Social Responsibility and Shared Value = Higher Profits

This past month, John C. Camillus, Bopaya Bidanda, and N. Chandra Mohan published a book titled The Business of Humanity: Strategic Management in the Era of Globalization, Innovation, and Shared Value, which explains why many organizations are pursuing a novel, forward-thinking business model. These companies are building "humanity" into their models as the driver of economic, environmental, and social sustainability.

During a recent email conversation with the authors this month, I asked them: “Can companies built on shared value sustain for the long term?” Here is their collective response:

That is a fundamental question that goes to the heart of the Business of Humanity® Proposition. Our answer is an emphatic "Yes!"

Iconic figures such as Nobel Peace Prize-winner Muhammad Yunus contribute to keeping this question alive by proposing “social business” as a model, de-emphasizing profits and focusing primarily on addressing social concerns. This mindset, though most commendable, raises justifiable questions about sustainability.

We see shared value as a requirement for the survival of business. For instance, the importance of sharing value with communities is becoming apparent and activist non-governmental organizations (NGOs) make it an imperative. Remember that Tata Motors had to abandon a $300 million investment in an assembly plant because the local community felt that it had been exploited when land was acquired for the plant.

We go even further by arguing that sharing value strategically with the organization’s stakeholders enhances profitability. The disruptive innovations that are part of the Business of Humanity’s profit-enhancing business model will create damaging conflicts between stakeholders if they are not purposefully engaged in the process of value creation and understand that they will be earning a slice of a substantially larger pie.

We are definitely not being Pollyannaish. When Paul Polman, the chairman of Unilever, was asked how his company could continue to make profits with its emphasis on social and environmental sustainability, his response was that he did not see how profits could be sustained without such an emphasis. The Business of Humanity strategy development process is designed to ensure that shared value promotes profitability and, consequently, sustainability.

Do you think there is validity to the argument that a more human-centered capitalism is vital as a long-term business strategy and the correct method for sustainable economic behavior?