In early 2011, interest in the Creating Shared Value (CSV) strategy proposed by Professor Michael E. Porter has been growing. This is because it breaks away from the existing Corporate Social Responsibility (CSR) perspective that dichotomously separates corporate economic value and social value, and proposes a value creation strategy where both can become healthy simultaneously from a long-term perspective.
Mark Kramer, who co-authored the CSV paper with Professor Porter, proposes through his co-founded company FSG a method of reflecting social needs and context at the core of business by breaking down the general strategic framework into 10 steps. This article analyzes IBM's CSV strategy, "Smarter Planet," and its sub-programs based on this strategic framework, explaining specific CSV execution strategies and presenting differences from the existing CSR paradigm.
Step 1: Clarify the Company-wide Vision for CSV
CSV begins with sharing and restructuring the vision of corporate executives. IBM's "Smarter Planet" announced in 2008 is a good example, encompassing technology, expertise, and industry trends with an innovative vision applicable across all industries.
Step 2: Define Measurable Social/Business Outcomes
Unlike CSR, CSV must create both social and economic value simultaneously. IBM quantifies expected social improvements and connects them with business opportunities.
Step 3: Identify Social Issues Connected to Business
By focusing on social issues that are closely related to the company's core competencies, CSV creates genuine competitive advantage rather than peripheral philanthropy.
Step 4: Analyze the Value Chain for Social Impact
The company needs to examine every step in its value chain to find opportunities where social improvement and business value creation intersect.
Step 5: Build the Business Case
CSV initiatives must demonstrate clear return on investment. IBM's Smarter Cities, Smarter Healthcare, and Smarter Grid programs each show measurable business outcomes alongside social benefits.
Step 6: Engage Stakeholders
CSV requires collaboration across government, NGOs, academia, and communities. IBM's approach involves partnerships with cities, universities, and local organizations worldwide.
Step 7: Develop and Test Solutions
Pilot programs allow companies to iterate on CSV solutions. IBM tested smart city solutions in cities like Rio de Janeiro before scaling globally.
Step 8: Scale the Initiative
Successful pilots become scalable programs. IBM's Smarter Planet expanded from a few initiatives to a comprehensive platform touching healthcare, energy, transportation, and education.
Step 9: Measure and Communicate Results
Transparent reporting of both social and economic outcomes reinforces the CSV approach and builds credibility with all stakeholders.
Step 10: Embed CSV in Corporate DNA
The ultimate goal is making CSV inseparable from the company's core strategy, not an add-on program. IBM has successfully embedded the Smarter Planet vision into its fundamental business identity.
Conclusion: CSV vs CSR
While CSR focuses on reputation and has limited connection to business, CSV puts social needs at the center of corporate strategy. The key difference is that CSV creates both economic and social value simultaneously, making it sustainable and scalable in ways traditional CSR cannot match. IBM's Smarter Planet demonstrates how a technology company can address global challenges while building significant business value.
