How "Sharing" is Changing the Business World

This post is about becoming aware of Michael Porter's idea of "shared value."  Use this information the next time you make an educated purchase, or for the business owner/employee wanting to add value to their company.  Discover how to incorporate "shared value" into your business model.

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A Changing World

Our economic world is changing.  Consumers are more interested in an entire selling experience and are now more than ever more aware of what they're purchasing.  Customer reviews, blogs (just like DynamiteAds), and the extraordinary extent of the Google search allows consumers to fully understand what they're getting and how to get it easily and at an affordable price.  This disturbs businesses who are stuck in traditional marketing and sales, but those who accept and understand the new era of business are thriving.

What is "Shared Value"?

"The concept of "shared value", 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 . . 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."

 - Referenced from Michael E. Porter and Mark R. Kramer's article, "Creating Shared Value."

http://hbr.org/2011/01/the-big-idea-creating-shared-value

http://jeroen-de-flander.com/

What I've gathered from this article is the growing idea that businesses are moving from a self profit model to a model based on the extended reach of society.  Those companies that are able to act on society's needs within the core of their mission and vision will thrive.  This means that with each decision the company makes they not only have to keep the consumer's needs in mind, but the needs of society as a whole.  The next section details two companies that have fully immersed themselves into "shared value."

Companies Already Winning with "Shared Value"

In 2006, American Traveler Blake Mycoskie befriended children in a village in Argentina and found they had no shoes to protect their feet.  Wanting to help, he created TOMS, a company that would match every pair of shoes purchased with a pair of new shoes given to a child in need.  Realizing this movement could serve basic needs, TOMS Eyewear was launched.  With every pair purchased, TOMS will help give sight to a person in need.

- Referenced directly from TOMS company website

http://www.toms.com/corporate-info/l

The beautiful landscape we know and love is fast disappearing.  At Ten Tree, we believe that we can inspire a new group of consumers to tackle the environmental issues we are now faced with.  By planting ten trees for each product purchased and ensuring that all our clothing is produced responsibly we allow each and every customer to make a difference.

- Referenced directly from Ten Tree's company website

http://www.tentree.com/about

"Shared Value" Satisfying 3 Customer Needs

How has "shared value" come into play for consumers of these two companies?  A customer of TOMS and/or Ten Tree satisfies three key needs:

1. Physical Need - Purchasing clothes that the consumer can physically wear.  Ex. Shoes from TOMS or a t-shirt from Ten Tree.
2. Psychological Need- Buying TOMS causes the company to give a pair of shoes to a child in need.  Buying a Ten Tree t-shirt will ensure that ten new trees will be planted.  The customer is psychologically satisfied by purchasing the good deed for another human being or for the environment.
3. Societal Need - The act of giving to others can be displayed in public while wearing the TOMS shoes.  Someone wearing these shoes can be classified as a giver.  Where the Ten Tree t-shirt allows for the perception of environmentally friendly.

How to Use "Shared Value"

These companies haven't attempted to tap into "shared value," their entire business is built around it.  TOMS and Ten Tree are extreme examples of using "shared value."  Another method to incorporate "shared value" into your company is through greater employee satisfaction.  The greater a company's employee satisfaction, the more profitable that company will be.  James Oakley from Purdue University has done extensive research to show facts of this correlation:
"There is a direct link between employee satisfaction and customer satisfaction and improved financial performance."

- To find out more about James Oakley's incredible research on this topic visit:

http://www.purdue.edu/uns/html4ever/2004/040913.Oakley.sat.html

Michael Porter's research into "shared value" is changing the game of business.  Incorporating "shared value" into your business will allow you to break through the barriers of traditional business, increase profit, and inevitably make way for the future.

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