Creating Shared Value
Business Bodhichitta: Sustainable visions for business start from within and are about ‘paying forward’ on what will be delivered. You take a stand and make an offer well before you expect to be ‘paid back’. Values give rise to value. The business model you use will be built upon the values at the heart of the business.
Creating Shared Value acknowledges trade-offs between short-term profitability and social or environmental goals, but focuses more on the opportunities for building a social value proposition into corporate strategic thinking.
It is very significant when the arch-guru of competitive advantage writes an article in the Harvard Business Review on Creating Shared Value, as Michael Porter (with Mark Kramer) has done in the issue of Jan-Feb 2011. The concept focuses on the connections between societal and economic progress. As he points out, “Business and Society have been pitted against each other for too long.
What on earth is Business Bodhicitta?
It is a matter of bringing compassion into your business and applying wisdom to its work. With a conscious intent to create, run and develop your business on such principles, you will find many problems either melt away or do not even surface in the first place. Business Bodhicitta involves sensing and expressing loving kindness to others.
Bodhicitta energy transforms all your ordinary actions of body, speech and mind – your entire life – into positivity and benefit for others.
My friend and former colleague, Roger Saillant, for many years a top Ford executive, a fellow teacher on the Marlboro MBA in Managing for Sustainability and now Executive Director of the Fowler Center for Sustainable Value at Case Western Reserve University, says it’s about, “struggling each day to become a human being.”
There is plenty of evidence of selfish grasping in business; look where it goes. The excesses of Wall Street and many financial institutions on Main Street demonstrate what happens if there is a lack of consciousness about how ambition can turn into greed.
It is no longer reasonable to leave your inner values at home. Bringing them to work without living them is counter-productive. Working without sharing them will lead to conflict.
The quest for financial wealth as a single purpose leads to dissatisfaction and ultimately, to destruction. The delicate balancing act of meeting the needs of all parties to the business transaction leads to genuine wealth.
Genuine wealth is based on the concept of wellbeing and is built on five capitals:
Mark Anielski, author of the Economics of Happiness, uses the flower image above with the five petals surrounded by a circle to portray the five capitals of wealth. ‘Wealth’, he takes to mean conditions of well being and not the narrow output definition of wealth, as in the way most companies (net worth) and nations (Gross Domestic Product) define it.
“To be genuine means to be live in accordance with one’s values, the shared values of a family or household or the shared values of a community of households,” he suggests. Or, I would add, the shared values of a business. Another relevant view can be seen at EcoBuddhism, a Buddhist response to global warming.
In economics, an externality (or transaction spillover) is a cost or benefit, not transmitted through prices, incurred by a party who did not agree to the action causing the cost or benefit. The illustration below shows the concept clearly.
Externalities can be beneficial or deleterious. Most frequently we think of them as being negative, as in pollution or C02 emissions, though Adam Smith contended that selfishness leads markets to produce whatever people want. He talked about the”invisible hand of the market”. Today this is a difficult position to hold.
John Ehrenfeld, the Executive Director of the International Society for Industrial Ecology and author of Sustainability by Design, and my faculty colleague on the MBA in Managing for Sustainability, asserts that by focusing on the “being” mode of human existence rather than on the unsustainable “having” mode we cling to now, a sustainable world is within our reach. The concept of genuine wealth echoes what John is saying.
This starts from a place of caring. The concept of caring immediately leads one to the other person from the self. John talks about the three primary areas of care:
- The human, or caring for oneself
- The natural, or caring for the world
- The ethical, or caring for others.
John also suggests that sustainability is a matter of flourishing, or growing luxuriantly. The interesting thing about ‘flourishing’ is that it is a subjective word, which allows you to know it when you see it. This is in contrast to the objective-intense world that preoccupies most of us in business.
“All humans have had at least a moment when their senses revealed flourishing, but all too few live in circumstances where those precious moments reemerge over and over,” he says.
However, seeking to make genuine wealth flourish with compassion and wisdom, allows the possibility of sustainability.
Mercenary Capitalism is Ending
“Today’s era of economic, social and environmental crisis has sent a powerful message: the age of ‘mercenary’ capitalism is ending,” says Stuart Hart, author of Capitalism at the Crossroads, He continues, “We must finally embark on a new age of sustainable, stakeholder-based capitalism.” He believes that the new form of capitalism should uplift the entire human family of 6.7 billion while at the same time replenishing and restoring nature.
Stuart Hart is no lone voice in the wilderness. ‘Capitalism 4.0′ is the title of a book by Anatole Kaletsky that describes recent economic and political history and describes the latest trends in the transformation of democratic capitalism. At the level of the firm, both economic and social changes create huge openings for the social enterprise and it is no longer easy to hide behind the notion that the fundamental goal of the firm is to maximize value for its owners.
There are many examples of people coming from spiritual directions towards the transformation of capitalism, as well as business people integrating their spirituality in the workplace. An example from the spiritual community is Healed Earth, an organization with which one of my former MBA students, Brian Schwartz, is associated. Take a look at what they are doing.
The Canadian François Couillard of Strategies & Direction Consultants has developed an astonishingly simple, but alluringly effective model of the social:financial innovation continuum:
As François comments, “As you can see, a simple way to look at organizations is along a continuum of returns, ranging from purely social on the left to exclusively financial on the right. Social innovation can occur anywhere along the spectrum.” It is interesting that while his circles look like distinct and discrete, more and more companies span the whole continuum.
There are progressively more forms of corporate governance that reflect that. In my State of Vermont, for example, we have had the L3C (limited profit) structure for a while and as of July 2011 we have the Benefit Corporation, modeled on the B Corporation (Venture Founders was a founder B Corp). The L3C is a standard LLC that allows for accepting program-related funds from non-profits. Whereas the the Benefit Corp has articles of association that articulate both social and financial ends.
1. In Buddhism, bodhicitta is the wish to attain complete enlightenment in order to be of benefit to all sentient beings. The word is a combination of the Sanskrit ‘bodhi‘ (awakening) and ‘citta‘ (enlightenment). Most of us, if we work at it, can aim only at relative bodhicitta, working for the good of all beings as if it were our own.