Strategy and Society The Link between Competitive Advantage and Corporate Social Responsibility

1. Strategy and SocietyThe Link between Competitive Advantage and Corporate Social Responsibility Michael Porter, Mark Kramer Harvard Business Review December, 2006

2. Fundamental Premises (1) Business and Society are intrinsically interdependent Business Success and Corporate Social Responsibility are not opposite ends of a continuum Balancing Business Success and Corporate Social Responsibility is not a zero-sum game; it can be a win-win opportunity!

3. Business and Society • “Any business that pursues its end at the expense of the society in which it operates will find its success to be illusory and ultimately temporary.” • “No social program can rival the business sector … [at] …creating jobs, wealth and innovation that improve standards of living and social conditions over time.” • Michael E. Porter, Mark R Kramer Strategy & Society • Harvard Business Review, December 2006

4. Fundamental Premises (2) • There’s nothing wrong with benefiting society motivated by enlightened self interest • Corporate Social Responsibility will be most effective when practised in a way that also contributes to business success!

5. Fundamental Premise (3) Strategy is fundamentally about choice among legitimate alternatives There are thousands of legitimate social issues worthy of support through corporate social responsibility

6. Conclusion! Effective Corporate Social Responsibility requires purposeful, consistent, coherent strategic choices among the myriad of legitimate social issues worthy of support

7. Strategy is Purpose • “[Strategy] is the interrelationship of a set of goals and policies that crystallizes from the formless reality of a company's environment, a set of problems an organization can seize upon and solve.” - Kenneth Andrews The Concept of Corporate Strategy Richard D. Irwin, Homewood, 1971

8. How to be Strategically CSR • Consider the impact of business operations on society (“looking inside out”) • Value Chain model can be a useful framework for this analysis (article page 5) • Consider competitive implications of society for business (“looking outside in”) • Diamond Framework can be a useful framework for this analysis (article page 6)

9. “Looking Inside Out” • Value Chain framework encompasses all activities of the company (article page 5) • Each such activity can have impacts on society, positive and/or negative • Minimize the negative impacts • Identify opportunities for distinctive synergistic social and strategic benefits

10. “Looking Outside In” • Diamond Framework encompasses key dimensions of a company’s social context (article page 6) • Identify issues of social context that matter most to the company • Identify issues of social context on which the company can have the most positive impact

11. Responsive CorporateSocial Responsibility • Being a good corporate citizen • Comply with society’s expectations • (e.g. law, custom, ethics) • Minimize and mitigate any negative impacts of value chain activities • Support even generic social issues in the communities of operation

12. Differences must bein terms of Activities • “Competitive Strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.” • Michael Porter, What is Strategy? Harvard Business Review, December 1996

13. Strategic CorporateSocial Responsibility • Select a small number of initiatives whose social and business benefits are large and distinctive – “an explicit and affirmative corporate social agenda” • Ideally, these become a social dimension to the value proposition of the company leading to Creating Shared Value. • Michael Porter, Mark Kramer, • Harvard business Review, January, 2011

14. Strategy and SocietyThe Link between Competitive Advantage and Corporate Social Responsibility Michael Porter, Mark Kramer Harvard Business Review December, 2006