Why this Course?
This course has been inspired by the work being done with respect to platform strategy and creating shared value.
I believe that these two topics if fully understood can change the ways corporations do business and how society views capitalism and big business. By harnessing the power of these two disruptive ideas, it is possible to uplift humanity and reduce inequality. The two emergent ideas are more relevant to the world more than ever as they emphasize on scaling best practices for doing business with one another in a profitable yet responsible way.
Business executives across the world realize that not empowering their current and potential customers is the biggest business risk of them all. It is refreshing to hear business executives talking about doing business responsibly and using this newfound honour to create value that is mutually beneficial to the communities they operate in and their companies.
It is no longer enough to simply deliver value to shareholders at the expense of employees, the environment and every other actor. The time when business took an “Us and Them” position is over, in order to solve the wicked problems bedevelling our planet we have to be united and use all our resources to contibute to lasting solutions.
Time and again, business has proven to be the best at creating value. Now is the time to harness the value creation power of corporations to change the world for the better.
Increasingly investors, consumers and employees are calling on corporations to offer innovative and scalable solutions to the world’s most pressing challenges in a way that delivers societal value and contributes to the bottom line. So how does that happen? What’s the difference between CSR activities and shared value? What conditions are needed for shared value activities to thrive? How can the ethos of shared value be optimized by platforms? How do we measure success?
What does the course offer?
MGLI 010: Platform Strategy for Creating Shared Value offers an overview of the platform strategy driven shared value concept and provides a discussion forum and activities that will give you the knowledge and tools needed to:
- Define platform businesses and predict where in your industry they might arise.
- Check if your business is a platform or not.
- Understand the basics of platform architecture, purpose, and design for optimal value exchange.
- Learn how platforms are defining new innovative pricing models.
- Design free pricing strategies that are profitable.
- Address transition barriers that firms face in trying to organize themselves as platforms.
- Anticipate mental model misconceptions from using a product perspective.
- Develop strategies for launching new platforms when critical mass is important.
- Learn how to open a business model for scalability.
- Recognize and compete in winner-take-all markets.
- Predict unexpected sources of competition.
- Identify how shared value initiatives fit into your company’s existing societal engagement activities.
- Recognize the right opportunity to leverage a company’s assets and capabilities to both solve societal challenges and promote growth.
- Rethink partnership opportunities to advance shared value.
- Learn from corporations who are successfully transitioning into shared value platforms.
This course is designed for practitioners across business units who have varied levels of knowledge or who are new to the idea of Creating Shared Value. Participants are encouraged to come with questions and a willingness to engage in interactive discussions.
Platform Business Models:
According to Sangeet Paul Choudary The platform business model enables interactions between producers and consumers of value. It achieves this goal through two mechanisms. First, a platform provides a plug-and-play infrastructure which encourages open participation by an external ecosystem of producers and consumers. Second, it lays out the rules of governance for the interactions that ensue. The platform stack is a tool to help understand the various architectural elements constituting a platform business model and to identify the unique factors that determine success for each platform. This slide deck lays out a narrative for understanding recent competition among digital players using the platform stack.
Creating Shared Value (CSV)
As stated above, the course is a compilation of ideas emanating from Platform Business Strategy and Creating Shared Value philosophy.
Valuable information on platform business models wasalso found on Applico’s website.
Dr Murat Uenlue was also a fountain of knowledge with regards to platform business models, through his ebooks and website, I was able to learn a lot.
Credit for Creating Shared Value business philosophy goes to:
- FSG, a mission-driven consulting firm for leaders in search of large-scale, lasting social change.
- The Harvard Business School’s Institute for Strategy u0026amp; Competitiveness
- The Shared Value Iniative – a global community of leaders who find business opportunities in addressing societal challenges.
- Michael Porter is the founder of the modern strategy field and one of the world’s most influential thinkers on management and competitiveness. The author of 19 books and over 130 articles, he is the Bishop William Lawrence University Professor at Harvard Business School and the director of the school’s Institute for Strategy and Competitiveness, which was founded in 2001 to further his work and research.
- Mark Kramer is co-founder and Managing Director of FSG, a nonprofit consulting firm established in 2000 and specializing in strategy, evaluation, and research. As the primary overseer of FSG‘s consulting practice, he helps drive the vision and growth of the firm and leads engagements across all of FSG’s impact areas, with a particular focus on shared value. A prolific author, Mr. Kramer’s work is featured regularly in major publications, and he is a frequent speaker around the world on topics in catalytic philanthropy, collective impact, creating shared value for corporations, new approaches to evaluation, impact investing, and social entrepreneurship. He is the co-author of four Harvard Business Review articles with Professor Michael E. Porter of Harvard Business School.
- iPropeller Open Innovation whose mission is propelling business innovation aimed at creating economic and societal value
Let’s start the course by asking the question that I hope you have heard more than enough times by now.
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The platform business model is revolutionizing the way business is conducted. Society’s behaviour has been changed as a result of this emergent business configuration of exchange of value.
