10 Steps Towards Balancing Purpose and Profit
Is your organisation looking to join the global movement towards balancing purpose and profit?
If so, you wouldn’t be alone. Companies across the world are realising the business opportunity that comes with creating a more resilient and sustainable social environment in which to operate. Earlier this year, Blackrock CEO Larry Fink described purpose and profit as being inextricably linked; for just this reason. His advocation for this thinking has only advanced the push for creating shared value as the new norm.
Shared value is a business strategy where companies create measurable economic benefit by identifying and addressing the social problems that intersect with their business. Whilst a company’s purpose guides its decision-making, shared value is the business model upon which it exists, offering the ‘how’ to deliver on an organisation’s ‘why’.
Earlier this year, the Shared Value Project and A.T. Kearney released the 2019 State of Shared Value in Australia and New Zealand Report, which included a 10-point action plan for companies to embed a shared value strategy, and effectively deliver on their purpose.
With practical insights about what it takes to move up the shared value maturity curve, based on a survey of 40 executives from 34 companies and in-depth c-suite interviews, the report inspires and empowers businesses to become more sustainable by looking beyond the balance sheet to the social areas intrinsically linked to their operations. Here are its key pointers:
1. Distinguish shared value from CSR (Corporate Social Responsibility)
Shared value complements CSR and corporate philanthropy but is distinguished by the tangible business value and competitive advantage created.
2. Define a bold purpose which inspires and embraces shared value thinking
Having a compelling purpose is important as it allows an organisation to frame its relevance within the community and consider the social issues that intersect with the business.
3. Identify business opportunities inspired by the organisational purpose
When identifying opportunities, it is important to look up and down the value chain and across stakeholder groups.
4. Use the purpose as a touch-stone for corporate decision making
Using the purpose statement to validate and shape key business decisions embeds shared value thinking into the organisation’s DNA.
5. Explicitly align investments to purpose and opportunity
Investments from innovation to supply chain optimisation to digital can be leveraged for shared value creation.
6. Recognise the need to adjust mindsets and create a language that works
Recognising mindset and language barriers head on is essential.
7. Measure impact in terms of the organisation’s bottom line
It is essential to bring on board shareholders and investors when it comes to measuring the impact to the organisation’s bottom line.
8. Illustrate success to inspire more success
At early stages on the journey regular “audits” of initiatives and innovations are needed within companies to identify and celebrate.
9. Partner intensively and expansively
Partnerships are a shared value cornerstone. Like any capability, partner management is one that needs to be nurtured in companies leading to unlock shared value.
10. Work closely with the board
Boards have a longer tenure than many C-suite executives. Given the mid to long-term nature of shared value, efforts that have the board not only supporting but advocating for shared value are seen as central.
If your organisation is helping to pave the way in balancing purpose and profit, the 2019 Shared Value Awards are a fantastic platform to showcase your work to the Australian business community. Now in its fourth year, the Awards also recognise individuals driving change and influencing better outcomes for business and society.
Delivered by the Shared Value Project, the Awards are judged by an independent Selection Committee of Australian business leaders, with previous winners including Arup, NAB, PwC, Suncorp Group, Yarra Valley Water, Former Minister for Foreign Affairs Julie Bishop, and AIA Australia CEO Damien Mu.
This year, the Awards categories include:
- Corporate organisation leading through shared value
- Small or medium organisation leading through shared value
- Shared value project/initiative by an organisation or through cross-sector partnership
- Shared Value Trailblazer
- Shared Value Champion