In the third Executive MBA Mini Masterclass, we were thrilled to welcome Oliver W. Olson, Director Global Education Programs and Senior Lecturer of Marketing and Strategy at Maastricht School of Management. Previously, we have seen ‘Leadership in an Uncertain World‘, and a three-part panel event on ‘The Post-Referendum World’ (part I, part II, part III). Oliver gave a fantastic presentation on ‘Shared Value’, and how it should be embedded in organisations to transform business strategy.
“This isn’t exactly true. Michael Porter is like the Godfather of Strategy, and he tells us that strategy is all about making choices, understanding trade-offs, and deliberately choosing to be different. We know from business that it’s not always the big company that wins – it’s the company that understands its own strength and weaknesses. Strategy is about knowing what your competitive advantage is, and how to exploit it.
Value means developing a winning strategy, and is about balancing the perceived benefit of a product (perceived by the customer) and the cost (again, to the customer). If customers perceive the benefit of a product as higher, then the cost can also increase and there be a balance in the value. But the delivery of value in today’s world is changing – increasingly customers would rather ‘do good’ with their purchases than give donations to charity.
Corporate Social Responsibility (CSR) is about ‘doing good’. It is measured by social impact – it is nominally about sustainability, impact on the community and environment, reputation, and compliance. But CSR is all about external pressures on a business – it is not embedded within the very fabric of the organisation. It’s about the whims of the Director or CEO – they enjoy sports, so fund after-school clubs; they like animals, so donate to conservation charities. The act of giving, however, can stop, or be directed away from the original recipient.
Shared value is about embedding CSR into a business at a fundamental level, within the value chain itself. The value chain is everything in business that leads to selling a product. CSR is everything after the value chain. The company has made an extra million pounds in profit this year? Give it to charity. Shared values means that the profit margin is dependent on ‘doing good’.
I’ll give you an example. Here is TOMS SHOES:
TOMS expanded into one-for-one sunglasses (buy a pair of sunglasses, and Toms will pay for an eye surgery in a developing country) and one-for-one coffee (buy a pack of coffee, and Toms will ensure clean drinking water for someone for a week).
This is CSR. Toms realised that this was not shared value, and eventually did something about it. Rather than paying UPS to deliver their shoes, they paid local people to collect them from the port and distribute them. This lowered their costs. This increased their perceived value from customers. Which, in turned, increased the overall value of the company. They called is CSR 2.0.
Shared value is about thinking through the value chain and finding something that increases the competitive advantage of an organisation and lowers costs. In terms of our equation – perceived befits need to go up while costs needs to go down.
So, think about your business: Where can you do to improve social issues that also improves competitiveness?”
The Executive MBA Mini Masterclass is part of an ongoing series of events for business professionals. It precedes the start of the new triple accredited EMBA programme at the University of Suffolk in February 2017.
To register interest in attending a free Executive MBA Mini Masterclass please contact Laura Messer (firstname.lastname@example.org), EMBA Coordinator.
Dr Tom Vine leads a suite of MBA programmes at Suffolk Business School. He can be contacted at email@example.com.