Since its inception, companies have always had the concept that the main objective of their activity is to earn money, that is, to have economic profitability through the sale of their products to the provision of the services they are dedicated to. In turn, the community in general has always seen companies as a source of employment but also as a cause of ills such as air pollution, the exploitation of natural resources and the widening gap between rich and poor. In their beginnings, companies focused their activities exclusively on productivity, forgetting the well-being of their collaborators, the impact they generated on the environment and the effects they had on the community in general.Already from the mid-twentieth century on, the social responsibility that companies must have towards society in general and the environment in order to contribute to the improvement of the community in general begins to be discussed. However, despite this, there is still the concept that companies only exploit the natural resources of the communities in which they are located to the maximum and that they are paid very little compared to the profits they make. (viewer, 2013)There is still the concept that companies only exploit the natural resources of the communities in which they are located to the maximum and that what they receive is very little compared to the profits they make. (viewer, 2013)There is still the concept that companies only exploit the natural resources of the communities in which they are located to the maximum and that what they receive is very little compared to the profits they make. (viewer, 2013)
In 2011, professors Michael Porter and Mark R. Kramer in their article "Creating Shared Value", propose a new way of looking at addressing these issues in which both companies and the community in general are benefited, to de that way they generate progress that favors both parts. The proposal made under the name of Shared Value, suggests that the objective of a company should be to maintain its competitiveness while working for the well-being and progress of the surrounding community. Porter and Kramer point out: “the competitiveness of a company and the health of the communities where it operates are strongly intertwined. A company needs a successful community, not only to create demand for its products, but also to provide crucial public assets and an environment that supports the business.A community needs successful businesses that offer jobs and wealth creation opportunities for its citizens. ” (Michael Porter, 2011). This means that the generation of business progress must be linked to social progress.
Shared value, Porter and Kramer explain, is not social responsibility, nor philanthropy, nor sustainability, it is a new way of looking at capitalism that can generate innovations that lead to economic growth.
In this article we will look at what shared value is, how you can create shared value and some examples of Colombian companies that have successfully generated shared value.
What is shared value?
According to Porter and Kramer, the concept of shared value can be defined as the set of activities that include operational policies and practices, focused on improving the competitiveness of a company and in turn generating progress at the economic and social level in the communities in where it is located. The social problems of the communities around the companies generate additional costs, such as lack of education, for example, of the people who make up a community, since if the company hires unskilled personnel, it must invest in their training so that they can achieve the necessary skills to perform the charges. This can be avoided,if companies create a partnership with educational institutions in the sector that promotes the technical and professional training of people in the community so that they are trained to carry out any position in the company according to their training. This concept then invites entrepreneurs to change their view that the main objective of the company is to achieve economic profitability and replace it with that that the economic progress of companies must be linked to the social progress of the surrounding communities.This concept then invites entrepreneurs to change their view that the main objective of the company is to achieve economic profitability and replace it with that that the economic progress of companies must be linked to the social progress of the surrounding communities.This concept then invites entrepreneurs to change their view that the main objective of the company is to achieve economic profitability and replace it with that that the economic progress of companies must be linked to the social progress of the surrounding communities.
How is shared value created?
Any company located in any country, whether industrialized or developing, can create shared value, although the scenarios and opportunities will be different for each one.
There are three ways to create shared value:
- Creating new products and entering new markets Redefining productivity in the value chain Creating “clusters” (Michael Porter, 2011) around the company facilities.
We will briefly explain each point below.
Creating new markets and products
One way to create shared value is by looking for new markets and creating new products that in turn favor the community for which it is intended. One type of market that can be explored is that of people with low economic incomes who can be reached with products that already exist but whose characteristics make them accessible. Example, microcredits or low-cost cell phones. With these strategies, shared value is created because the company gains new clients and increases its profitability, and at the same time the beneficiaries raise their quality of life.
Redefining productivity in the value chain
The value chain is inevitably affected by social problems, since these can generate additional costs. The ways to redefine the value chain are: through the efficient use of energy, using natural resources in a balanced way, helping suppliers to improve the quality of their products, by changing the distribution of products, improving the working conditions of the collaborators and trying to negotiate with the supplier as close as possible to their facilities. In this way, shared value can be generated if the company is more aware of the use of energy and natural resources, programs and practices that lead to the reduction of air pollution and the preservation and conservation of the environment will be created.In turn, if we have suppliers that deliver high-quality supplies, the quality of our product will increase and by having them close to our facilities, transportation costs and waiting times will decrease. Finally, if the company's employees have good working conditions, their performance will increase and productivity will increase, along with the quality of life for them and their families.