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Definition: Platform Business Model
If you have attended any startup pitching events recently, you might have relised that eveyone is calling their company a “platform”.
The word has become commoditised to an extent that it has become pop-culture to be associated with a “platform”. Its the coolest thing to talk about at work and social gatherings. Large companies are claiming that they are re-imagining their business models to turn them into platforms that optimise the exchange of value.
The question is, are all these claimants really platforms? If subjected to a test, would they qualify as platforms?
Below are three definitions of “platform business models” that we will use to guide our conversations in this course.
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Google, Facebook, YouTube, Airbnb, Uber, eBay, Alibaba, PayPal make use of the platform business model. In this course, I use the terms “platform business model,” “platform business” and “platform” interchangeably. Economists also call them multi-sided platforms (MSP).
Creating shared value is a framework for creating economic value while simultaneously addressing societal needs and challenges. When businesses act as businesses—not as charitable donors—they can improve profitability while also improving environmental performance, public health and nutrition, affordable housing and financial security, and other key measures of societal wellbeing. Only business can create economic prosperity by meeting needs and making a profit, creating infinitely scalable and self-sustaining solutions.
Creating shared value goes beyond philanthropy or corporate social responsibility. Creating shared value is addressing societal needs and challenges with a business model.
Creating shared value will drive the next wave of innovation and productivity in the global economy.
The purpose of the corporation must be redefined as creating shared value, not just profit per se. This will drive the next wave of innovation and productivity growth in the global economy. It will also reshape capitalism and its relationship to society, and legitimize business again as a powerful force for positive change.
There are numerous ways in which addressing societal concerns can yield productivity benefits to a firm. Consider, for example, what happens when a firm invests in a wellness program. Society benefits because employee and their families become healthier, and the firm minimizes employee absences and lost productivity. The graphic depicts some areas where connections are strongest.
Measuring shared value allows companies to maximize opportunities for innovation, growth, and social impact at scale. This article explains the specific purpose of shared value measurement and offers a step-by-step process and pragmatic approaches to measurement with examples from leading companies.
When companies adopt a shared value approach but do not understand or rigorously track the connection between social and business results, they miss important opportunities for innovation, growth, and social impact at scale.
Measurement approaches that link social and business results are vital to unlocking shared value for companies and scalable solutions to social problems.
- A framework to measure the interaction between business and social results is one of the most important tools to successfully practice shared value.
- Measurement illuminates the direct connection between tackling social issues and achieving economic success, which ends investor skepticism and drives further shared value adoption.
- Shared value measurement has 4 steps: Identify the social issue to target, make the business case, track progress, and measure results and use insights to unlock new value.
Collaborative leadership is critical to progress in today’s ever-changing society. A more collaborative model allows for greater social value creation and a better leveraging of resources. Creating shared value requires employees to develop new collaborative leadership skills that enable them to build innovative, deeper relationships. The recent Shared Value Leadership Summit highlighted the importance of partnerships and new forms of collaboration – inside and outside of an organization. To unlock the full potential of shared value in helping to resolve today’s toughest problems demands collaborating with others in businesses, governments, and civil society.
This challenge placed upon leaders to move towards a genuinely more collaborative model is a BIG one. No one sector can stand outside the system and attempt to address social problems alone. We need to work together across sectors to advance social change. More and more, collaboration is happening and if we can build on this momentum to combine the cutting-edge ideas from business with innovative knowledge from nonprofits and the policy power of government, we can truly transform our societies for the better.
Collaborative leaders take a more open approach. Team building and power sharing replace the traditional forms of organizational hierarchy. Shared value collaboration encourages creative thinking, internal “crowd sourcing” and a new business model that enables collaboration across sectors as has never happened before.
Building Collaborative Leadership
Collaborative leadership requires very distinct characteristics in order to pursue such complex endeavors. With a future that is most definitely collaborative here are a few best practices identified at the Shared Value Leadership Summit:
- Power is greatest in the collective team: The new approach of collaborative leadership recognizes that power is greatest in a collective team. By encouraging equal participation across all levels, collaborative leaders allow solutions to develop from the best ideas of the group and take a team approach to problem solving.
- Information is for sharing: Open information sharing is the cornerstone of collaborative leadership. Getting everyone on the same page in a project requires information sharing. Education also plays a role. The more cross training available, the more creative approaches to problem solving can develop and be implemented.
- Trust is paramount: The basis of collaborative leadership is trust. Because team members are given more responsibility for their work, leaders are often more involved in the process. This means that as issues arise they are often dealt with swiftly. Collaborative leaders look for the root cause of conflict as it arises, and address solutions promptly to keep work moving forward.
- Co-creation of strategy and joint problem solving: In a collaborative environment, strategies, action plans and solutions are brainstormed among team members. Collaborative leaders recognize the power of a group approach to co-creation to secure the best ideas and buy-in from the collective.
