Companies know that giving back has a direct connection to the bottom line. How that gets done is ever changing. First, it was all about all about philanthropy, where business donates money to causes. Then, it was about “corporate social responsibility,” or minimizing their social or environmental harm.
Harvard professor Michael Porter who is author of the infamous, “Five Forces” framework, says it’s time to move on. These days, it’s all about, “shared value.” Shared value is tied to solutions: actual products and services with a social purpose.
According to a recent chat, he says,”The ultimate impact businesses can have is through the business itself,” he says in an interview. “There are huge unmet needs in the world today. The question now is how to get capitalism to operate at its best because capitalism is fundamentally the best way to meet needs. If you can meet needs at a profit, you can scale.”
It’s not about creating cheaper versions of products and services we enjoy in the developed world. It’s about coming up with new offerings that actually solve social problems. So, less new packets of soap or cigarettes, more services that improve health and economic output.
Take a look at TED Talk below to learn more.