The importance of creating sustainable value for consumers: A conversation with Professor Mark Kramer

That's why it was a real honour to hear from Professor Kramer in person when he joined us live from California at this year's inaugural Discovery Retirement Summit. This shared-value pioneer mentioned inspiring case studies of how companies that address society's needs can become more profitable, while benefitting and empowering people at the same time. Below is an exclusive snippet from a chat we had with him.

Q: You're passionate about businesses thriving by 'doing good' for society. But how does one define 'good' in a world where truth is increasing being framed as relative?

That's a wonderful question. You know, I don't agree with the premise that truth is up for grabs. Not in every area, but in many areas, there are facts. So when it comes to climate change, or smoking, or whatever issue you want to pick, the definition of what's in the best interests of people has to be rooted in scientific fact, not passing opinions or fantasy. Of course, there are areas of personal preference and values determined by religious or other kinds of convictions that can differ from person to person. But in the most important areas of human welfare, we have a pretty good fact base about what it takes to sustain a healthy body, a healthy nation, a healthy economy. These aren't mysteries.

I think one of the virtues of engaging companies in the challenges of meeting society's needs is that companies have to pay attention to facts because they live with the consequences. Their product has to actually work. People have to actually buy it. So they can't take a position that is contrary and say, for example, 'I don't want to wear a mask because it doesn't matter.' Well, the reality is it does matter, and we have the data to show it. So while there may be political points to be scored in debating issues or taking a controversial stand, companies can't operate successfully just based on hyperbole. I think that's an important difference, and in some ways, a saving grace.

Q: Overall, how's the business world doing at creating value for society?

I'm on the board of a group called the World Benchmarking Alliance, which was set up by the United Nations Foundation to track corporate progress on sustainable development goals. And, unfortunately, most of the companies I reviewed are just continuing business as usual. They may change what they say on their website or in their public relations materials, but many have not really changed practice. So I think we have a long way to go.

Q: Are there examples of companies leading the cause we can look to?

Well, Discovery is certainly one - when I teach my MBA course on creating shared value, my very first class is about Discovery, because I think it's such a perfect example of competitive advantage and increased profitability coming from addressing a social need - benefiting individuals and society as a whole by helping customers get healthier.

PayPal is another great example - they've purposed to democratise access to financial services, making a payment system available and suitable for low-income people in the US, and increasingly around the world. They're also having a very positive impact in helping to uncover potential terrorism and criminal actions they can trace through the transfer of funds.

There's a company at work in Peru called Intercorp, which has focused its entire strategy on supporting the emerging middle class in Peru. They've started, for example, a number of affordable private schools that give kids an excellent education at a low cost. The schools are profitable and growing rapidly, so it's a wonderful example of a for-profit, mission-driven education firm.

And Walmart too, as the largest retailer in the world, has been a real leader by hugely reducing their own environmental footprint and encouraging all their suppliers to do the same. They've also raised wages and created opportunities for training and advancement for many of their entry-level employees. These are just some good examples.

Q: Perhaps front-runners in the shared-value approach will, through market disruption, build social expectation - so other companies step up. Are you optimistic?

When it comes to this topic, I am! Whether they use the term or not, about 20% of the world's largest companies currently follow a shared-value model, and I think that's significant. Many of them are still at a very early stage, but I'm seeing a lot of momentum to this idea, and that's something to be optimistic about.