That is true. Another truth is that stories have helped to shape the world since early humans first sat around a campfire, increasing understanding of what has come before and what is needed to keep moving forward. In the same way, the quest to have businesses institute shared value has its best chance of being successful if it embraces storytelling. Businesses already know that when their products and services seek to serve communities and consider their customers’ needs, they have and will always do better. Shared value through shared storytelling is how they build this formula into sustained company missions for social good. Even more, it may be the key to weathering an uncertain future.
Resources:
A New Competitive Edge: Creating Shared Value (2016)
Creating Shared Value: A Guide
Shared Value Project (based in Australia)
