Michael Porter is adamant that organisations must focus on creating shared value

Home / blog / Michael Porter is adamant that organisations must focus on creating shared value
Facebooktwitterlinkedin

Last week I had the privilege of attending the inaugural World Business Forum in Sydney where thought leaders shared their ideas and insights on a range of topics with those attending.  Over the next eight weeks I am going to share the key insights and observations that each of these amazing thought leaders presented beginning with Michael Porter, one of the foremost authorities on modern competitive strategy.

Strategy is not about competing to be the best; in fact one of the worst errors leaders and managers make is to design strategies to compete with rivals on the same dimensions.  Strategy today is about companies defining a distinctive and unique value proposition the company will deliver to its customers.  To find that unique value proposition three questions must be answered:

  • Which customers are we serving?
  • Which of the customer’s needs are we going to master?
  • What price are we going to ask?

Many leaders confuse strategy with operational effectiveness; both are a necessity. Strategy is the roadmap that sets the path to a destination, to reach that destination; strategy needs to be flexible while operational effectiveness is about “doing things better and better”.

CEO’s must be the owners and drivers of strategy within their respective organisations.  They are responsible for ensuring every leader at every level in their organisation understands the strategy.

Michael Porter maintains now is the time for companies to go further. We have entered a participative economy and the opportunity has never been greater to create shared value to drive economic growth.  Business can use profits to make a far greater impact than governments as business revenues are around twenty times greater than current government spending. Getting business revenue growth and investment moving can overshadow what governments can achieve.

Porter maintains that it does not detract from government, it’s more effective way for business and governments to engage with society; it actually creates new opportunities for innovation and adds resources. Where governments can assist is in monetising innovations is through co-investment with the private sector, guaranteeing small business loans, creating favourable tax breaks to reward capital gains and funding research.

The success of a company and the health of the communities around it are mutually dependent. Porter maintains recognising and capitalising on these connections between societal and economic progress has the power to unleash the next wave of innovative growth in Australia.

Only time will tell the extent to which leaders, their organisations and governments embrace this concept.


 

Vivente Australia enables leaders and managers develop the bond between people and performance, creating a powerful advantage: the synergy between people, leadership, management, and culture, produces performance that allows your business to achieve its best.

Facebooktwitterredditlinkedin

RECENT POSTS