At MDI Gurgaon, we recently had Prof. Mark Kramer (MD –FSG, Visiting faculty at HBS, Scholar for HBR) talk on “Shared Value Creation“. We generally know the concept of Corporate Social Responsibility (CSR) and Charity if not anything else, but the concept of Shared Value Creation is relatively newer. Well, perhaps the idea still is not new, but its relevance in today’s world certainly is.
Shared Value Creation as I understand and take it is creating Social sustainable benefits for others as and when you create monetary benefits for yourself. It is a concept which according to Mark, the corporates and private entities should relate more to. For example, Novartis (the drug company) found that only 17% of medical drugs in India were available to rural population and there was no serious infrastructure to distribute to such a huge market, brought innovation. They provided 300 health educators to go around to different villages to educate the villagers about proper drugs. To make distribution more effective, they tied up with Vodafone and gave out cheeky – attractive deals for those who would promote the drugs in general. After 3 years, they broke even and now are profitable. They, according to mark reached out to 42 million people. After, huge success they now are replicating this idea to other south asian countries.
Such steps taken may not be solely for the purpose of social benefit, but are surely more effective than myriad list of government initiatives that countries take and lose out on the implementation part. Other examples may be of GE or Pepsico nutrition initiatives in southern India presently where they are coming out with a 3-5 Rs nutrition bar for the poor. What I really liked about Mark said was that he didnt give out gyaan. He said what we humans generally do. We are not excited about selfless help, we are not used to it. Perhaps, in this world, it is better to make social problems a business opportunity to properly address them.
Finally, Mark talked about 3 important parts of the whole “Shared Value Creation” concept.
1. New Product and Distribution design systems for new markets
2. Redefining the Value chain (For Eg: Walmart going green, SRISTI)
3. Strengthening the cluster.
The third concept is particularly interesting. What he meant by this was, you help societal sections improve themselves or strengthen other sections so that effectively you benefit. He took the example of CISCO, which had launched a massive distance learning drive to learn better concepts of networking, IT, etc. This way they helped increase more educational value and also improve the standards of the workforce globally. The other example he took was Jain irrigation in India.
This lecture really intrigued me. I thus am going to put out a couple of articles on Start ups or initiative which I come across.