Integrating Purpose with Profit by Creating Shared Value

I have been talking about how corporations need to integrate Purpose, Participation and Profits and move from social responsibility to social innovation. Michel E. Porter and Mark R. Kramer provide three strategies for integrating Purpose with Profit in their HBR article on Creating Shared Value (PDF). Creating Shared Value Porter and Kramer argue that businesses need to integrate societal and economic progress and create shared value by:

1. Re-conceiving products and markets by creating eco-friendly products and services (like GE Ecomagination) or low-cost solutions for the bottom of the pyramid (like MSafaricon’s M-PESA).

2. Redefining productivity in the value chain by rethinking location choices, reducing energy use, recycling resources, and redesigning procurement and distribution systems (like Unilever’s Project Shakti in India).

3. Enabling local or regional cluster development, by linking the company’s success to the community’s success, and addressing deficiencies in areas like logistics, suppliers, distribution, training, market organization and education institutions.

It seems to me that we now have a critical mass of knowledge on “how” to integrate Purpose and Profits through a social innovation, or shared value, approach. The bigger challenge now is to convince a critical mass of corporations on “why” they need a shift from the social responsibility mindset to the social innovation mindset.

What do you think? What conditions can we create to trigger this change in mindset? Do share your insights in the comments below.

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