A recent publication by Accenture, Business at its best: Driving Sustainable Value Creation, provides advice and direction for companies looking for new ways to grow and reach high performance. Full of good information and available free at the link above, a brief synopsis of the publication follows.
What IS Sustainable Value Creation?
Sustainable Value Creation is a core business strategy focused on addressing fundamental societal issues by identifying new, scalable sources of competitive advantage that generate measurable profit and community benefit.
- Core business strategy: a strategy that addresses a threat or opportunity faced by the company that is critical to its long-term success
- Fundamental societal issues: issues such as illiteracy, poverty, hunger or access to social services. Minimizing production waste, fostering employee wellness, and lightening the social burden caused by a company’s product portfolio are not fundamental societal issues; they are inward focused rather than outward focused.
- New and scalable: innovative and creative, considering previously unrecognized possibilities; ideas and solutions that can be replicated and scaled across the company to deliver whole-business impacts.
- Competitive advantage: access to new or previously underserved markets, higher market capitalization, reduced costs, increased revenues, and/or greater value of intangible assets.
- Measurable: generates a quantifiable positive impact on both the business and on fundamental societal issues. There needs to be an accurate and timely assessment of ROI to justify the investment and resources expended.
Successful companies are good at generating profitable ideas, yet they often overlook business opportunities that can be found within fundamental societal issues. It is in the root causes of those issues that new competitive advantages may be found.
Executives who rethink products, services, and community development elements can identify benefits to society and to their business. While exploring opportunities, keep in mind that not every corporate obstacle or strategic issue is linked to a fundamental societal problem. A solution may only be found in philanthropy for some issues.
As a function of Sustainable Value Creation, there needs to be a profit margin through out the strategy – it is, at the core, an economic and business-driven decision. And can be a source of competitive advantage.
How Do You Find The Convergence Point Between Business Strategy and Fundamental Societal Issues?
Finding the convergence point between your business strategy and society’s issues begins with trend analysis. Ideas can also come from regulatory changes and media, both business and general publications. For example, climate change could be a strategic commercial issue for your company.
Once you and your team have identified opportunities, narrow the list into those that are:
- Clearly a broad need
- Linked to your company’s strategic direction
- Addressable by your core competencies
The nature of cause-and-effect issues related to need is complex, map these interconnected links and complexities early in the planning process.
Next Steps: Research, Develop, Repeat
The process of strategy development should be approached like an R&D project. It will be iterative, real-time, and public. To minimize the possibility of failure and unintended consequences, develop a deep understanding of the populations and communities that will be affected. Solutions must be matched to local wants and needs.
When you’ve succeeded with a pilot project, you’ll want to scale your efforts across the company. But, like managing any other strategic change, a little corporate “rewiring” is necessary.
Now is the time to embed new structures, communications, incentives, and metrics across your organization to sustain the new behaviors. Rewards, incentives, and governance are where your new strategy will succeed or fail.
Communication With Internal and External Stakeholders
Communicate with your employees regularly, reporting on progress and sharing proof of success. Keep consumers and customers on board by informing them of your actions, operations, and the social impact.
Educate your investors and shareholders to embrace a long time horizon for returns with Sustainable Value Creation. Reinforce the value of these strategies; it is not a time to focus purely on quarterly returns or high ROI projects.
While it may seem easier to go it alone, you’ll be more successful by collaborating or partnering with a wide range of organizations – including your competitors – while maintaining your competitive advantage.
“Q&A: Roundtable on Shared Value,” Stanford Social Innovation Review, John Kania & Mark R. Kramer (2011)
Vision 2050: The New Agenda for Business, World Business Council for Sustainable Development (2010)
Creating Shared Value: A How-To Guide for the New Corporate (R)evolution, Valerie Bockstette & Mike Stamp (2011)
“Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth,” Harvard Business Review, Michael E. Porter & Mark R. Kramer (2011)
New Era of Sustainability, Accenture and the United Nations Global Compact (2010)
Shaping the Future: Solving Social Problems Through Business Strategy, Committee Encouraging Corporate Philanthropy, based on research by McKinsey & Co. (2010)