Why should you care about becoming more engaged in social or community issues? The results are proven to be far more than expected, time and time again. Done properly, it can help your business in more ways than you can imagine.
During our Marketing Forum last year, we brought a new concept in value based business modelling to our sector’s senior marketing leaders. A model that surprised with its potential for franchise systems and marketing plans. The model is creating a new frontier for innovation, competition and measurable business performance across the globe from Nestle to Bendigo Bank. It’s called Shared Value!
What is Shared Value?
Shared Value proposes that strengthening the connection between what a company offers and what its customers and community really needs can create value and drive business growth. Through this linking of social outcomes with financial opportunities, businesses can not only survive but thrive, differentiate, and position themselves for long-term sustainable success.
From our perspective, the emergence of the Shared Value trend also feeds into the wider moral issue of weighing up the merits of Good Profit versus Bad Profit, and whether all company profit is in fact good for a business in the long run. These are all important topics for the Australian franchising sector, and the businesses which operate within it, to address, examine and consider, particularly in the wake of one of its most highly publicised and potentially damaging public issues.
The concept of creating shared value was first introduced in the Harvard Business Review and while it shares some of the same ground with Corporate Social Responsibility in ‘doing well by doing good’ what sets it apart is that is actually marries up financial returns with engagement by businesses on social and community issues. While Corporate Social Responsibility is all about responsibility and reducing harm, Shared Value is all about creating and adding value for both the business and the community. Real and measurable value, which in turn self-promotes and enables something that franchising, is very good at: scalablity. This is in stark contrast to many corporate responsibility programmes that turn off once the funding stops or the company cannot sustain the resources to run the project. The Shared Value model means that the project, the business and the benefits for all are self-sustaining and is quantifiably measurable in value to all parties.
As we said in the introduction, one of the most popular presentations at last year’s Franchise Marketing Forum was by Phil Preston, CEO of The Collaborative Advantage, on the emerging trend of creating ‘Shared Value’. Here he outlines just how a business can develop an effective community engagement strategy.
Three ways to harness Shared Value for your business
1. Relevance – Connect with relevant charities or causes
A financial services company gives its financial planners opportunities to help families dealing with cancer, so they can better manage their finances through this difficult stage in their lives. They are applying their skills in a very relevant way.
A removal company supports four major charities, and uses its trucks and logistics skills to help them set up and pack up. A lingerie business owner runs free seminars to help women with early breast cancer detection.
From these examples alone, we see that relevance can be established by way of skills, business assets and heading off issues that might affect our customers.
Why does relevance matter? Why would it be preferred to less relevant forms of giving?
In business today, we can gather a lot of information sitting in front of our screens. However there is little value in information alone – the real value lies in gaining experience, insights and shared learning from on-the-job activities.
Connecting with a relevant charity or cause will help you and your employees discover things and explore new perspectives that can potentially be applied in a positive and profitable way in your business.
Ask yourself: Which charities am I connecting with and why? Should I be doing more in some areas and less in others? How can I increase relevance and gain benefits down the track?
2. Profitability – Is it possible to support social issues and increase profitability? And is it okay from an ethical point of view?
A group of real estate agents have been involved in a project to help reduce homelessness in Western Sydney. Property managers help identify the signs of early rental stress and, when they do, notify relevant social services providers. In many cases, tenants are unaware that support is available and 57 evictions have so far been averted over a two-year period.
What is the business benefit? The real estate agents save time, energy and about $1,000 in hard costs each time, as well as saving their clients – landlords – an estimated $10,000 in rent that would otherwise be lost and savings on property remediation costs.
Because there is a commercial outcome, it means that the real estate agents are likely to keep supporting the social issue, which is far more powerful than once off activities. Plus, it is part of normal operations and the resources applied to the issue far exceed what donations could normally achieve.
If making a profit means that you’ll keep investing in the outcome, that’s okay by me. It’s not okay to exploit social issues to make a profit.
Ask yourself: Are there issues affecting my customers, employees or business partners that I could help solve and also receive a return on my investment?
3. Advantage – Can I figure out a way of connecting with the community that really makes me stand out versus my competitors?
Social and community-based strategies are usually harder for competitors to replicate, because the “technology” is not so transparent, and building trust between partners doesn’t happen overnight.
To add the icing on the cake, if you can make use of unique assets or strengths you possess in the process, then it becomes nigh on impossible to copy and your brand will really stand out.
The removal company I mentioned earlier is a mid-sized firm and is able to create and maintain a positive workplace culture because of its size – its larger competitors cannot do it. Therefore they are able to extract a superior return on investments in workplace health, employee wellbeing and reducing absenteeism.
Ask yourself: What is my uniqueness? Are there under-utilised assets in the form of people, company characteristics, relationships, networks, intellectual property, physical assets or capabilities that I could be making better use of?
Putting it all into action
You can advance your own business prospects by heeding the tips given here. The challenge is to be proactive and see this as an opportunity set rather than waiting for something to happen.
Where do the best opportunities lie for you?
Phil Preston, the CEO of The Collaborative Advantage, makes it easy for public, private and social sector enterprises to plan and develop collaborations, both internally and externally, for performance improvement. Phil brings the processes and how-to tools that make it possible from his experience in the corporate sector for 19 years, and was the head of a financial research team responsible for $40 billion of global investments. In 2013, he was invited by Professor Michael Porter and Mark Kramer to help form the Shared Value Initiative’s global practitioner network and is now a member of the Australian-based hub, the Shared Value Project. Since then, he has become a leading case study author and the co-creator of the Shared Value Canvas.