From my earliest posts to this blog back in November 2009, I have been writing about new business models in the coffee industry — novel ways that coffee companies are investing to generate higher profits for themselves and greater social and economic benefits for the farmers in their supply chains. I have come back to this issue over and over again based in part on what I am hearing in conversation with leaders from the coffee industry and the international development community, in part on what I am seeing here on the ground in the coffeelands, and in part on my conviction that what is good for smallholder farm families can also be good for business. I don’t think I have managed to persuade many people.
Fortunately, competitiveness guru Michael Porter has come to the rescue. In the January issue of Harvard Business Review, he makes an urgent, credible, well-supported and ultimately convincing case that investment to create “shared value” will drive the next wave of innovation and growth in the global economy.
Porter’s article is titled “The Big Idea,” but it actually advances a lot of big ideas:
- Corporations have viewed the entire enterprise of capitalism too narrowly, privileging financial growth at the expense of other legitimate and worthy goals of business.
- The dichotomy bewteen financial gains for private firms on one hand, and social equity, economic development and environmental sustainability in the communities where it operates, on the other, is false.
- Businesses that succeed in pairing financial gains with positive social, economic or environmental impacts beyond their firms are “creating shared value.”
- Creating shared value (CSV) is not philanthropy or Corporate Social Responsibility (CSR), but a strategy to increase competitiveness.
- Firms whose products, services and strategies effectively meet demands that arise from social needs will become more competitive and drive a new wave of growth.
- The core competencies of non-profits that specialize in creating social, economic and environmental impacts will be revalued in this new paradigm, in which collaborations with non-traditional stakeholders can unlock additional shared value.
In short, Porter and his co-author Mark Kramer offer a bold vision of how to reinvent capitalism for competitiveness, people and the planet. Unlike the scattered posts I have published here over the years relying mostly on anecdotal evidence, their account is tightly reasoned, clearly articulated, well-documented, rooted in rigorous thinking. In short, it is everything you would expect from its authors, who are world leaders in the fields of competitiveness, business strategy and social impact. Moving forward, we will leave the heavy conceptual lifting to the big thinkers and stick to more familiar terrain — collaborations at origin with companies leaning against the outer bounds of innovation — firmer in our belief that the idea of shared value has a bright future in the coffee industry. Don’t take my word for it — take theirs.