I just watched Professor Michael Porter’s lecture on Shared Value on Youtube. It was mind-blowing! Just amazing stuff!

Basically, Shared Value indicates the overlapping area between business opportunities and social needs. This is similar to Andrew Savitz’s Sweet Spot idea, but shared value is profit-driven method that addresses social problem directly. Sweet Spot is thinking about how can an existing business model address social needs in a way that benefits the company as well? In the Sweet Spot idea, the profit is secondary or the profit comes eventually. In Shared Value, companies build their business model around the social need in order to make a profit.

Shared Value is literally a merge between nonprofit and for-profit organizations. Traditionally, nonprofits looked to businesses for funding so nonprofits can go out and address the social needs such as hunger and diseases in behalf of the businesses. However, nonprofits were limited to the amount of funding businesses gave them. The businesses could not keep giving money because there were not enough money to go around. So how about making money while helping others? Businesses themselves can offer solution to societal problems while making money.

The purpose of the company is now not just about making money but also about helping others ! The Shared Value now switches companies’ traditional views on rich population as their main customers to six billion people in the world who are not rich but can still offer something in exchange for a product or service. Six billion in sheer number can yield much profit even if a product or service were to be sold for a penny.

Heinz is already practicing this Shared Value. Five million children from 15 developing countries have anemia due to lack of iron in their nutrition (Klein). Thus, Heinz created a pouch containing vitamin powder that can be mixed with food or drink. This only costs little more than two pennies (Klein)! Yet, their customers are now five million children in the world!

I also saw businesses as money-making machine at the expense of the poor people. After learning about Shared Value, I now have hope for the businesses. I would actually want to work for them to help them solve societal issues while getting paid. This is a perfect chance to say killing two birds with one stone.

http://www.heinz.com/sustainability/communities/heinz-micronutrient-campaign.aspx

http://www.forbes.com/sites/csr/2011/06/14/three-great-examples-of-shared-value-in-action/#4b3eb2051ba6