Sunday, November 4, 2012

Capitalism in the 21st Century – Creating Shared/Sustainable Value (CSV)


Capitalism in the old days focused entirely on maximizing shareholder equities, which should still be one of the top priorities in the 21st century; however, creating shared value should be the number one priorities of society nowadays.  CSV is defined as creating value that meets social needs instead of the conventional economic needs.

In the last century, businesses grew at the expense of the communities they reside in.  NGOs survived by attacking businesses.  Communities did not enjoy having the large businesses around the neighborhood.
As capitalism evolves into the newest stage, all parties are becoming aware of the fact that they should work together to creating shared value to grow sustainably. 

NGOs are considering new ways to operate – cooperate with the businesses by giving them advises instead of attacking them, getting the businesses more involved in the communities rather than asking them directly for financial contributions.

Large MNCs (Multi-National Companies) should start thinking about the BoP (Bottom of Pyramid) and environmentalist as opportunities.  Because most of the developed countries are already saturated and the bulk of the growth of the world’s economy is coming from the developing countries, it would be a misstep for the MNCs to not focus on the BoPs. 

Communities are very welcome of this kind of new change and embracing this evolving type of relationship.
One of the key roles among all these parties is the businesses.  It is the businesses’ vision and ability to create shared values that would benefit all members of the society.  They should not be confused by the CSR (Corporate Social Responsibilities) and think that doing CSR is adequate.  Other the overlapping ground of ‘doing well by doing good’, CSV is actually very different from CSR.  CSR is about responsibility while CSV is about creating value

Companies must be leaders in bring the communities and businesses back together.  If a business can invest in setting up a vision in creating shared and sustainable value, it can become the leader of tomorrow, otherwise if it stays status quo and continue to operate in the old way, it is very possible that it will miss the next big wave of growth by losing the faiths in the communities.

Essentially, whether MNCs believe in global warming, CSV is vital for companies to survive and grow in the long run.  To develop a comprehensive strategy for CSV, it is important to target the BoPs.  As resources are getting scarcer and only companies that develop long-term sustainable solutions are positioned to grow in the new trend of the market place.

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