Creating Shared Value: Competitive Advantage through Social Impact
Course Number 1415
Visiting Lecturer Mark R. Kramer
Fall; Q1; 1.5 credits OR (optionally) Field Course: Creating Shared Value (6514), Fall; Q1Q2; 3 credits
NOTE: As an option, students can elect to complete an additional 1.5-credit independent paper/project during Q2 applying concepts from the course to an industry, company or societal problem of their choosing. Students who elect this option take the Q1 course and, instead of submitting a paper, develop a project in consultation with the instructor that is due at the end of Q2.
Classical economics taught that the social and environmental impacts of business were externalities to be handled by government regulation, philanthropy or corporate social responsibility. Classical finance went further, arguing that any corporate focus on “social” factors was a misuse of shareholders’ resources. We have since learned, however, that societal problems actually create internal costs and new avenues for improving efficiency, while social needs offer new opportunities for differentiation and growth. Companies that integrate a social purpose into their competitive positions will find opportunities for innovation and profitability that competitors miss.
The hotly debated concept of creating shared value (CSV) rejects the deeply ingrained notion that there is an inevitable trade-off between social benefits and shareholder returns. It offers a more sophisticated way to think about capitalism — one imbued with a social purpose that arises not out of charity or obligation but out of a deeper understanding of competition and economic value creation. CSV offers the next major evolution of business thinking that will drive competitive advantage in the global economy. Future business leaders will therefore find it important to understand and be able to apply this framework over the course of their careers.
Social enterprises and governments are also beginning to recognize that the private sector is an essential partner in solving the world’s problems and making progress toward the Sustainable Development Goals. The result is a new form of cross-sector partnership built on collective impact and shared value creation that offers corporations the opportunity to utilize their expertise, resources and management capabilities to catalyze social change in powerful ways that also deliver bottom line results.
Course Content and Organization
The Creating Shared Value course is fundamentally a course on competitive strategy, based on the ideas first introduced in the Porter & Kramer 2011 HBR article Creating Shared Value. Unlike other approaches that analyze the social impact of business in abstract moral or philosophical terms, CSV offers corporate leaders practical guidance in driving business results through measurable social impact. The course will provide a clear framework and rigorous tools for putting the concept of CSV into practice.
The course includes 12 recent cases and frequent guest protagonists covering all three levels of CSV: creating new products and markets, redefining productivity in the value chain, and enhancing the local business environment in which the company operates. We will address the challenges involved in shifting organizational culture and processes, measuring social impact, engaging investors, and managing public-private partnerships. Cases will cover companies in both developed and emerging economies, including large/mid-size public companies as well as venture capital backed start-ups. We will examine companies “born” with a CSV strategy, as well as those transitioning to CSV in response to external pressure from climate change and other emerging social issues. A module on investment analysis will distinguish CSV from other approaches to ESG, sustainable and socially responsible investing. Supplemental course materials will include critiques of CSV as well as readings and research reports on CSV opportunities in different industries (healthcare, extractives, banking, and insurance) and in particular social issues (education, global health, employment, racial equity). All cases focus on social impact as integral to company performance in a rapidly evolving market and societal environment. Professor Porter, who co-authored many of the case studies, will also deliver a guest lecture on the core principles of competitive strategy that underlie CSV.
CSV is intended as a mainstream strategy course for future corporate leaders and entrepreneurs who want to understand how social issues intersect with corporate strategy to create new opportunities for competitive advantage, and who are committed to purpose-based corporate leadership. It is also suited to students who aspire to work in governments or social enterprises that hope to partner with businesses to deliver social impact. A limited number of cross-registrants from other schools in related disciplines will be accepted to enrich the class discussions.
Course Evaluation and Grading
50% of the grade will be based on class participation and 50 % on a final paper.
This course is part of a portfolio of courses relevant to Social Enterprise. For a full listing, see the Social Enterprise Initiative website.