"CSR is Dead" Harvard's Porter Advocates Shared Value

The first business book I ever purchased was Michael Porter's Competitive Strategy, so I took note when I saw that the upcoming HBR IdeaCast featured Porter speaking on "How to Fix Capitalism". What really caught my attention was when I heard him say, "CSR is dead."

Porter is decidedly not echoing Milton Friedman's forty-year-old essay "The Social Responsibility of Business is to Increase Profits". Instead, he is proposing a new concept of "shared value":

The purpose of the corporation must be redefined as creating shared value, not just profit per se…The concept of shared value…recognizes that societal needs, not just conventional economic needs, define markets. It also recognizes that social harms or weaknesses frequently create internal costs for firms…And addressing societal harms and constraints does not necessarily raise costs for firms…Shared value, then,…is about expanding the total pool of economic and social value.

You can find a detailed discussion of the shared value concept in Porter and Kramer's, "The Big Idea: Creating Shared Value". There is a lot to think about in that article; I want to touch on the CSR aspect by quoting this passage:

Shared value creation will involve new and heightened forms of collaboration. While some shared value opportunities are possible for a company to seize on its own, others will benefit from insights, skills, and resources that cut across profit/nonprofit and private/public boundaries. Here, companies will be less successful if they attempt to tackle societal problems on their own, especially those involving cluster development. Major competitors may also need to work together on precompetitive framework conditions, something that has not been common in reputation-driven CSR initiatives. Successful collaboration will be data driven, clearly linked to defined outcomes, well connected to the goals of all stakeholders, and tracked with clear metrics.

The reference to "reputation-driven CSR" echos a long-standing concern of conscientious thinkers that the acquisition of virtue often trumps quantifiable, net macro-scale progress. A seminal 2007 paper on carbon neutrality, for example, was subtitled Offset Indulgences for Your Carbon Sins and asked if some contemporary practices were too similar that of the medieval Church's "market-based approach to sinning." One can legitimately ask if similar dynamics are at work with some CSR.

You can access more thought leaders on this topic, as well as (most importantly) practitioners, at Corporate Social Responsibility is Dead: Long Live Corporate Social Innovation on Canada's Social Innovation Generation (SIG) blog.)

Green ICT practitioners have largely embraced collaborative implementations of evidence-based sustainability; it is refreshing to see the broader vision of shared value similarly grounded in "data…defined outcomes…clear metrics."

Update 2010.02.28
A constructively-skeptical perspective on CSR can be found at John Rook's The ‘Noble Distractions’ of CSR.

Update 2011.08.14
Porter's work is cited in the New York Times's First, Make Money. Also, Do Good.. The artilce cites work by ICT companies IBM and Intuit.

Long live sustainability communications!

Porter I think is really making the case for it to metamorphose from the tangential adjunct to PR it has been to a core business strategy. It brings to my mind the metaphor of a butterfly -- it has been an ugly caterpillar, but hopefully will emerge soon as something more beautiful -- as well as credible and effective.

When firms have substantive sustainability and social innovation strategies, they need a new approach in how they talk about them. PR and marketing spin seriously detract from their accomplishments. "Sustainability communications" starts from a base of well-documented facts, describes them with a minimum of spin, honestly discusses failures and opens the door for dialogue with interested customers, employees, investors, business partners (not just NGOs or niches like SRI).

CSR reports are too firmly rooted to die, but they too must metamorphose. To me there are 4 categories and 15 criteria they need to meet to rise above the glossy PR works of the past. Read about it on my blog: http://bit.ly/WhyCSRReportsFail

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