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29 Jan. 2015 | Comments (0)

I have written about Michael Porter’s concept of Shared Value Creation (companies creating profitable products and services with a social purpose) in this blog a number of times - most recently when I predicted the growing acceptance of the idea as a part of a company's social responsibility portfolio in the posting, “CSR Trends to Watch in 2013” [January 14, 2013]. Although I've written and spoken about my belief that achieving real shared value is impractical for many companies and exceedingly difficult for others, the trend is definitely toward more acceptance of this idea in executive suites around the world.

One of my ongoing fears about the idea of shared value taking hold is the possible unintended consequence of companies focusing on the goal of generating measureable profits by creating products with a social purpose, and at the same time curtailing a company's social responsibility and philanthropy programs because of their inability to achieve the same kind of profitable results - essentially throwing the baby out with the bathwater.

This fear was brought home when a colleague, Gary Steuer (who was once head of the Arts & Business Council in New York and is now president of the Bonfils Stanton Foundation in Denver), sent me an article from this month's Fast Company with the provocative title, “Never Mind Corporate Responsibility, Companies Can Solve Actual Social Problems.” In it, the writer Ben Schiller refers to Mr. Porter as a rock star in the world of management research and the guru of shared value as a management concept.

According to Schiller, Mr. Porter believes that companies are entering a third phase in their relationship with society. The first was about philanthropy, where businesses donate money to causes. The second was about corporate social responsibility or minimizing their social or environmental harm. And, the third is about solutions - meaning the creation of actual products and services with a social purpose.

“Businesses have been stuck in a box. They have been thinking about 'social' as being good or responsible, rather than as opportunity,” he argues. “They haven't thought about needs this way or customers this way. They have been thinking too narrowly economic.”

While I agree that there has been an evolutionary process of companies embracing the concepts of corporate social responsibility in addition to philanthropy, and I have been a major proponent of incorporating the tool of philanthropy into the broader function of corporate social responsibility (as it is here at American Express), I’m always troubled with the idea of shared value existing apart from or even in opposition to CSR when it should be viewed as an integral part of a company's socially responsible behavior.

Corporate philanthropists and CSR professionals have been focused on integrating their functions in the operations of their businesses and finding solutions to societal problems for decades now. Strategic philanthropy - or the idea of marrying a company's business interests with the needs of society - grew up in the 1980s, and corporate social responsibility - which I would argue is all about how companies operate, not just about how they minimize harm - came to life in the 1990s. The idea behind shared value - that companies and capitalism can be used to create real solutions to society problems - has been embraced by the CSR field for so long that it is now taken for granted.

In short, shared value and corporate social responsibility have a “both/and” relationship rather than an “either/or” one.

Granted, it's critically important for academics and intellectuals to research and explain what is happening in corporations today, and to push companies to try new ideas. And, Mr. Porter and his colleagues have done CSR professionals a great service by focusing attention on the inherent ability of corporations to develop and scale products and services that have a social purpose. For that, we should all be grateful.

But, let’s stop talking about shared value as something apart from CSR. Good companies give back to their communities through philanthropy and employee volunteerism. Better companies also embrace the ideals of corporate social responsibility in their cultures and operations. And, the best companies also figure out how to utilize their resources to solve societal problems and make a profit doing it. These ideas belong together, not apart.

So, a better title for Fast Company’s article might have been, “Mind Corporate Responsibility Because Companies Can Solve Actual Social Problems.”

This article was first published on CSR Now!

  • About the Author:Timothy J. McClimon

    Timothy J. McClimon

    Timothy J. McClimon is President of the American Express Foundation and Senior Vice President for Corporate Social Responsibility, American Express Company.  In this role, he directs all of the A…

    Full Bio | More from Timothy J. McClimon

     

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