Member News

Corporate Shared Value - what is it and why does it matter?

Corporate Shared Value - what is it and why does it matter?

We were delighted to welcome Oliver Olson, Director of Global Education Programs and Senior Lecturer of Marketing and Strategy at the Maastricht School of Management to talk about Corporate Shared Value (CSV). This was a topic that even Google had not been able to provide an agreed definition on and so mystery and interest ran abound. Oliver was disarming, starting with or rather playing down his own business experience of banking in the US and Management Education in Europe. ‘Nobody really knows what strategy is’ he told the intrigued attendees. It soon became clear and we realised why we were there and why this was good.

 

Filling in some background theory, Oliver talked about competitive advantage - know what you are and what you are not. From this emphasise your value, your perceived benefits over cost (a model that Apple have figured out pretty much perfectly). In the recent past then, companies have focussed on profits within the rules of the game. ‘Greed is good’ and if companies make money society will benefit. Oh yeah? Society was not so sure and so the rise of social responsibility in business grew and very soon green, sustainable products that donated money to charities were all around us. But Corporate Shared Responsibility (CSR) was a flawed model. In reality, companies measured social impact like they were judging a beauty pageant, and it was really all about reputation. The social mission was at the whims of managers.  But worse than this, companies were failing to link sustainable activities to business growth – their revenue and profitability – so how could it ever succeed?

 

Oliver gave us an example of CSR – Tom’s Shoes. Around 2010 Tom’s Shoes promised that for every pair of shoes bought one pair of shoes would be given to a child in need. Tom’s shoes were $54 for the cheapest pair however annual sales reached $350,000,000 and people liked it. When this idea lost ground they went into coffee and offering clean drinking water. And from this then into selling sunglasses and offering sight saving surgery for every pair bought. This sounds good, and it may seem unfair at first to critique it, but in business terms this model can be massively improved– with Corporate Shared Value (CSV).

 

The key difference between CSR and CSV is that Corporate Shared Responsibility looks at everything after the value chain where as Corporate Shared Value looks at where it can input into the value chain. So Tom would have been using CSV if instead of donating one pair of shoes he had trained local people in the locations where they were donating to make their own. Or if he had trained local doctors in these locations to perform sight saving surgery rather than shipping in mobile medical units. Tom’s model was flawed because it was increasing perceived benefit whilst also increasing cost. To have used a CSV approach would not only lower costs and improve local knowledge but it would have created ways to be competitive that did not require massive diversification. This can be done on a degree of scale – so Tom could have simply employed local artists to pain the shoes for example to start with. In short, businesses can really benefit by incorporating the people they see as charity into their own business models.

 

This is what MBAs teach – how to apply great theory to your own business. If you redefine the products and the markets that you serve and think about reaching outside of your market, and if you redefine your value chain, then you will be improving the cluster that you operate in which in turn will be making your business more successful. Moreover, when you make large profits no one will be protesting outside your gates because you also genuinely and meaningfully benefitted others whilst you did this.  

Article by University of Suffolk

University of Suffolk is a modern and unique institution offering a range of full and part-time degrees in Arts and Humanities, Business, Nursing and Midwifery, Science, Technology and Health, and Social Sciences.  

University of Suffolk degrees are jointly validated by two leading UK universities, the University of East Anglia and the University of Essex. Students at University of Suffolk benefit from the input of these two universities, as well as local colleges and the wider community. Students are based across the six UCS centres at the main Ipswich Campus on Ipswich Waterfront, Bury St Edmunds, Great Yarmouth, Lowestoft, Otley and Suffolk New College.

University of Suffolk has grown over the last five years from a small cohort of local students to a thriving community in excess of 5,000 students. Of this number the majority of students are undergraduate but growth is also being seen in both postgraduate and international numbers.

Anyone interested in studying at University of Suffolk is encouraged to attend an Open Event to find out more about the range of courses available, as well as meeting academic staff, learning about student support, accommodation, admissions and student life, and getting advice on student finance, budgeting and the range Fee Waivers available.

University of Suffolk has enjoyed increasingly strong National Student Survey outcomes and graduate success is regularly highlighted, with 92% of graduates going on to employment or further study in 2012*. This high success rate confirms University of Suffolk’s strong emphasis on employability and reflects the continuing recruitment of experienced staff, including many top Professors and Visiting Professors. 

The Business Development team at University of Suffolk is committed to building high-value partnerships with commercial, public and third-sector organisations, facilitating engagement with businesses locally, nationally and internationally. The team works with the academic departments across University of Suffolk to support business engagement and enterprise in areas such as Continuing Professional Development, consultancy, knowledge exchange and student enterprise. To discuss how University of Suffolk could enhance your business performance through a bespoke programme of activities, solely focused around the individual needs of your organisation, please contact the Business Development team: 01473 338628.

*DLHE Survey 2012 (Destination of Leavers from Higher Education)