I have been reading Maurice Bretzfield’s blog “Shared Value Today” http://sharedvaluetoday.com/. His blog is a must read for non-profits and corporations who want to go beyond “charitable giving” and impact their bottom lines. Mr. Bretzfield’s recent post “Shared Value That Produces Corporate Profit” is on point and should be shared with your networks.

Shared Value That Produces Corporate Profit by Maurice Bretzfield (http://sharedvaluetoday.com/post/8256218043/shared-value-that-produces-corporate-profit)

The Intercontinental Hotel Group forms local partnerships to fund hospitality training schools. Unilever supports disadvantaged women in rural India. Marriott Hotels trains the long-term unemployed. The Coca Cola Company invests $30 million on sustainable water projects in Africa. Why?

These companies are investing in sustainable development projects in local communities because they are driven by clearly defined commercial and financial considerations. And many companies are investing in similar initiatives because they can draw a direct link from social impact to financial return.

Other leading firms, such as IBM, now require that there is value and contribution from both sides when dealing with the non-profit sector initiatives. Firms are looking at ways for their CSR programs to create shared value – value that benefits the community and the corporate bottom line.

Creating shared value is hard work. Because it goes beyond the traditional functions of most corporations, R&D, production, marketing and sales and the like, it takes great internal thought and examination, a new view to markets and truly creative product development. Time and energy must be invested to find creative solutions that the organization can match to a community need while producing profit for itself.

Coca Cola uses two liters of water to create one liter of soda. Thus abundant supply of clean water is a corporate imperative. By funding hospitality training schools Marriott ensures a supply of trained committed workers. And Intercontinental Hotels, as part of its branding effort, has found that by engaging the community they go beyond their brand recognition of being a secure and comfortable place to spend a night to becoming a community hub of activity.

In order to create shared value a company must understand the strategic importance of the interests of the community in which it operates. This is all about solving problems in new ways and making a profit while benefitting the community.

Companies that look beyond the traditional definition of Corporate Social Responsibility (CSR), those that go beyond making donations and lending employees as mentors and volunteers stand to reap great rewards from expanded product offerings and new market development. Thus, CSR goes from being a “feel good” demonstration of a company’s values to a strategic initiative. An initiative that when properly implemented integrates into a company’s competitive strategy and delivers shareholder value.

Far too many companies view their CSR program as being separate from their overall strategic plan rather than looking upon their program as being an integral part of their overall competitive strategy.

In order to be successful these initiatives must have the “buy in” and support of senior management. This becomes possible when managers look upon shared value efforts as potential profit centers rather than cost centers.

Unilever, the global consumer product behemoth, by recognizing the profit making possibilities of community based strategies, has built new business models by looking within communities where traditional solutions simply don’t work. One example is the successful implementation of a direct to home distribution system where traditional distribution models are not available due to lack of infrastructure in Vietnam and India. Unilever supports low-income woman in small villages in these countries as part of a direct sale strategy thus supporting communities while building a new chain of distribution. It’s a win for the company, low income women, consumers and the communities that Unilever serves.

There is hidden value in every company, value that contributes to the welfare of communities and the bottom line of corporations. It must be identified and developed. As Roslyn Dickerson, Senior Vice President of Corporate Responsibility and Public Affairs at InterContinental Hotels Group recently noted in her participation at a recent Shared Value Roundtable (http://www.ssireview.org/articles/entry/qa_roundtable_on_shared_value/) “As time goes on, eventually it’s not shared value, it’s simply new business development. And there are lots of places inside the organization where new business development occurs. It will allow us to have an even broader scope that takes into consideration what’s going on out there in the community, what’s going on in government, and what’s going on in our own business organization”.