At FSG, we often hear from firms who buy into the shared value idea and who see its potential, but are wrestling with how to turn that from a well-meaning HQ-led initiative into shared value creation “on the ground.” They see the path ahead, but their internal structures, processes and culture are geared up for projects that can be completed in weeks or months rather than the longer, more painstaking work that can be required to truly create shared value. For these corporations, asking them to take a longer-term perspective is like asking Usain Bolt to run a marathon; they can probably do it, but it’s definitely not what they’re optimized for.
Two conversations I had recently with executives responsible for implementing shared value illustrate this challenge well. (To spare their blushes, let’s call them Acme AG and Big Products, Inc., for the purposes of this blog.)
The Acme executive explained that a big problem in her industry is getting CEOs comfortable with the longer time horizons that characterize many shared value efforts. She explained that in her industry, it is common for CEOs to be appointed from the sales & marketing function. This means that, reasonably enough, they had been schooled in closing deals as the ultimate measure of their success for the majority of their careers. As a result, she’s found that they tend to be reluctant to approve (or stick with) the more ambitious proposals that pass across their desks.
The executive at Big Products also has a time-horizon problem, but it’s not at the top. The company has already developed some sector-leading shared value initiatives, and its CEO is strongly supportive. His challenge, he explained, was that at Big Products, a typical manager stays in a role for only about two years before moving onto the next posting. They’re assessed on their contribution to shared value, but the way they really stand out and build a name for themselves is to achieve something during their tenure in the job. That creates a bias for small, quick-wins, rather than the ambitious, game-changing moves that would help move the company’s shared value agenda forward.
These examples represent a genuine tension within companies. To create shared value, an ability to consider the long term is essential. However, the elements of the culture that make it hard for the companies to do so are also part of their competitive advantage in other ways. For example, Acme AG benefits substantially from having a CEO with sales experience; theirs is a volumes business, and a lean and effective sales force is critical to their ability to prosper. Similarly, the high frequency rotation at Big Products, Inc. plays helps keep managers fresh and laser-focused on delivering results; they significantly outperform some of their competitors in this respect. But both are impeding shared value.
At FSG, we’re increasingly being asked to help companies like Acme and Big Products think through how they can move shared value from being a nice idea into a driving force for their business. We’ve already learned a lot: on September 28th, we’ll be hosting a webinar that will start to explore how leading corporations are beginning to tackle this challenge by making the case for shared value internally. We’ll be summarizing a report we published recently on how companies can get started implementing shared value. We’ll also hear from companies in the middle of this process, including HP and Houghton Mifflin Harcourt.
But these are complex questions, and there’s still much more we can learn. If your company is working on embedding shared value into the business, we’d love to hear about your experiences, and we’d love for you to join the webinar in September.