Ideas for Leaders #395

Creating Shared Value Using Inter-Organizational Networks

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Key Concept

More and more companies are making the connection between commercial success and attaining sustainable growth through ‘creating shared value’. This Idea outlines three steps organizations can take to advance their efforts in ‘creating shared value’, highlighting the role of inter-organizational networks as a key driver.

Idea Summary

Creating positive societal and environmental impact whilst retaining competitiveness has become an increasingly popular concept for companies in recent years—also known as ‘creating shared value.’ A term first coined by Harvard Business School’s Michael E. Porter and Mark R. Kramer in 2011, creating shared value refers to policies and practices that enhance the competiveness of a company whilst improving the economic and social conditions in the communities where it operates.

A number of large organizations have already integrated the concept of creating shared value into their business strategies, including Novo Nordisk, Unilever, PepsiCo, Nestlé and Coca-Cola. Nestlé, for example, have focused on three areas in which they work towards creating shared value: nutrition, water and rural development. In their 2013 Corporate Social Responsibility Report, the company reported that they had reduced direct water withdrawals in every product category, reducing overall water withdrawals per tonne of product by 33% since 2005, in line with their commitment to work to achieve water efficiency across all operations (Nestle Corporate Social Responsibility Report).

In a recent white paper published by the Center for Creative Leadership (CCL), the idea of creating shared value is revisited by Vered Asif and Charles J. Palus who point to three steps that organizations can take to advance their efforts to do so:

  1. Identify the business case for shared value: every business today operates in relationship to broader societal challenges that can make or break the company, say Asif and Palus. Organizations should ask themselves, what are the key societal challenges that intersect their business? Which of these stand out in particular, in light of probable and possible future scenarios?
  2. Explore the networks of organizations that are working on the societal challenges that affect your business: once a particular issue has been identified, organizations should create an inter-organizational network map, highlighting relevant government players, NGOs, and organizations already working on the issue, including competitors, etc. The key questions to ask are: which organizations and individuals are the central players? Which are increasing or decreasing in influence? How is your own organization connected as part of this larger network?
  3. Build a leadership strategy for collaborating in inter-organizational networks: finally, reflect on what it would take for your organization to be a more effective player and leader in the network map that has been created. Discuss your organization’s strengths and weaknesses in collaborating effectively within this network.

Business Application

After working through the steps above, organizations can start having candid conversations and dialogue about creating shared value and the leadership strategy required to make it happen. 

Asif and Palus highlight different leadership practices developed by CCL that can be implemented, including ‘Boundary Spanning Leadership’; this involves seeing, bridging and leveraging different types of group boundaries, such as demographic, geographic, etc. Similarly, the practice of ‘Dialogue’ involves inquiry and creative conversation through which team members are able to build trust, reflect on assumptions and difficult topics, find common ground and come up with multiple solutions that allow the best ideas to win. 

Using these and other practices can help push the idea of making a positive impact on society become reality.

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Authors

Institutions

Source

Idea conceived

  • June 2014

Idea posted

  • June 2014

DOI number

10.13007/395

Subject

Real Time Analytics