In an effort to create societal value, many companies engage in important corporate social responsibility (CSR) initiatives. Unfortunately, admirable as these activities often are, they are not always easy to sustain. From a traditional business perspective, such societally beneficial projects are often considered a cost, and the cost side of a business equation is forever vulnerable. However good a company’s intentions, many CSR programs ultimately depend on the commitment of current management and the profitability of the core business.
Fortunately, some smart companies have found a way out of this trap by designing ventures to not only yield important public benefits but also make money. Our in-depth analysis of how four companies created for-profit initiatives that also have high societal value suggests that each followed a similar step-by-step process to achieve what we call synergistic value creation. As with any kind of new business, the odds of establishing a new business that creates value for both shareholders and the public can be improved with good planning.
For each of these four companies, we analyzed company reports, press articles, case studies and ranking information, and on the basis of these insights, identified the most important activities that aimed simultaneously at creating public and private benefits. Next, we conducted between three and 10 semi-structured interviews with various respondents at multiple levels within each of the companies, and asked them how they developed these new projects. We found that all of them followed a surprisingly similar four-step new business development process.
Step 1: Create mechanisms to gain multi-stakeholder input
Traditionally, companies analyze their internal capabilities and target customer markets to identify new opportunities. The process of synergistic public-private value creation requires a different starting point, since companies generally have a limited understanding of public needs. The companies we observed resolved this issue by creating mechanisms at the outset to bring together actors with very different interests, perceptions and capabilities.
For example, the consumer goods company Procter & Gamble established its Connect + Develop open innovation program to ensure that its business innovation leaders consider external expertise and multiple stakeholders’ perspectives.