Creating clusters
Porter and Kramer describe a cluster as geographic concentrations of firms, related companies, product and service providers, and logistics infrastructure in a particular area. (Michael Porter, 2011) Clusters can also be formed with academic and government institutions in order to have access to training and the use of natural resources. Having a support cluster is a great help for companies because it allows them to improve productivity since with this they can have access to more trained employees, suppliers that deliver quality products or services and better infrastructure at the transport level.
By creating a cluster, a company can generate benefits in the community where it is located, since as it grows, suppliers will grow along with it and the infrastructure and competition of the community in general will also increase. This is a good way to create shared value.
How to create shared value in practice?
Creating shared value implies working for the profitability of the company while complying with laws and standards and mitigating any type of negative environmental impact that may arise during the execution of the organization's activities.
"The opportunity to create economic value by creating value for society will be one of the most powerful forces that will drive growth in the global economy," say Porter and Kammer (Michael Porter, 2011). This is because companies, wanting to create shared value, will no longer see the environmental issue as a necessary expense to which they are forced and will begin to see it as a productivity driver. Shared value can be implemented by any type of company in any economy, that is, whether it is located in an industrialized country or a developing country.
The important thing according to Porter and Kramer when implementing it is that the company asks the following questions:
"Can the design of our product incorporate greater social benefits? Are we serving all the communities that benefit from our products? Do our processes and logistics approaches maximize efficiencies in water and energy use? Could we build our new plant in a way that has a greater positive impact on the community? How do gaps in our cluster reduce our efficiency and slow innovation? How could we improve our community as a place to do business? If two places are economically comparable, in which of the two will the local community benefit the most? ” (Michael Porter, 2011)
If a company is capable of generating well-being for the community, it is most likely that business conditions will improve, and thus positive scenarios will be created that will lead to improvements for the company.
Shared value in Colombia, success stories.
Currently in Colombia there are several companies that are implementing shared value as a strategy and competitive advantage to stay competitive and generate benefits for the community.
These are successful example cases of companies that have created shared value in Colombia. (Bogota, 2016)
Davivienda Bank - Daviplata
Davivienda is a Colombian bank with more than 40 years and one of the most important in the country with presence in countries such as the United States, Costa Rica, Panama, Honduras and El Salvador. Seeing the Colombian reality in which a high percentage of the population is unbanked, Davivienda devised in 2011 a strategy that he called Daviplata through which low-income people could open a savings account and make transactions from your cell phone without any additional cost. In order to implement this initiative, Davivienda created strategic alliances with other organizations, including the government, that serve as support for logistics. This strategy generates shared value because:Millions of Colombians entered and can continue to enter the banking system through this system, which allows them to increase the possibilities of receiving credits, no cost is generated in the transactions, the transactions are agile, secure and can be done from any cell phone. which makes it inclusive and the company's profitability increased. This is an example of generating shared value by entering new markets and creating new products. (Bogota C. d., 2015)This is an example of generating shared value by entering new markets and creating new products. (Bogota C. d., 2015)This is an example of generating shared value by entering new markets and creating new products. (Bogota C. d., 2015)
Dairy Campo real-Cheese plus life
Lácteos Campos real is a family business located in the city of Bogotá dedicated to producing and trading cheeses with high nutritional content. It has more than fifty products which are distributed on different surfaces throughout the country and has a presence in Miami, United States.
