Micheal Porter, undoubtedly, is a man that had the most influence in business thinking after Peter Drucker. You may doubt the man’s new preaching, but you can never doubt his contributions. After all he is the man that gifted the world the theory of competitive advantage. And he not only limited that to business world, he spread it in geopolitics with his ever-influential “The Competitive Advantage of Nations”, which till date is the benchmark through which we get to know which is country is the next big thing. But all this is so 80s. Its been a quiet few decades for Mr. Porter where he was struggling to come up with something new to trump his competitive advantage theory. Some say, he finally cracked it after 20 years. And this new theory, called “Shared Value”, is what people are calling the biggest new business philosophy for now and coming future.
What is this shared value? Shared value is a type of business thinking and practice where the organizations not only pursue their self interest but also act for the common good of society. Now this should not be confused with Corporate Social Responsibility (CSR). The key difference between CSR and shared value is, CSR is an after thought where companies assume that if they dont invest in CSR there will be growing tension among government, common people, stakeholders and the company management, but shared value starts from the very beginning and is very much instilled in the core day to day practices of company. CSR is more reactive and less fruitful. Ask BP and Enron – two biggest proponents of CSR.
I am assuming after the failure of self interest seeking capitalism in the form of global recession, the world will embrace this kind of responsible capitalism and responsible organizational behavior. Which is why this new theory of Mr. Porter is making a lot of waves. And this kind of business practices are not totally uncommon. GE’s “ecomagination” is a similar business initiative of creating environmentally friendly products which creates $18 billion in annual revenues.
I guess we just have to wait and see how willing organizations are to share their value on a continuous, widespread basis.