Greg Hills, Managing Director, FSG, offers his thoughts on the business side of social impact.
Consider the following concepts: root cause analysis...lean six sigma...weekly, quarterly, and annual reviews. If you've ever been through an MBA program, you've heard these terms before. But do these concepts sound like core business practices or ways to achieve social impact? It's a trick question.
According to Bob Corcoran, GE's VP of Corporate Citizenship, they're both. Bob shared his thoughts on the emerging concept of measuring shared value on a panel I moderated at the recent Net Impact Conference, which also included Barbara McAllister of Intel and Kathy Brown of Verizon.
Shared value refers to the concept of solving social problems while simultaneously driving profitability and competitive advantage. But as Bob explained, doing so requires companies to build, execute, and measure strategies within the business, not in silos outside of existing business units. At GE, anything outside the core business has failed, Bob asserted, reinforcing the notion that the best way for companies to address social problems sustainably and at scale is to apply corporations' unique assets and expertise to drive measurable change.
He explained that GE's approach to shared value asks how it can solve a social problem, such as reducing net system cost in health care delivery or reducing patient stays or deaths in a health care facility, and then innovating on products and services to address those problems.
Similarly, Intel has achieved global market leadership in the growing global technology education market through its rigorous approach to measuring shared value. Key to Intel's success, says Barbara McAllister, is understanding what works for students and teachers and to incorporate that knowledge into product design and deployment. Ongoing tracking of product performance in the classroom, as well as post-sales measurement of educational outcomes, provides insights to improve the product design and delivery, which ultimately improves the effectiveness of Intel's education technology solutions and leads to additional sales and greater market share.
Creating shared value can do more than just strengthen existing product lines; it can open up new markets entirely. Verizon's shared value focus, referred to as shared success, is a growth strategy to develop products and services that address social problems not because they want to be a good guy, according to Kathy Brown, but because it represents innovation opportunities that leverage their broad network and connectivity. For example, Verizon is using its expertise running secure networks to enhance the security of electronic medical records and reduce fraud in health care payments.
In her own reflection on our conference session, Kathy describes one of the biggest challenges of a shared value approach. Measurements must be built in a solid, quantitative manner, she writes, and integrated into traditional measures of business success so we can understand how they interact.
As our discussion at the Net Impact Conference demonstrates, many of today's leading companies are taking a hard core business approach to solving social problems. To pursue successful shared value strategies, our future business leaders will need to reconsider traditional business disciplines - strategy, marketing, financial analysis, operations, etc. - and apply them in new ways. By reconceiving social problems as business opportunities, and applying rigorous execution and measurement, we can ensure an enduring creation of business and social value moving forward.