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PurPle: A Review of FSG’s Measuring Shared Value Report

By Scott Beaudoin, Global Director, PurPle (Purpose + People)

Recently, Michael Porter, Greg Mills, Mark Pfitzer, Sonja Patscheke and Elizabeth Hawkins at FSG wrote a very interesting article called Measuring Shared Value: How to Unlock Value by Linking Social and Business Results. In it, Porter identified measurement as a key driver of shared value adoption. We agree, as measurement and performance metrics will also be the key to maximizing potential with PurPle, our signature global offering. Here we review the report by Porter and discuss the future of PurPle-led strategies and shared value decisions.

When we launched PurPle in April, 2012; our focus was on redefining the way companies and brands should approach corporate social responsibility, sustainability and cause marketing. We focused this new approach on the new “triple bottom line” – purpose, participation and performance.

At MSLGROUP, we are at the forefront of Purpose, being the North Star for companies and brands when it comes to innovation, communications strategies and customer engagement. Today, more than ever customers want to know what companies and brands stand for – why they exist in the world and why they should care about doing business with them. This purpose must be well defined, unique and core to its roots. But, most importantly this purpose must be defined bottom up and not top down. All employees and other important stakeholders must co-create and collaborate on purpose as they will inspire and fuel this purpose.

When it comes to participation, whether it is in the development of social innovations or in the activation and deployment of these innovations and strategies, creating platforms that organize people and programs that fuel it are most critical. Today, technology and connectivity make this possible and effective. Collaborative social innovation should replace the former corporate social responsibility focus within companies. Participation throughout the process should be the new normal.

The third piece is probably the most important one of all. Performance is the only way to make PurPle-inspired strategies successful and long-term. Creating opportunities for profit and competitive advantages at the same time as it benefits society by unleashing the power of business to help solve fundamental global problems is critical to unlocking the value in this offering. In short, data and analytics are the future to mass appeal of PurPle within the business community.

Porter’s Report on Measuring Shared Value

Early in the report, it is pointed out that in order to effectively measure shared value, which we will define as PurPle- inspired strategies, companies and brands need well-developed goals to measure against. Shared value measurement will ultimately lead to diminished investor skepticism of the shared value concept and reward companies who create shared value. The authors of the article point to three ways companies and brands can do this.

Re-Conceive, Redefine & Change

First, re-conceive products and markets by targeting unmet needs to drive incremental revenue and profits. The article points out that this strategy will lead to increased revenue, market share, market growth and profitability. Second, redefine productivity in the value chain by better managing internal operations so that it increases productivity and reduces risk. The strategy, according to FSG improves productivity, reduces logistical and operating costs, and improves quality and profitability. Third, enable cluster development by changing societal conditions outside the company to unleash new growth and productivity gains.
Three interesting approaches to connecting the social benefit with the business benefit. However, the article goes on to outline an iterative four (4) step process that is integrated with business strategy that is most intriguing and one I can clearly see as producing data and insights our clients will be most interested in.

  1. Identify the social issues to target: identify and prioritize specific social issues that represent opportunities to increase revenue or reduce costs.
  2. Make the business case: develop a solid business case based on research and analysis of how social improvements will directly improve business performance
  3. Track progress: track progress against the business case by comparing business activities with financial performance.
  4. Measure results and use insights to unlock new value: validate the link between social and business results and determine the return on investment.

The Future of Shared Value Measurement

Even though these approaches and measurement process are not widely used across the business community, as many companies are still using traditional CSR measurement models that are not linked to social progress, FSG points to Coca Cola, Novo Nordisk, InterContinental Hotels Group and Nestle as companies who are most advanced in this. Refreshing that two (2) of these companies are our clients – Coca Cola and Nestle.

The future of PurPle-led strategies and shared value decisions will be predicated on the future of shared value measurement. FSG’s point-of-view that measuring shared value will yield data and insights that offer significant opportunities is right on. Despite the difficulties of change in how we measure these efforts, the path forward is made clear in this article. As trusted PurPle advisors, we must:

  1. Recommend that our clients anchor PurPle-led measurement in strategies. This will provide data and analytics that will validate them.
  2. Ensure data establishes a direct link between social impacts and business impacts and the value it creates for the business.
  3. Assess the extent of the value it creates by tracking social and business results relative to investments and costs.
  4. Distinguish this type of measurement from other important, current forms of measurement, including compliance, sustainability and philanthropy.
  5. Adopt pragmatic approaches to navigating measurement challenges.

CEOs, CMOs, and other executives can be convinced PurPle-led strategies that lead to shared value are viable business imperatives in today’s society. However, as FSG rightfully points out in this article, the investment community remains the true driving force for PurPle and shared value adoption at scale. However, data and analytics of these strategies providing evidence of the direct economic value created from them will be the most effective way to prove the value and in turn, reward companies who do so.

Scott Beaudoin is the global director of MSLGROUP’s PurPle specialty. He is also the Consumer Practice Director at MSLGROUP in New York. Through his work, Scott has received top industry honors including PR Week Campaign of the Year, Public Relations Society of America Silver Anvil and PR News Platinum Award for Cause-Related Marketing.

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