Lácteos Campo Real launched the Queso Más Vida in 2011, a product designed to increase calcium levels in women, especially those who suffer from cancer and are undergoing treatments such as chemotherapy. With studies done previously it was discovered that calcium is an essential element for women suffering from cancer and that its absorption must be superior to that of a healthy person. In turn, the company employs women suffering from this disease who promote the product in supermarkets. This is an example of shared value because through Queso más vida the company helps women with breast cancer to maintain adequate calcium levels in their body, helps to avoid this disease in healthy women,It employs women suffering from cancer while at the same time that the company has received income of at least 40 million pesos, representing a 33% growth. (Bogota C. d., 2015)
Pavco-Mexichem Colombia sa
Mexichem is a leading Mexican company in the world in plastic piping systems and Latin America is a leader in the chemical and petrochemical industry in Latin America. In Colombia, Mexichem has offices in the cities of Barranquilla, Bogota and Guachené. In the latter, the company started a training program for the residents of the area in order to give them the skills to carry out positions in the organization. This initiative has generated the incursion of trained local workers, the incursion of local suppliers in the company's value chain and the creation of local government plans that contribute to population growth. 90% of the company's employees are from the region. (Bogota C. d., 2015)
Cafam
Cafam is a family compensation fund with more than 65 years old that provides services throughout the Colombian territory to more than 39 thousand companies. In 2013 the Cafam Convention Center in the city of Bogotá was linked to the initiative of the Bogotá Chamber of Commerce to create a Tourism and Business cluster. The objective was to train the providers that provide their services to the convention center in order to improve the quality of their services. Initially 20 suppliers participated and then another 20 more, who provide audio and video services, organization of events, decoration, recreation, advertising, POP material and portable toilets, among others. The trainings were done in the areas of customer service, difficult customer management and innovation, marketing, advertising tools,strategic planning and tax management. This initiative gave good results and the Cafam supply chain has reached higher levels of productivity due to the implementation of this project and therefore the competitiveness of the company and, at the same time, the participating suppliers have found the training they have received to be very useful.. (Bogota C. d., 2015)
Cinecolombia-cinema with social purpose
Cinecolombia is the Colombian film company that is dedicated to projecting and distributing films and, in turn, selling edible products that serve as snacks for people who attend movie theaters. It has rooms in all the cities of the country. This company created in the Agua Blanca District, a population that houses people with low economic incomes characterized by a lot of violence and unemployment, a shopping center in order to provide the residents of that community with other low-cost training options. This initiative has made other companies look at this sector as an alternative to invest since there are many people who live there and who are potential customers for their products and / or services. Colombia has achieved sales of more than 4 with this cinema mall.000 million Colombian pesos has already generated new employment options for the residents of the sector. (Bogota C. d., 2015)
Corona-Ceramic
Corona-Colcerámicas is a company dedicated to the sale and distribution of products for home improvement. Through the Dress your house project, this company offers low-income people the possibility of accessing high-quality products to improve their homes at affordable prices. The promotion of this initiative is carried out by female heads of households who go from house to house offering products to households in twelve cities in the country. Once purchased, the products are sent home by people who are also part of the community, thus creating employment for many people. This project aims to boost the economy, enter a new market such as people with low economic resources,increase sales and improve the living conditions of the people who join the program by improving their homes. This initiative started in 2007 and has brought benefits to both the company and the community. (Bogota C. d., 2015)
Securitas
It is a multinational company dedicated to providing security solutions appropriate to the needs of each client. He arrived in Colombia in 2007 and since then has implemented a policy of social and labor inclusion for the disabled population, which he called Inclusive Surveillance. Among the people hired with disabilities are victims of war, ex-combatants, disabled by diseases such as hemiparesis or with their upper or lower limbs amputated. Several clients have joined this initiative and have agreed to receive people with these disabilities at their facilities. Customer awareness and education and the training of the organization's human talent have been essential to ensure the success of the program.The company offers training on the subject of disability, work with disabled personnel, advantages and opportunities, among other aspects. As a result of this initiative, the company has a line of business called Inclusive Surveillance and in turn has employed many people with some type of disability that has improved the quality of both themselves and their families. (Bogota C. d., 2015)
conclusion
Creating shared value is a strategy that can stimulate the world economy and in turn create a new form of capitalism. There are three ways to create shared value: creating new products and entering new markets, revalidating the value chain and creating clusters. Currently many companies are successfully implementing this strategy and this article mentions several companies that in Colombia have been successful in creating shared value. As are Cafam, Securitas, Lacteos Campo Real, Corona, Cinecolombia, Pavco-Mexichem and Banco Davivienda. This is an example of creating products and services that generate profitability for companies and at the same time contribute to better ones in the communities that surround it, if possible. (Bogota C. d., 2015)
Bibliography
- Michael Porter, MK (2011). Creating shared value. Harvard Business Review. Bogota, C. d. (2015). Bogota Chamber of Commerce. Obtained from http://www.ccb.org.co/Fortalezca-su-empresa/Por-necesidad/Iniciativas-de-ValorCompartido/Premio-de-Valor-Compartido.Bogota, C. d. (05 of 02 of 2016). Bogota Chamber of Commerce. Obtained from http://www.ccb.org.co/Fortalezca-su-empresa/Por-necesidad/Iniciativas-de-ValorCompartidoespectador, E. (17 of 06 of 2013). Creating shared value: a new way of business success. Obtained from The spectator: http://www.elespectador.com/publicaciones/especial/creacion–de–valor–compartido– una nueva – forma – de – exito – e – articulo – 428293
