Brain trust: incorporating shared value into business strategy
Three industry professionals give their take in response to the question: “What examples have you seen of businesses successfully incorporating shared value into their strategies?”
Bridget James, director, Think Green Marketing
The aim is to reinforce a society’s ability to manage challenges while bolstering economic resilience, building a stronger market and community. Many businesses, however, myopically view shared value as an accessory to business as usual.
Tesla: as a clear indicator of adding economic and social value, it rebranded and recycled one of GM and Toyota’s old production sites, employing 11,000 people to manufacture the Tesla S. The Powerwall home battery allows homes and businesses, with solar-arrays, to stockpile energy during the day and can be used night and morning, without having to draw more energy from the grid. The batteries also provide risk management for emergencies.
Bank Australia: practises responsible banking and invests 4% of after tax profit into a community investment program, which focuses on making a positive and sustainable difference to the environment and society.
Despite their ads presenting happy and satisfied customers, the big banks continue to focus narrowly on short-term profits, at the expense of ethical or environmental concerns. Consumer satisfaction and shared value are not their strengths.
The ABC’s Four Corners exposed supermarkets and fast food outlets for selling chicken products that had been produced with exploited immigrant labour (‘Slaving Away’, 6 May 2015). The recruitment company, engaged by Baiada, is responsible for processing chickens that are branded Steggles and Lilydale, as they appear on the shelves of Coles, Woolworths and Aldi. This company is also responsible for the chicken sold by KFC and Red Rooster.
The question of success with shared value, like green marketing, lies in companies’ ability to understand the ethical and environmental impacts of their business on society and the economy.
Rhod Ellis-Jones, principal of Ellis Jones and founder of the Shared Value Project
Corporations are moving beyond the premise of ‘giving back’ to seek ways of creating ‘shared value’: measurable returns for the business and society.
Studies by major academic institutions Harvard Business School and research giant Nielsen define the opportunity: new markets, product and service innovation, value chain re-engineering and price premiums.
Australian companies are among the world’s leaders in creating shared value. Most people who get into debt would rather find a way to get out of it. Working with charitable sector partners, NAB reengineered its debt collection business from the traditional model of force and foreclosure to support and assistance. NAB Care sees staff, trained by Lifeline, identify and help customers experiencing financial hardship. More than 100,000 Australians have received support and NAB has enjoyed $7.2 million in cost savings as a result.
About 70% of Australians are overweight or obese. Australian biotechnology firm, Probiotec, collaborated with the CSIRO (Commonwealth Scientific and Industrial Research Organisation) to develop a weight loss program that links weight and health metrics, making a departure from traditional programs that focus on body image. In just six months, Impromy has become the most successful program in its category in terms of average weight loss. It is also the number one selling product in Chemmart pharmacies. It has a serious chance of remedying Australia’s obesity condition.
AAMI (a Suncorp Group motor insurance brand) launched its Skilled Drivers program to raise awareness among young drivers of the consequences of decisions made behind the wheel. More than 100,000 new drivers aged 18 to 24 have attended the course; AAMI claims analysis shows that accident frequency and severity is lower in those who have been through the course than those who haven’t. Fewer claims means greater profits, but also lower premiums for drivers. The roads we all travel are safer.
With our relentless focus on understanding and measuring human behaviour, shared value is the natural domain of marketers.
Brad Hecht, chief research officer, Reputation Institute
As the global economy recovers from financial crisis, stakeholders are becoming more and more conscious of not only the quality and cost of products they buy, but also the values and social relevance of the firm that stands behind them.
Reputation Institute’s 2015 Global RepTrak survey has found that corporate attributes such as governance, citizenship, leadership and workplace drive over 60% of corporate reputation, which directly correlates to stakeholder behaviours like willingness to buy or willingness to recommend the product to others.
In 2015, the essence of a company, and the benefit the company provides to society, is far more important to its stakeholders than the quality or cost of its product.
To gain, maintain and grow stakeholder support, all firms, regardless of industry, need to consistently and authentically communicate their shared values and societal relevance. What is the ultimate mission of the firm? How does its existence benefit more than just its shareholders? What larger value does the firm deliver to society? Our research shows that stakeholders are more emotionally attached to, and more willing to buy from, a firm that successfully balances financial return with societal return.
One firm that has successfully implemented a shared value strategy is Danone, the stated mission of which is ‘Bringing health through food to as many people as possible’.
The firm has specifically targeted four business lines, each of which is tasked to provide locally tailored products, developed to be the healthiest in their category, within each local region. Each product is developed and delivered through a sustainable food chain and promoted through responsible marketing campaigns.
Additional examples include DuPont, ‘Applying science to global challenges’, ING Bank, ‘Empowering people to stay ahead in life and business’ and Shire Pharmaceuticals, ‘To be as brave as the people we help’.
Each has clearly articulated shared values that aspire to deliver broader societal benefits, while staying relevant to their direct shareholders. Our research shows these firms will be disproportionately rewarded for it.