Shared value is the idea that by addressing society’s needs and challenges, companies can create economic value in a way that also benefits society. Shared value seems promising, but many managers struggle to make it happen.
This executive guide provides a new approach to pursuing shared value by focusing on business models. Prepared by researchers Lorenzo Massa, Florian Lüdeke-Freund, and Nancy Bocken, the guide draws on a systematic review of research and practice, gleaning insights from more than 180 articles and interviews with leaders and managers.
Three Tools for Business Model Design
The guide provides three tools to support managers and entrepreneurs in the design of business models.
The Hourglass Model
The Hourglass Model guides managers and entrepreneurs on how to analyze the total value created. They can use it to map how their current business model creates, destroys, and/or misses value opportunities. When managers and entrepreneurs see this, they can more readily identify opportunities to increase shared value.
The Hourglass Model looks beyond the traditional focus on firm and finance, encouraging consideration of value creation across the business system. This “total value creation” perspective recognizes that any business (model) depends on diverse stakeholders that provide diverse forms of capital, such as investors providing financial capital, the environment providing natural capital, and employees providing intellectual and human capital.
The Sustainability Strategy Roadmap
The Sustainability Strategy Roadmap (SSR) helps managers and entrepreneurs plan their sustainability strategy more formally. It can be used to set a focused strategy for shared value creation. The SSR can be used for any type of innovation related to shared value: product, process, organization, or business model innovation.
Use the SSR to clarify your company’s expectations for shared value, develop a blueprint for their achievement, and prioritize initiatives to mitigate risk and increase chances of success.
The Business Model Thinking Framework
The Business Model Thinking framework helps managers and entrepreneurs generate and validate new business models. Companies match opportunities in their portfolio to appropriate innovations.
Only some strategic opportunities are likely to require innovating a business model. For those that do, managers need to understand the peculiar aspects of innovating a business model, as opposed to innovating products or processes. The Business Model Thinking (BMT) framework helps managers do that.
New Models for the Private Sector to Create Shared Value
By innovating business models – the fundamental way a company creates, delivers and captures value – the private sector can use its innovative capabilities to develop solutions that profitably address social and environmental issues.
This report offers tools to help managers and entrepreneurs rethink value creation and align it with strategy. This perspective could help advance progress toward visionary business models that create shared value.
- Main Report (webpage summary, PDF)
- Primer (webpage, PDF)
- To Create Shared Value, Adapt Your Business Model, an article by Florian Lüdeke-Freund and Lorenzo Massa
- NBS-SA Research on Innovative Business Models, an interview with Florian Lüdeke-Freund
- Pathways to Change, a report outlining the business challenge that led to this project
- The initial call for proposals outlining project description