‘Creating Shared Value: How to Reinvent Capitalism and Unleash a Wave of Innovation and Growth,’ Michael Porter and Mark Kramer (Harvard Business Review: 2011)

What: This is a concise outline of Porter and Kramer’s Creating Shared Value (CSV) approach to business.

Thesis: “It is not philanthropy but self-interested behavior to create economic value by creating societal value.” (16)

Key Idea: To look after oneself in business is (also) to look after others.

Reflections: Porter and Kramer aim to expand the aperture of business thinking while leaving the frame intact: but the frame needs to expand, too.

In framing their thesis, the authors invoke Adam Smith, who famously observed in Wealth of Nations:

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own self interest.”

However, it was also Smith who begins his Theory of Moral Sentiments by stating:

“How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”

The key insight necessary for expanding the CSV frame is to see that Smith is talking about the same thing in both passages. The self-interested self is interested in others.

Let’s say that an economy that’s doing what it should adds value to its participants lives through their exchanges. Is there anything that we communicate to one another through our business transactions that isn’t itself a means of exchange? (You know: money, services, swag, etc.) Sure, we communicate lots of things. But what do we communicate that adds economic value–which isn’t itself a means of value? Maybe just this delight in the well-being of others. In fact, maybe that’s all.

I think Kramer and Porter’s CSV framework has the power to remind us of something central to our exchanges. Economic self-interest, rightly understood, is not solipsism. It’s not simply a matter of my private values and choices.

If we really understand ourselves, we’ll see that economic self-interest delights in the delight of others. And we also relate to ourselves as others. Thus, our exchanges communicate value that they don’t exchange. That’s exactly their point.