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Pitch

Companies and societal groups can be clustered in terms of their potential to create 'shared value'.


Description

Summary

Since Porter and Kramer (2006, 2011) first conceived the notion of 'creating shared value', which simultaneously seeks mutually dependent economic and social/environmental progress, real-world examples have emerged to act as proof-of-concept. Companies like Nike, Nestlé and GE have successfully collaborated with NGOs and broader society on initiatives that made simultaneous impact on profits and society. The present proposal suggests that the community will be subdivided into various clusters that can act as platforms to create shared value between the various constituents. The easiest way for this clustering to take place is to identify common interests/motivations among companies, community and civic groups which may act as a clustering filter. The key distinguishing feature of this proposal is that its pillars consist of creating shared value.

It is argued that these clusters may evolve to become distinct hubs of dynamic strategic resources (Wernerfelt, 1984), comprised of hybrid organizational relationships devoted to ensuring shared value between sectors.

A case of shared value that focuses on climate change could be the wind energy cluster in Denmark (think Silicon Valley for wind energy). Denmark is a global wind power hotspot, as the country has a long tradition within renewable energy, where public research, industry and local communities have seen the potential to co-create shared value by focusing on wind power. As a result of this cluster, 40% of Denmark's electricity consumption is produced by means of wind power and the goal is to reach 50% by 2020. However, this has similarly provided Denmark a competitive business advantage within wind power, as appr. 75% of the world's offshore wind turbines are either Danish-produced or have Danish developed foundations and components. Moreover, Denmark attracts companies, investments and talents within wind power, which reinforces their position.


What actions do you propose?

  1. Identify 'themes' that the network of climate actors can be clustered after in order to create shared value.
  2. Cluster the network actors.
  3. Run discussions in each cluster to identify common areas for potential shared value creation.
  4. If needed - further subdivide the various clusters into sub-clusters.

 

Although apps and websites can be utilized to facilitate the discussions, a certain amount of personal interaction is deemed necessary for a fruitful collaboration.


Who will take these actions?

Government needs to facilitate thematic clustering and the initial conversation (in collaboration with business and organizations), but subsequent interaction must be driven by the actors themselves (business and organizations). It is the ambition, and underlying rationale, that the interactions will be self-driven and maintained.


What are the key challenges?

Engagement is a major challenge, but must be overcome with sufficient communication in the initial phase.


What are the key benefits?

As it promotes shared value, it has benefits to the triple bottom line of local companies (profit), society (people) and the environment (planet). The objective is to obtain a symbiosis between these elements. If distinctive clusters are created around shared value, it could create economically maintained social, environmental and business benefits for the region.


What are the proposal’s costs?

Initial communication and interaction costs. However, these are arguably low compared to alternatives.


Time line

The initial steps can be executed in 0.5 - 1 year. Thereafter, the collaborations are supposed to carry themselves onward with various time perspectives.


Related proposals

Use the climate challenge to create shared value between MIT and MIT alumni

References

  1. Porter, M & Kramer, M (2006). Strategy and society: the link between competitive advantage and corporate social responsibility. Harvard Business Review.
  2. Porter, M & Kramer, M (2011). The big idea: Creating shared value. Harvard Business Review.
  3. Klein, P (2011). Three great examples of shared value in action. Forbes.
  4. Florin, J & Schmidt, E. (2011). Creating shared value in the hybrid venture arena: A business model innovation perspective. Journal of social entrepreneurship, 2(2).
  5. Pfitzer, M, Bockstette, V & Stamp, M. (2013). Innovating for shared value. Harvard Business Review.
  6. Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), p. 171-180.