From philanthropy to CSR to shared-value to ???...???

There is an ever growing awareness about social challenges for which governments and NGO's lack sufficient capabilities to fully meet them. At the same time, Companies or Businesses are perceived to be prospering at the expense of the broader communities despite increasing CSR activities.

Harvard Professor Michael E. Porter and Mark Kramer came up, in the 2011 McKinsey award winner HBR article, with the concept of Creating Shared Value. Let's have a close look what this is all about. What is the role of companies in communities and how is it evolving?

Prof. Michael Porter's evolution model

It started with Philanthropy

It's harder and harder to do pro-public business activities because supporting business is viewed as a questionable activity. Business has been trying to address these issues with philanthropy. In fact, the first response to business to these societal issues is philanthropy.

Twenty years ago was the question to corporate/companies of "what percentage of your profit do you give to support society? In India they have even passed a law on this with a strong recommendation that businesses should give 2% of their profit to philanthropy, if they don't, they have to say why.
Philanthropy is good. A place to start but philanthropy is not enough... simply because there is not enough money!

The next step is Corporate Social Responsibility (CSR)
CSR is more than just philanthropy, but it includes philanthropy; compliance, understanding the communities standards, citizenship, being a good corporate citizen, and "sustainability" which means a lot of different things that it's hard to define sometimes. It's clear about environmental sustainability but less clear about a broader sustainability. Many corporates have many CSR activities but they do it to be considered a good corporate citizen only.

The next step is Creating Shared Value (CSV)
The more we learn about poverty, healthcare, water, nutrition, about societal issues, the more we see opportunities to use economics or new business models to address these societal issues. Shared value is about creating new markets, new opportunities for growth, and new ways to improve productivity. With CSV, opportunities for disruptive innovations will proliferate. Capturing  these opportunities will require new thinking about market segmentation, customer segmentation,  supply chain management, human resource management, and other management disciplines. Some companies are already redefining strategic positioning around a shared value mindset.

Aligning strategic positioning with shared value opens up fundamentally new ways of thinking  about the business. Shared value opens up a new and far broader opportunity set for companies. Companies that create shared value will gain competitive advantages and superior performance. Finally, it's important to mention here that Shared Value is not about triple bottom line. 

A new type of leadership is required in the 4th industrial revolution

Thousands of books have been written about leadership and leaders, and many theories have been
developed in the fields of management and psychology. To mention one, Austrian-born American management consultant, educator, and author Peter Drucker stated that “management does things right; leadership does the right things.”


What type of leadership is required to succeed in this new business world, created by the Networked Society, and the ongoing digital transformation of the global economy.? This society will see new market spaces, where cross-industry companies will compete. Because of its openness, its technology based on mobility, cloud and performing networks, because of globalization, free trade and capital movement; the Networked Society will transform and reshape businesses and industries.

So, what leadership and strategy playbook should executives and strategists use?

The competition and the customers have become unpredictable and will be even more so in the future. It will be hard for companies to keep a strong position and defend it for extended periods of time. It means that competitive advantages will no longer be possible to sustain. It also means that companies will have to review their strategies and portfolios, and start building new competitive advantages more often than ‘once a year’.
Leaders in the Networked Society need to constantly start new strategic initiatives. They should care less about market segmentation – because the borders between industries will be blurred – and focus more on the jobs-to-be-done (the Clayton Christensen concept) that are out there for customers.


I think that executives in the Networked Society should have at least the following skills:

- Innovation in their DNA. Have the ability to successfully connect seemingly unrelated questions, problems, or ideas from different fields and areas.
- Ability to listen to the society, understand the issues and opportunities around sustainable development, and develop a strategy around them.
- A more customer-centric and less industry-bound view. Their methods for evaluating new business opportunities and their approach to innovation should be different.
- Ability to spark continuous change by building an agile organization that can support any new competitive advantage or any new strategic change without ‘pains’.
- A non-narcissistic approach, because leaders must be engaged in initiating questioning conversations in their organizations.
- Ability to make fast and right decisions instead of deliberations and/or consensus finding.
- Discovery-driven. Executives produce uncommon business ideas by scrutinizing common phenomena, particularly the behavior of potential customers.
- Executives in the Networked Society don’t delegate creative work, they do it themselves. Not only do they feel responsible for facilitating the innovation process, but also for coming up with strategic innovations.
- A track record for innovations. Innovation will be a core activity in the Networked Society.

So, are you an executive of the Networked Society era?

This blog has been posted on Ericsson Networked Society blog as well