Long live shared value

WHEN PROFIT MEETS PURPOSE AND IMPACT FUELS INNOVATION, THE REAL MAGIC HAPPENS

- M MUNEER

For a while now, especially post the 2008 financial meltdown, most economists and management gurus have been questioning the merits of capitalism as we know it. From the famous proclamation of Peter Drucker, "The business of business is to make money," to the essence of corporate strategy as maximizing shareholder value, capitalism has been like an airplane that refuses to land—but it will run out of fuel sooner or later. The widening income gaps certainly forecast that eventuality.

This idea of creating shared value invites businesses to transcend the traditional boundaries of corporate social responsibility (CSR) by integrating societal good into their core operations. Unlike CSR, which focuses on philanthropy detached from the profit-driven core of business, shared value allows companies to address pressing social issues while driving economic gains.

Many CEOs brush this idea aside whenever a discussion emerges using the Drucker statement and terming utopian. Besides, most are not clear about working on creating shared value in the business context, barring a handful of companies in India. There are many global enterprises that have successfully implemented this transformative approach.

At its core, shared value is about recognizing that business success and societal progress are inherently intertwined. Businesses do not operate in a vacuum; they thrive in robust, healthy communities. When businesses focus on meeting societal needs—whether through innovation, addressing environmental concerns, or enhancing consumer welfare—they create a ripple effect of positive outcomes that extend far beyond the quarter-to-quarter race.