Focusing on creating shared value in entrepreneurship

The other day I was in SAP SuccessFactors in San Francisco and I read “Success is Simply Human” on the wall. Absolutely true, I couldn’t agree more. After taking part in yet another design thinking workshop, I had the umpteenth confirmation that facing challenges and solving problems is a human-centered matter. Luckily, it seems that more and more companies are approaching current challenges with this mindset. The common good for both human beings and society is being put at the center of the problem-solving business. Creating a successful business and solving societal problems should be approached as two faces of the same coin.

I believe the purpose of a corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. How? According to Michael Porter, “it happens by reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company’s locations. Each of these is part of the virtuous circle of shared value; improving value in one area gives rise to opportunities in the others”.

Shared value is not social responsibility, philanthropy, or even sustainability, but a new way to achieve economic success. It is not on the margin of what companies do but at the center. It is what I believe worthy to be called business.

An example? By reducing its packaging and and cutting 100 miles from the delivery routes of its trucks, Wal-Mart lowered carbon emissions and saved $200 million in costs. By helping employees stop smoking and implementing numerous other wellness programs, Johnson & Johnson has saved $250 million on health care costs, a return of $2.71 for every dollar spent on wellness from 2002 to 2008.

The new thinking reveals that the congruence between societal progress and productivity in the value chain is far greater than traditionally believed.

And what is our role in this?

A whole new generation of social entrepreneurs is meeting social needs using viable business models. I strongly believe social entrepreneurs can create shared value and scale up far more rapidly than both purely social programs and 100% profit-focused companies.

My vision is to be part of this generation.