Creating Shared Value

Some recurring trends have emerged throughout our visits to the many organizations within and surrounding Auroville, including sustainability (of course), environmental awareness and preservation, and the effect of happy workers on the productivity of a business.  Listening to these truly grass-roots efforts explain their motivation to find creative solutions for social and environmental challenges that they have witnessed in their communities has demonstrated that determination and ingenuity can accomplish things without a strictly profit-oriented model.  In this remote location thousands of miles from Wall Street, these social businesses seem to perfectly embody on a small scale Michael Porter and Mark Kramer’s concept of shared value. 

 

As articulated in the Harvard Business Review last year, shared value is the next emerging business model, which rejects traditional capitalism as both socially and economically destructive due to its short-term, encapsulated perspective.  Traditional business can create huge profit margins very quickly, but as Porter and Kramer argue, this is not sustainable in the long-term, and the evidence of its destructiveness is visible globally where we find exploited human and natural resources being pushed to the brink of extinction.  Shared value is defined as “policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates.”[1]

 

Where NGOs were traditionally thought of as purely socially driven and businesses as purely profit-driven, here in Auroville we have witnessed a coalescence of the two that gives true clout to Porter and Kramer’s concept of shared value.  At Naturellement, a business that began with producing natural jams and juices and has now expanded to add other projects such as a lunch café, profits are extremely important because the Tamil women who work there are dependent on their salaries to support themselves and their families.  On the same token though, the owner Martina was adamant that the quality of work environment would never be compromised.  By creating a lunch program for the women who were used to eating white rice at every meal, she makes a long-term investment in strong and healthy employees.  Her philosophy is that by thinking about the business in a different way, she can have happy employees, who are able to work, to create and maintain the profit they need.

 

Although Naturellement is a very small-scale business, shared value is not limited to such enterprises. Porter and Kramer cite, for example, Project Shakti, an undertaking of the corporation Hindustan Unilever that creates shared value in communities across India by providing skilled employment opportunities for women and fights the spread of disease through access to hygiene.  These huge social benefits for Indians translate in profit benefits for Unilever, since Project Shakti now makes up 5% of their revenue in India.  Unilever is able to create new markets for itself while simultaneously benefitting the community, embodying a truly shared value.

 

As we begin to participate more actively with these organizations this week, we will have the opportunity to gain more insight into the practical operation of creating shared value and will ideally take away understanding that can be applied to any project we encounter in the future.

 

By Jillsa Aringdale

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s