Prof. Porter begins his talk by taking us through the various problems the world today suffers from. These include climate change, deforestation, poor nutrition, access to water, health care, food etc. What has changed throughout these years is the awareness of these problems at a global level.
Porter tries to find a role for businesses in helping solve these problems. He begins by identifying and evaluating the current model for solving social problems which includes stakeholders like Non Government Organizations, Governments, Philanthropists, etc. who tend to provide solutions to these problems and businesses which are usually seen as the problem in most cases.
Porter argues that with the help of all the solution structure that exists, we are making incremental progress and have been at these problems for far too long making only small progress. The fundamental problem in dealing with these challenges is the problem of scale.He identifies the problem behind inability to make a large scale impact as lack of resources. With the current model, there isn’t enough tax revenue, philanthropic donations, there isn’t enough money to deal with these problems at scale and hence we need to adapt and change the model to a profit generating mechanism. This is where businesses come in. The idea of “meeting needs at a profit” generates taxes, more donations and motivation to solve the problem too helping to deal with it at an infinite scale, sustainably.
He goes on to to talk about how conventionally we have always thought of business profits and social problems are in a trade off situation which is driven by the greed of businesses to make more profits, causing social problems. However, Prof. Porter states that the opposite is actually true and businesses do not profit from social problems in any fundamental sense in fact it does so by solving these problems. This potential has been realized in the now and we see examples of businesses adapting themselves to be more innovative in impacting these social problems while drawing profits from it creating a Shared Value - addressing a social issue with a business model. Businesses need to change the way they see themselves and embrace this idea to enable others to change the way they see businesses.
Although I agree with Prof. Porter at many levels, I also have my inhibitions in thinking it can be taken as is. Idea of looking at a social problems as an opportunity for businesses to generate profits does aim at providing a well researched, well planned sustainable solution, however the costs to bear for the common person in exchange for these services has not been taken into consideration by Dr. Porter. Take for example the RO water purifiers that most of us take for granted in our households, is rather a luxury for a lower middle class or BPL household.
The idea of creating a Shared Value between social entities and businesses was an enlightening one for me since if both parties would value the same service then both would benefit from it as per how much they set their value as. This idea is not only good for the relationship between businesses and social entities but also between mankind and nature.
In conclusion, I’d say Prof. Porter brings a fresh new perspective to business minded people who would want to do good for the world and stirs some great thoughts in our heads with his ideas worth sharing.
Watch the full talk here: