Collaboration
Shared Value:
Tough But Timely Medicine

When in hot water, take a bath.

To many westerners, this Chinese saying is nonsensical. Yet it accords with a fundamental African way of thinking: when faced with something profoundly troubling, the solution lies in a deeper experience of that very state.

My own encounter with this logic came after three years of trying to solve a health problem with the help of western medicine. Frustration eventually led me to African practitioners. The diagnosis required me to take medicines that would not remove my problem, but would actually intensify it. That, according to African doctors, is the way to deal with certain intractable problems: by intensifying your experience of them, you wake up the part of you that is powerful enough to become the solution. It was a tough and scary option, but I – and my health – have never looked back.

Shared value adopts a similar logic, which perhaps explains why it has found greater traction as a pithy phrase in annual reports than as an operational reality. When faced with intractable societal problems – such as poverty, unemployment or climate change – most firms seek to avoid, mitigate or insulate themselves as much as possible. But risk-based logic runs dry when we realise there’s a tax to pay – somewhere down the line – for disconnecting from what sustains our lives and businesses. Someday, some stakeholder, some community, perhaps even the earth, will present the bill. And the longer we wait, the bigger it’s likely to be.

Shared value is a business strategy that seeks business opportunity – at scale – in societal challenges. At first pass, it hardly sounds like a great leap: Business has always responded to needs – sometimes even creating them when they don’t exist. But shared value’s starting point is societal need – not consumer need. And that nuance makes all the difference. It introduces a radical shift in the value proposition and a new starting point for innovation.

When trade liberalisation followed South Africa’s membership of the World Trade Organisation in 1995, South African fashion retailers began a massive offshore drive that was duly fed by China’s entry onto the world market. Over the next decade, our clothing manufacturing sector effectively collapsed. Close to 38 percent of clothing and textile workers lost their jobs between 1996 and 2005. The tax hit retailers a few years later in the form of longer lead times, currency fluctuations, questionable quality, reliability of supply and logistical challenges.

In this context, the shared value solution is painfully obvious. By helping to restore local manufacturing capacity, clothing retailers address their supply chain constraints, clothing and textile businesses re-emerge, jobs are created – and there’s more disposable income to spend on fashion.

In retrospect, most shared value innovations are obvious. It makes sense for Discovery to incentivise its clients to better health – it is picking up its clients’ hospital bills. Of course SABMiller should use local crops such as cassava and sorghum for its African brands, engaging thousands of smallholder farmers – as long as it does not interfere with local food security. And how logical that Yara Fertiliser should partner with government and NGOs to develop agricultural growth corridors in Southeast Africa.

These shared value strategies employ different innovation patterns but are informed by the same underlying insight: the solution lies in embracing the problem – not seeking to avoid it. In our experience however very few companies think this way or have the courage to do things differently. Even fewer investors and policymakers have this perspective on their radar.

Shared value opens a space for new business models, new (often unconventional) partnerships, new finance sources, new performance measures, and a renewed connection with social context. Although fast being forgotten, this is deep African thinking – emanating from Harvard professors – with competitive application across the world. If you really understand shared value, you’ll know it’s not for the faint-hearted. But you’ll also know that business’s usual medicine isn’t working.