How Do Small and Mid-sized Businesses Create Shared Value?

A colleague and I were recently invited to talk about shared value with members of the Entrepreneurs Foundation in the San Francisco Bay Area. Though we had a couple of large Bay Area-based companies (e.g., HP, Cisco), the group largely represented small to mid-sized businesses. At FSG, we often work with the “L” and “XL” companies out there, but this audience provided us with a rare opportunity to think creatively about shared value opportunities for those “S” and “M”-sized companies out there. Furthermore, the majority of our audience operates on the b2b side of the knowledge industry.

During our two hours together, we learned about each company’s current efforts and challenges, shared ideas from different industries and brainstormed with one attendee about what her company’s specific CSV opportunities. I took away from some good nuggets to share with others.

What does shared value look like for small and mid-sized companies? We can point to leaders, such as IBM, but the path is not as immediately clear for the rest. Companies in this space often have a unique opportunity to reconceive of products and services to create shared value:

  • As part of a larger supply chain, how might your company play a role in transforming systems? How can you support the collective success of your company, your customers and society? In emerging markets, Intel works with large government ministries and education systems in countries around the world to improve local tech infrastructure and quality of instruction in school classrooms. Through a combination of business and foundation activities, Intel provides a suite of services and supports to government clients to not only implement the technology well, but also approach education and learning in new ways. At almost any size, companies can tap into industry-specific client segments to create shared value. This might mean identifying key markets in the public or nonprofit sectors, or focusing on industries, such as education, healthcare, or energy. Companies might consider, Where are resources shared among stakeholders? What contributions can you make for improving infrastructure for the benefit of communities?

  • You’re in the knowledge industry. What are you doing with your data? This has been a sensitive topic for many because of privacy issues (see Facebook), but done the right way, it can be a unique asset that lends itself quite well to shared value. Through its Smarter Cities initiative, IBM has aggregated utilities usage data and shared it with individual residents to make them more sophisticated consumers – leading to greater awareness of how to change behavior (e.g., when is the cheapest time of day to run my dishwasher), as well as actual changes in behavior, (i.e., household and citywide reductions in energy consumption). For small companies, planning ahead for that great day when you have millions, rather than hundreds, of data points can set you up for better shared value opportunities.

  • Who will be your employees in twenty years? Playing a proactive role in workforce development can be a key competitive advantage. Companies can work closely with local education systems to shape a more inclusive workforce of tomorrow while also ensuring that they have access to talent.  In Chicago, businesses recognize that the City Colleges community college system (CCC) sits at the crux of the local economy. Today, 96% of CCC students from Chicago’s public high schools need remediation and never achieve a certificate or degree, yet jobs in healthcare are projected to be an ongoing need. The healthcare industry is partnering with CCC to align the community college’s curriculum not only to the high schools, but to the skills needed to fill local jobs. Smaller businesses can participate in these types of partnerships as an industry to gain access to local skilled labor and meet demands of future growth.

We’re all in different places on this journey. And pretty much the full spectrum was in the room that day.

  • On the business side, some were start-ups, others were scaling and growing market share. In larger companies, such as HP, they may have a social innovation team, where much of the company’s CSV activities are rooted, in addition to more typical roles for philanthropy and CSR. From a strategy and management perspective, small and mid-sized companies are challenged to “find the time for strategic planning,” and at the management level, some of our participants may be the only member of a one-person foundation/CSR team. Developing shared value strategy requires the internal capacity for a process and structure.

  • On the social side, some are well-worn travelers, who know exactly the current state and limitations of their own company’s initiatives, and where they want to go next. (Yes, these tended to be the larger, more established companies.) Others are just starting out and are looking for more creative entry points. They’ve started a corporate foundation; some operate in industries well-aligned for potential social impact (e.g., clean energy, healthcare). But their activities might as well be staring at each other across an enormous canyon; they need a bridge. (One – Salesforce – was a unique case. Shared value has been part of the business practically from the start, and they are seeking opportunities to strengthen the bridge that they’ve built.)

Despite the array of experiences in the room, there were also some familiar themes. Regardless of the industry, the “old model” of thinking about corporate philanthropy and CSR is hard to change. Our participants shared some common lessons with us.

  • You need buy-in from leadership. From the “implementers” point of view, one frequent frustration is how their work is perceived by their CEOs and senior leadership. This is another way in which the canyon manifests in companies. The advice from the veterans, and as we’ve written about in FSG’s CSV How To Guide, is to find your champions and use them to help influence at the senior leadership level. And those that are trying to push CSV from inside should keep trying to make connections to the business side and be not only relevant, but vital.

  • Learn to work with partners. Our attendees all expressed an interest in collaboration. And EF, as a membership organization, is playing a role in supporting networking among companies. While this is a great first step, real, practical connections on the business side, up and down the value chain, are needed too. Access to those types of partners can be tricky for CSR and foundation managers to attain. However, they can also serve as good matchmakers. This role allows for external stakeholder engagement in a way that extends the company’s reach. Why not use this strength to support the business?

I expect these lessons are an entry point into some bigger conversations. I am grateful to have had the opportunity to think about these issues with such a warm and candid audience. Each of them asked to be inspired to do their work better and learn from each other. And I look forward to the next opportunity to think with them about how to create an impact for their companies and for society.

 

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