Reprint: R1309H
At its best, business is about innovating to meet society’s needs and to build a profitable enterprise. But many corporate leaders are struggling to achieve those twin goals. In a study of more than 30 companies that have succeeded in creating so-called shared value, the authors identified five mutually reinforcing elements.
Embedding a social purpose. This may involve reemphasizing a firm’s founding mission, as Danone’s CEO did in 2000 to refocus the company on its origins as a manufacturer of healthy food.
Defining the need. Some firms conduct extensive research to develop a comprehensive view of the social problem. Before launching a micronutrient-reinforced spice product for low-income consumers in India, Nestlé studied nutritional deficiencies in the country and visited 1,500 households to understand cooking customs and diets.
Measuring shared value. To monitor an initiative in Brazil to increase the employability of youth, Coca-Cola spent months planning how to achieve business and social goals and then established intermediate measures to track progress.
Creating the optimal innovation structure. The right structure for a social enterprise depends on whether the firm already has a clear social purpose, understands the targeted problems, is able to solve them, and builds a strong business case for doing so.
Co-creating with external stakeholders. Effective social innovators enlist external stakeholders in their efforts to understand social needs and to execute their strategies.
