In “Strategy and Society” Harvard Prof. Porter advised business-leaders to create “shared-value” in society. (1) Governments and politics shape society, and interact with business. Business-leaders must adopt a better-balanced approach to the shared-value they create in the business. Business is done in the frame of a dynamic and complex system where several parties closely interact so as to create or destroy shared-value.
-1- Every enterprise has 5 stakeholders with whom and for whom it creates value in its business, namely: customers/consumers, distributors-suppliers-allies-communities, the lifeforces, the shareholders, and the enterprise itself. Each of these parties has its own objectives and time horizon, but shared-value provides a common ground for the interactions that generate shared-value.
-2- Kaplan Norton submitted: “Over 75% of the firm’s market-value is now derived from intangible resources, which are not captured by financial metrics”. To manage and to measure the shared value created in the business, I propose the web of the 5 corporate capitals, namely: the <organizational capital>, the <talent capital>, the <market capital>, the <life and time cycles>, and the <financial capital>. 4 out of the aforementioned 5 corporate capitals are intangible resources.
To enable teams at all levels to actively participate in planning and reporting of the shared value they create, each of the 5 corporate capitals breaks down in 5 capital components. The ensuing transparency cultivates commitment, cooperation, and collective creativity.
-3- I have expanded on Prof. Porter’s model of the value-chains to show who contributes what shared-value on which link of the value-chain.
To outperform, organizations must remain alert, adaptable, and agile in order to constantly optimize shared value. I refer readers to the articles I posted on LinkedIn.