The Big Idea : Creating Shared Value by Michael E. Porter and M. Kramer

Michael Porter is known as one of best gourou in Managment and his work on the competitiviness of the firm. In this paper, initially, published in the Harvard Business Review and now in the Huffington Post, Porter focuses on an idea already known but which is well explained by this artist of managment. This idea aims to conciliate two opposite objectives : individual rationality of the firm and global rationality of the society. This focus is all the more important that  the capitalist system is under siege. In recent years business increasingly has been viewed as a major cause of social, environmental, and economic problems. Companies are widely perceived to be prospering at the expense of the broader community.

Even worse, the more business has begun to embrace corporate responsibility, the more it has been blamed for society’s failures. The legitimacy of business has fallen to levels not seen in recent history. This diminished trust in business leads political leaders to set policies that undermine competitiveness and sap economic growth. Business is caught in a vicious circle.

The concept of shared value, in contrast, recognizes that societal needs, not just conventional economic needs, define markets. It also recognizes that social harms or weaknesses frequently create internal costs for firms — such as wasted energy or raw materials, costly accidents, and the need for remedial training to compensate for inadequacies in education. And addressing societal harms and constraints does not necessarily raise costs for firms, because they can innovate through using new technologies, operating methods, and management approaches–and as a result, increase their productivity and expand their markets.

This big idea is also very useful for small economies such as Reunion Island where firms have to chzallenge with the two goals : profit efficiency and societal behavior. and have to jump over the profit/non profit boundary.

Read more at : « The Big Idea : Creating Shared Value » by M. Kramer and M.E. Porter or this other link which is presents a videotape of Porter

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