Creating Shared Value, an Introduction
Tags: Shared Value
Posted by John Holm on July 23, 2013.
Creating Shared Value
The evolving relationship between the for-profit and nonprofit sectors
For those not familiar with the rapidly evolving business strategy concept of Creating Shared Value, it can be best defined as an approach by which an organization creates economic returns by developing solutions to solve social problems. Multinationals (MNCs) such as Coca-Cola, Nestle, Intel, Intercontinental Hotels Group & Nova Nordisk are embedding shared value into their global business platforms and demonstrating measured impact both to the bottom line and community. Meanwhile, proactive nonprofits are quickly identifying new impact measurements and funding opportunities to evolve with the change.
To provide context, over the past decade I have had the fortunate opportunity to work with several MNCs (Starbucks, IKEA, Subway, & Libri) and nonprofits (The Little People Association & Casa Ioana) on their expansion into the emerging markets of Central and Eastern Europe. Consisting of several countries with vastly different cultures, histories and business practices, recent history has shown that more organizations failed than succeeded in their market entry primarily due to a lack of understanding the unique attributes that each culture represents.
For the organizations that prospered, there were two core elements to their success. First was the innate ability to customize a business model/social mission to the local market in each specific country. Second was the development of a truly empathetic approach to each sector’s respective counterpart. For example, a Romanian nonprofit increased year- to-year funding by 38% due to the identification of three additional social issues which had a measurable impact in alignment with targeted for-profits. Another example is the Hungarian-based Libri Book Chain which increased its year-to-year profit by 47.6% in Romania by expanding its business model to include a focus on the social issues of literacy and transparency. As both of these instances show, this nuanced interplay is rapidly evolving to a tipping point stage that can add value add to both sectors.
In the coming months, CAF America will be providing shared value case studies from around the globe, giving you an inside perspective on how rapidly the nonprofit and for-profit relationship is evolving. In the meantime, please click here for an article in The Guardian discussing how shared value is changing the landscape of how nonprofits interact with businesses.
John Holm is the Senior Director of Business Development, Marketing & Communications at CAF America. In 2012, John founded and served as Director of the Center for Shared Value and Social Impact in Bucharest, Romania. In the same year, he initiated and authored the Shared Value Action Learning Project at Maastricht School of Management in both The Netherlands and Romania, where he also serves as a Senior Adjunct Lecturer.
