The economic impact of the COVID-19 pandemic will be felt long after life returns to relative normality. Thousands of small Australian businesses have been devastated and felt the impact in decreased trade, business closures, staffing issues and interruptions to supply chains.
Both state and federal governments have called upon the business community to creatively devise solutions that will create new jobs and provide a means for job retention for employers – in turn stimulating economic growth.
The concept of shared value
Consumers are overloaded with choice in the market and have been shown to lean towards sustainable and socially responsible businesses. Leading global brands have actioned the consumer sentiment surrounding businesses being more than just profit-making, to introduce protocols and behaviours to have a genuinely positive impact on people and the environment
Shared value, created by Michael R. Porter and Mark E. Kramer, suggests that corporate success along with social and environmental conditions are inextricably linked and therefore the success of one should, in turn, result in the strengthening of the other.
Supporting large corporations that aspire to participate in shared value removes a barrier to entry for these companies and encourages action.
In order to create a shared value partnership, the corporate is required to pivot its business model to ensure that social change can be achieved. This shared value partnership is created in three ways.
- Creating new products and services for new or existing markets which better services societal needs.
- Redefining productivity in its value chain. This might be done by utilising its resources, energy, employees or suppliers differently in order to generate a social benefit.
- Enabling local cluster development, by improving the local operating environment by supporting skill development and capacity building.
Creating mutually beneficial opportunities
In a shared value corporate partnership, small businesses are given the opportunity to innovate, and to position their business model to best cope with economic stress.
Through the formation of local cluster development between small business and large corporates, would ensure sustainable development for small business. In regional communities, these relationships create jobs, upskill employees and instigate ongoing sustainable economic implications for the broader community, not simply where the cluster exists.
Through establishing a mutually beneficial partnership with a small business by offering expertise and resources, a large corporate in return will receive:
- competitive advantage through enhanced supply chains
- advancement of its company culture by embracing a purposeful partnership
- access to new economic opportunities
- ability to meet social procurement targets for Government tenders – the partnership could be tailored to take such targets into consideration during the partner establishment phase
- enhanced staff engagement relating to supporting social needs
Shared value partnerships
The formation of a shared value partnership can appear in various ways including:
- vertical partnership – a small to medium-size business (SME) with an annual turnover of less than $20 million, partners with a large corporate with an annual turnover of over $500 million
- horizontal arrangement – between an SME in any industry of relevance
In keeping with the social agenda of a shared value program, special considerations are made for small businesses that have Indigenous recruitment arrangements or Indigenous staff. Similarly, for small businesses that seek to support the inclusion of females in industries such as construction and infrastructure.
Case study: global engineering company creates shared value with disability job provider
In 2019, Apricot Consulting initiated a shared value program on behalf of the Aurecon group. Financed by the Aurecon group, Apricot Consulting brought together Ability Works, a disability job provider, Transurban and RMIT Business School. Ability Works staff, with the required upskilling and resourcing, were integrated into the Transurban supply chain, providing e–Tags for the organisation.
Aurecon was also able to access consulting advice on disability access design engineering. With RMIT providing research support and marketing consultation, Apricot consulting provided program management, ongoing governance and the competency framework that ensured the success of the program.
As a result of the program, Transurban increased its supply chain capacity and Ability Works were able to increase their employee base by 15%. This partnership continues to yield positive results for all partners involved.
Apricot’s end-to-end business model
Shared value is integral to the social responsibility of corporations. Apricot Consulting has developed a four-step business model that will ensure that all parties involved will see the value and sustainable output for the duration of the program.
Interested to learn more? Click here to contact us for more information about our shared value offering.