Creating Shared Value

Johnson & Johnson Inc. Our Credo We believe our first responsibility is to the doctors, nurses and pa6ents, to mothers and fathers and all others who use our products and services. In mee2ng their needs everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customer's orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit. We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognize their merit. They must have a sense of security in their jobs. Compensa2on must be fair and adequate, and working condi2ons clean, orderly and safe. We must be mindful of ways to help our employees fulfill their family responsibili2es. Employees must feel free to make sugges2ons and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their ac2ons must be just and ethical. We are responsible to the communi2es in which we live and work and to the world community as well. We must be good ci2zens -‐ support good works and chari2es and bear our fair share of taxes. We must encourage civic improvements and beJer health and educa2on. We must maintain in good order the property we are privileged to use, protec2ng the environment and natural resources. Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innova2ve programs developed and mistakes paid for. New equipment must be purchased, new facili2es provided and new products launched. Reserves must be created to provide for adverse 2mes. When we operate according to these principles, the stockholders should realize a fair return.

The primary aim of SiG is to create a culture of con2nuous social innova2on – SiG@MaRS brings this work to Ontario

  Innovative enterprises which combine a strong social purpose with sound business principles

  Contrast to traditional businesses which are primarily driven by the need to maximize profit or charities only driven to serve a social need

  May include both for-profit and non-profit entities

Return Con6nuum

Grant Funded Non-‐Profit (Charity)

RETURN Social (Charitable) Financial

(Commercial)

Tradi2onal Business

Revenue Genera2ng NFP (Social Enterprise)

Social Purpose Business

Target Zone

Social Ventures

  Information and referral   Market Intelligence

  Access to mentors   Access to networks

  Access to talent

  Access to capital   Help with governance

  Innovation in program design + delivery   Access to pro bono professional services

  Workshops Clusters

In October 2011 – SiG hosted Mark Kramer, co-‐author (along with Michael Porter) of the HBR ar2cle en2tled Crea6ng Shared Value at MaRS Mark’s company FSG is a nonprofit consul2ng firm specializing in strategy, evalua2on, and research, founded in 2000 as Founda2on Strategy Group and celebra2ng a decade of global social impact. The following slides summarize Mark’s presenta2on:

HBR January February Edi2on 2011

The long-‐term compe66veness of companies depends on social condi6ons

•  Improving educa2on and skills

•  Safe working condi2ons •  Sustainable use of natural

resources •  A sense of fairness and

equal opportunity •  A transparent business

environment

Slide by Mark Kramer, FSG, October 2011

Business has an essen6al role to play in solving social problems

•  Only companies can create prosperity that funds government and civil society

•  Companies can create sustainable and scalable solu2ons to many social problems in ways that governments and NGOs cannot

•  Businesses can overcome constraints that limit their growth

Past thinking about sustainability has focused too much on the fric6on between business and society rather than their interdependence


Shared Value is: Policies and prac2ces that enhance the compe22veness of a company while simultaneously advancing the economic and social condi2ons in the communi2es in which it operates. Shared Value is NOT: •  Sharing the value already created •  Philanthropy •  Personal values •  Balancing stakeholder interests


Shared Value goes beyond tradi6onal Corporate Social Responsibility (CSR) •  CSR prac2ces such as ethical behavior,

transparency, sustainable use of natural resources, and fair labour condi2ons are essen2al requirements for any successful business

•  Shared Value adds addi6onal opportuni6es to improve social and environmental condi2ons beyond CSR


Traditional Aligned Shared Value

•  Corporate philanthropy is removed fro the core business

•  The key drivers are building community goodwill and a “good corporate ci2zen” reputa6on

•  Corporate engagement focuses on themes/issues related to the company or leverages company assets/ exper2se

•  However, objec6ves are not 6ed to company strategy

•  Key business driver is

reputa6on

•  Corporate engagement is viewed and managed as a key component of the overall company strategy

•  The key drivers are opportuni2es to create shared value for the business and society


Social Need

Business Opportunities

Corporate Assets and Expertise

Shared Value Opportunity

…is found at the nexus of business opportuni2es, corporate assets and social needs


•  Global customers •  Supplier networks •  Government leaders

•  Specialized product knowledge

•  Marke2ng and distribu2on skills

•  Intellectual property

•  Investment capital •  Influen2al voice •  Philanthropy

•  Civil society •  Public sector leaders •  Providers to the base of the

pyramid

•  Needs of the underserved •  Scien2fic and technical

knowledge •  Opportunity for impact

•  Philanthropic partners •  Influen2al voice •  In-‐country programs

Rela2onships

Knowledge

Resources


Habitat for Humanity Interna6onal and The Home Depot Founda6on today announced the na2onal expansion of Partners in Sustainable Building. The $30 million green building program will provide funds and resources over a five-‐year period to help Habitat affiliates build 5,000 homes that meet Energy Star® guidelines or a

na2onally recognized green building standard.

Business Problem & Innova6on •  Cisco’s growth is limited by the

number of trained network administrators worldwide

•  As a result, Cisco established the Networking Academy

•  Developed a distance learning program that combines a web-‐based curriculum with local instructors and lab facili2es

•  Partnered with industry peers, schools, governments and universi2es

•  Focused on economically deprived regions around the world

Social Impact • Over 10,000 Academies established in 165 countries • Over 4,000,000 students have been trained • More than 70% have aWained a new job, a beWer job, increased responsibility, or higher salary

Business Impact • Alleviates a key labor constraint for Cisco customers; Students become familiar with Cisco products; and Strengthened rela6onships with key suppliers, local businesses and government

“Right now, we ask [chari2es and non-‐profits] to take on these jobs. We give them money to do it. They receive the money whether they achieve their objec2ves or not,” Diane Finley, Minister for Human Resources and Skills Development, told The Globe and Mail. “Now we’re saying, ‘All right, we s2ll want you to do this, but you get more money if you actually achieve the objec2ves.”

OWawa looks at rewri6ng rules on charitable giving Bill Curry OTTAWA— From Friday's Globe and Mail Published Friday, Oct. 28, 2011 4:30AM EDT

•  Does your experience in working with corpora2ons lead you to believe CSV is on the way – or not?

•  What do you think this trend could mean for the NFP sector? •  Maybe you think it means nothing

•  Maybe you think the sector has to face the fact that we no longer “own” social purpose work and we have to determine how to posi2on ourselves to come to the table as equals

•  There is an absolute trend to outcomes – to pay for performance – is this a discussion we should be having?

Allyson Hewitt Director, Social Entrepreneurship and Director, SiG@MaRS [email protected] 1.416.673.8410 For more information about FSG visit: www.fsg.org