The traditional capitalistic view of business' contribution to society as seen purely in terms of economic output has been argued persuasively in the past.
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However, society's ever-increasing determination that businesses which seek to profit at the expense of society are not sustainable challenges businesses to embrace a wholistic view of their business practice. Since Porter & Kramer outlined their Creating Shared Value (CSV) philosophy in 2011 it has provided a business perspective recognises societal needs are not exclusively a cost to the business. Rather, developing a business model that responds to societal needs is seen as a tool for both private and public value creation. This approach upends the notion of the shareholder as the main stakeholder of a company. Further, CSV provides an opportunity for businesses to develop unique value propositions, develop strategic competitive advantage and sustainable business models to create value across an expanded range of stakeholders.
Transitioning to a sustainable business model involves changes in strategic and management decisions as implementation of CSV is required to be embedded across every activity of the business. Products and services are reconceived whilst the value chain and productivity are redefined, impacting strategy, operations, structure, people and processes.
While implementing sustainable business model innovations requires additional investment in the beginning, research demonstrates that the increased competitive advantage that results produces significant economic gains against competitors in the long-term.
Through a process of persistent experimentation combined with a strong leadership a business can integrate shared value within a sustainable business model. The risk of not successfully implementing a sustainable business model is that stakeholders will turn to other established business or new entrants as a means of addressing their growing concerns of sustainability.
Established businesses who are quick to adopt a sustainable business model will be rewarded with increased economic, environmental and social benefits.
This opportunity provided by creating shared value is a win-win.
Siobhan Curran is the manager of the University of Newcastle's Integrated Innovation Network I2N
