In a world with a growing gap between the rich and the poor and progressive scarcity of natural resources, many people recognise that profit maximisation cannot be the only business driver.
And these people are voting through their actions. Consumers are showing preference for products that guarantee good employment practices and non-aggressive manufacturing processes for the environment; talented new graduates are increasingly looking for jobs at companies that act responsibly within the communities where they operate; and investors are looking for opportunities that show social and environmental as well as financial returns.
Companies that strive to develop strategies that benefit both society and their own long-term competitiveness can be described as creating “shared value.” Moving a company towards a shared value approach often requires major changes in fundamental areas of the business; but the main shift needs to happen in mindset and business philosophy. What does this mean for Enterprise Development?
By investing their ED spend strategically and tracking the performance of their investment, companies are more likely to benefit themselves as well as the enterprises that they support. In the long term, a carefully planned enterprise development strategy can lead to a more efficient supply chain, an improved environment and infrastructure to do business in and a network of highly-skilled, well-resourced business partners. It has the potential to generate new customers for the business and to create a healthier, happier workforce living in thriving, economically vibrant communities, all of which of course contributes to a stronger bottom line.
Companies that create shared value do not simply try to do the best they can in the context they find themselves in. Rather, they take an active role in shaping the kind of society they want to operate and thrive in. They strive to invest where they see the potential for shared value – investments that are good for their business, good for the enterprise that receives investment, and ultimately good for the country and the planet.
A shift to this kind of approach is often a long-term process that takes companies through various phases of fine-tuning of their strategy and operations to accommodate the new ethos. Executing this strategy successfully will mean hard work and learning through experience – but the most successful companies are already used to that.
Contributor: Dylan Edwards - senior consultant and researcher with GreaterCapital, part of the GreaterGood South Africa group.