The paper "Creating Shared Value by M. Porter and M. Kramer" is a delightful example of an article on business. The article is a timely read particularly during the trying times of ABC Corporations. The idea of shared value brings about a wave of business innovation and growth, the kind of profit that create societal benefits and therefore more durable and long-term. This is the kind of business perspective which the company needs particularly in this trying times that it may not only allow the company to overcome its present challenges but also to prevail over them.
The principle of shared value involves a “creating economic value in a way that also creates value for society by addressing its needs and challenges.” It means that we have to strike a balance between serving the needs of society and addressing the need for companies to profit.
The idea of making profit must be expanded to include the welfare of other stakeholders in the value creation such as suppliers, employees and the greater public. Companies must not dwell on the narrow perspective of merely raking in huge profits by squeezing suppliers and relying on outsourcing to push down cost and at the expense of people society. Such mindset is short term and is the culprit why people are skeptic of business organizations.
This does not mean that we forgo profit. Profit is important for companies to remain viable and part of its profitability is efficiency. But instead of making a trade-off between making a profit and serving society, companies should instead create societal value by “reconceiving products and markets, redefining productivity in the value chain, and building supportive industry clusters at the company’s locations”. This only meant a new thinking about business of looking new ways to operate it that strikes synergy and enhances productivity or in short, to become innovative and creative allowing business to make profit with higher social purpose.