Rethinking Partnerships for Greater Shared Value
How companies undertake partnerships to create shared value was discussed extensively at the Leadership Summit. Partnerships are seen as key and innovative new forms of collaboration are being developed, where unlikely alliances are bringing unexpected returns, crossing nontraditional boundaries, and building long-term solutions to immense social problems. In the end, partnering is all about people—more specifically about connections between people. Organizations must choose to integrate partnership into their strategy and business culture, thus inspiring co-creativity in every process and unleashing shared value that works for all.
Daniel Lee, Executive Director of the Levi-Strauss Foundation shared the way their company is rethinking their partnerships and relationships with nonprofit organizations to achieve greater shared value for all.
Principles for Successful Partnerships
While best practices help build collaboration skills and new thinking helps advance partnerships, core principles of partnership provide the foundation for building a successful collaboration. The Partnership Brokers Associationprovides this framework as well as comprehensive training in building collaborative partnerships for a sustainable work.
- Equity: ‘Equity’ is critical in a relationship where there are wide divergences in power, resources and influence. Equity is not the same as ‘equality’. Equity implies an equal right to be at the table and a validation of those contributions that are not measurable simply in terms of cash value or public profile.
- Transparency: Openness and honesty in working relationships are pre-conditions of trust – an important ingredient of most successful partnership. Only with transparent working will a partnership be truly accountable to its partners, donors and other stakeholders.
- Mutual Benefit: If all partners are expected to contribute to the partnership they should also be entitled to benefit from the partnership. A healthy partnership will work towards achieving specific benefits for each partner over and above the common benefits to all partners. Only in this way will the partnership ensure the continuing commitment of partners and therefore be sustainable.
When companies create shared value, they increase economic performance and create tangible societal benefits. This means the return to their investors can be measured in two ways—in profits as well as in societal impact. Shared value investing represents an evolution in the relationship between investors, business, and society.
The Purpose of Investing
- The fundamental purpose of investing for society is to allocate capital to companies who can earn an attractive return
- Investors create the greatest societal value by selecting companies that will use capital well, monitoring their fundamental performance, and intervening to improve that performance
- The essential social role of investors is multiplied by recognizing and capitalizing on the shared value opportunity
MAKING THE CASE FOR SHARED VALUE
Shared value measurement, by directly linking social and business results, provides investors a direct line of sight between achieving social results and business performance.
An increasing number of investors are using ESG analysis as a way to improve the quality of the information used in portfolio evaluation. But information asymmetries between investors and companies are limiting ESG analysis, mainly for companies in emerging markets. Although sustainability ratings agencies have developed very sophisticated databases of companies from all over the world, the information they are providing on emerging markets is restricted to a handful of companies. In addition, even when available, this information can be difficult to access and analyze as companies are not providing enough relevant ESG information.
This lack of ESG information is mainly a consequence of the lack of integration between sustainability managers, financial managers and IR teams, which often have different strategies, objectives, targets and metrics. In order to solve the problem of ESG-related communication between investors and companies, the first step must be to fully integrate the corporate management of sustainability.
In Brazil, only 34 percent of the top 100 companies and top 20 banks in the country provide access to adequate ESG information via their websites. Even though most companies have adopted the Global Reporting Initiative’s reporting guidelines, none has clearly disclosed financial results related to the company’s sustainability strategies.
Communicating proactively with investors on ESG issues is a powerful strategy to increase access to capital. With that in mind, companies in emerging markets should improve their communication and adopt a development process based on:
- Companies with sustainability strategies should seek investors with long-term perspectives that actively support sustainability strategies.
- Mapping potential investors and their ESG methodology is another important step to bridge the gap between a company’s sustainability policies and investors’ expectations
- Companies can provide comprehensive information about regulation, consumer behavior, competitors, civil society influence and other social, environmental and political issues that might affect business performance.
- Sustainability materiality of companies in emerging markets should adapted to the local market, society and environment.
- Demonstrating the competitive advantages that result from sustainability strategies is a strong argument to attract new investments
- Sustainability and financial information must be related and coherent to enable integrated ESG analysis.
- International sustainability standards are the universally accepted way to gauge sustainability results and to provide investors assessing ESG performance with an easy-to-understand and comparative framework
- Both publicly and privately held companies should adopt governance best practices.
- The company’s stakeholders are an important source of reputation and information for investors. Formal and continuous relationship channels, such as panels, consultations, grievance mechanisms and formal partnerships improve companies’ credibility.
Making ESG work
The increasing adoption of an ESG perspective in the investor’s decision-making process is a great opportunity to enhance corporate sustainability performance. Companies must adapt to this new investment market trend, however: new metrics, management and governance systems must be created to solve the problem of asymmetric information at both company and market levels.
At the internal level, companies must integrate sustainability into business and investor relations strategies. At the market level, and mainly in emerging markets, providers of ESG data and research must improve the quality of the information on social and environmental issues by adapting it to the local context.
Transparency is a basic condition for enabling market development, and integration of social and environmental objectives into the business’ objectives depends on new metrics and institutions focused on driving market decisions toward sustainable investing.