Creating shared value in mature markets

Creating shared value has drawn considerable attention. The idea put forward by Michael Porter and Mark Kramer in their groundbreaking 2011 HBR article “Creating Shared Value" is that large companies have the resources and potential to really make a difference in achieving societal goals. Not just as a ‘do-good’ activity, but using the core competencies of the firm to deliver the goods and services that will meet a social demand.
In emerging markets there are ample examples of opportunities where companies can use there existing competencies to meet unmet social demands. A nice example is the story of Nestlé that developed Maggi Marsala sachets for the Indian Market that also contained the micronutrients that were lacking on the traditional diet in India. As a result, Nestlé is selling millions of these sachets in a market that can afford them and at the same time the problem of malnutrition of the Indian population is being addressed.

In mature markets, however, the challenges are much more complicated. Not that the notion of creating shared value is not relevant. But firms in mature markets are under the impression that they already have addressed and even solved the issue. Unfortunately that is an illusion.
For example in my country - The Netherlands - we are dealing with a huge societal issue related to intensive livestock farming. Over a period of several decades, this industry has been optimised looking primarily at cost components. Other relevant issues, such as animal welfare and health hazards for neighbouring communities, have been neglected.

Today, the sector is under fierce debate. Farmers try to defend their positions by showing that they have already optimised their production. Animal welfare organisations call for a drastic reduction of animals to ensure acceptable conditions for pigs and chickens. Local and regional governments are grappling with the polarisation between entrepreneurial (and thus tax) benefits versus the call from the constituency for more socially acceptable modes of production.

In this situation ‘fiddle and fit’ operations are no longer adequate. Real innovation is needed that will demonstrate that shared value can be created if we are willing to re-design a large part - if not all - of the supply chain. That requires an open mind and a willingness to change from all of the partners in the chain. And in mature markets that is where the sticking point actually lies. Creating shared value might be a way out of this catch-22 situation.

We are still searching for the hole in the garden wall that will reveal this new perspective.