The discipline of community relations has evolved dramatically in recent years. Recognizing both the responsibility to support their communities and the business benefits of a positive reputation, companies have invested billions of dollars and millions of hours, resulting in a substantive impact.
Yet for many organizations, corporate social responsibility (CSR) is on the verge of the most dramatic change yet. It’s a shift to the concept of creating shared value, which tears apart the traditional lines between a CSR program and the business it supports. In many ways, it makes community relations obsolete, as the entire business becomes a community relations effort unto itself. The emerging practice of creating shared value can transform how companies grow and impact communities around the world.
Through shared value, a company places an understanding of community needs such as housing and food at the center of its business and product development process. It doesn’t simply try to meet community needs through a program that sits on the side of the business–it makes those needs a business focus. By meeting the demand for critical human needs, a company strengthens communities while tapping a burgeoning underserved market.
The financial and social benefits of creating shared value present an opportunity–and a challenge–for companies. Will a business place underserved people’s needs at the core of every decision? Do companies develop products that will help to lift up the society in which they serve? Does a company fundamentally shift its business model to unleash the demand for basic services around the world? Shared value challenges companies to fundamentally rethink their products.
In a Harvard Business Review article on creating shared value, Michael Porter and Mark Kramer explored the impacts of blending capitalism with capacity building, citing a Thomson Reuters service that delivers weather and crop-pricing information to Indian farmers. Reuters estimates 2 million farmers pay US$5 per quarter for the service–and that 60 percent of them saw their incomes rise. The article also described Vodafone’s mobile banking service in Kenya. In three years, 10 million Kenyans signed up for the service, which handles funds equivalent to 11 percent of the country’s gross domestic product.
Global companies can’t overlook the market potential of creating shared value. Innovating products to meet the needs of billions of people presents too large an opportunity to ignore. But the organizational transformation needed to create shared value is daunting. There’s no playbook, it’s a slow shift, and the path looks different for each company.
Cisco’s journey to creating shared value began almost by accident, launching training programs in emerging markets because few local people had the skills to support the technology. Cisco quickly realized the impacts its training had on local communities–jobs, local value, and better quality of life.
These benefits came in tandem with establishing a workforce that could implement and maintain Cisco’s networking technology. The resulting shared value prompted Cisco to formalize the training, and the Cisco Networking Academy was created in 1997. This global education program teaches students to design, build, troubleshoot, and secure computer networks, increasing their access to career and economic opportunities. Networking Academy operates in 165 countries and is a cornerstone of Cisco’s global services. The workforce trained through Networking Academy is essential to Cisco’s global growth, and the training has improved the lives of more than 4 million people worldwide.
In the aftermath of the 8.0 magnitude earthquake that killed 68,000 people in China’s Sichuan Province in 2008, the company invested $50 million, much of that in the form of technology, in a Cisco initiative called Connecting Sichuan. Teams built smart hospitals and placed millions of health insurance records in data centers, increasing medical treatment capacity and helping patients save money. Using Cisco’s TelePresence technology, highly trained doctors now treat patients in rural areas.
“In terms of driving business growth, Connecting Sichuan is a powerful case study,” says Kathy Mulvany, Cisco’s director, corporate affairs marketing. “When we look to partner with governments for large-scale networking projects, we can point its success. Although new partnerships are not based on a single factor, this project goes a long way in demonstrating the value our networks can bring to potential customers.” Mulvany also cites the branding benefits of creating shared value. “There are investors and potential partners who work only with companies that have a strong track record in corporate social responsibility,” she says.
Measuring profits and value
Shared value rarely emerges through short-term investments made amid pressures of reporting quarterly profits. However, strategic business leaders realize that overstressed suppliers, ravaged natural resources, and devastated communities compromise their profits, supply chains and growth.
Leadership is essential to driving shared value. Although its champions exist at all levels, leaders must encourage shared value to emerge from the bottom up. For instance, it’s crucial for Cisco Networking Academy staff to adapt training for local customs. The team in Israel added a socio-political component in the training. In Afghanistan, the team tailored the curriculum to fit cultural norms for teaching women. Executives must allow local flexibility and autonomy for shared value to take shape.
Shared value and beyond
Creating shared value drives also creates meaningful opportunities for employees. Take the story of Ash, a former inmate at HMP Wandsworth Prison in London. While serving time, Ash met Dave Thomson, a Cisco employee who volunteered in the prison as part of the Networking Academy. Dave and Ash met monthly, talking about making good decisions, and training Ash on computer networking. Later released from prison, Ash has worked for a year at Kelway, a Cisco partner company. Dave likely played a major role in Ash’s transition from inmate to internal IT help desk professional.
Improving lives–like Ash’s–is an important goal of the Cisco Networking Academy. But it’s also essential to give employees like Dave the opportunity to do meaningful, high-impact work and to become satisfied because they’re making a difference. It’s shared value in action.
The transformation to creating shared value has its challenges. But the rewards–for the business, for its employees, and society–are worth the journey.
Read more about Corporate Social Responsibility at Cisco on our website.