Are the concepts of “collective impact” and “shared value” connected? If so, how?
Consider first the case of collective impact. In their article in the Winter 2011 issue of Stanford Social Innovation Review, John Kania and Mark Kramer explained the concept of collective impact by introducing us to StriveTogether, and extensive, yet focused, collaboration designed to improve educational outcomes in Cincinnati. Collective impact represents “the commitment of a group of important factors from different sectors to a common agenda for solving a specific social problem”.
That definition seems to fit Neighborhoods Without Borders in Flint, Michigan, a group of residents who care about reclaiming the city. “We are mothers and fathers, sons and daughters, grandmothers and grandfathers, business people and pastors, educators and students, administrators and workers who come together in a grassroots community effort to significantly improve the over-all quality of life in Flint neighborhoods.” Neighborhoods Without Borders works closely with WOW Outreach in Flint, a community group which has the mission creating a Community with a ZERO Tolerance for Violence”. Both organizations have been at the center of the rebuilding process in Flint.
Now consider the concept of shared value. Earlier in 2011, Kramer teamed with Michael Porter to describe shared value in the Harvard Business Review. Business can generate shared value by “creating economic value in a way that also creates value for society by addressing its needs and challenges”. At the heart of shared value stands interdependence: “A business needs a successful community, not only to create demand for its products but also to provide critical public assets and a supportive environment. A community needs successful businesses to provide jobs and wealth creation opportunities for its citizens.”
We see shared value at work in the Advancing Manufacturing initiative in Lafayette, Indiana. There, manufacturers have joined with the community college and local government to strengthen the collaborations needed for more productive job training. Employers are finding a steady flow of qualified production technicians to boost productivity, and the community finds more secure employment opportunities for its residents. The collaboration seems to fit nicely the model of “shared value”.
But how might we compare Flint with Lafayette? What is the connection between collective impact and shared value? Reading the two articles side-by-side, we can see — perhaps only dimly, at first — that there must be one. Both articles use the case of cocoa growers in Côte d’Ivoire to make their argument. Depending on your perspective, collaborations to improve incomes among coca farmers can be either collective impact or shared value.
But anecdotes alone are not enough to make a clear case for connection. At the same time, our current strategy frameworks, rooted in neoclassical economics, seem inadequate to the task. Dividing the world into public, private and nonprofit sectors does not help us. Our language is too crude to capture the complexity inherent in collective impact and shared value. We will need a new approach, something we have been developing at Purdue.
We can start by focusing not on what organizations are — public, private, non profit — but what they do. Taking this step, we can distinguish between our market economy and our civic economy. In our market economy, actors engage in activities and investments that are publicly valuable and privately profitable. In our civic economy, actors undertake activities and investments that are publicly valuable, but not privately profitable.
Business dominates our market economy, but our civic economy is far more complex. It is composed of government, educational institutions, a vast array of non-profit organizations and philanthropy. Our market and civic economies are inter-dependent. In our civic economy, we make long term investments that enable our market economy to function and grow. Our market economy, through both taxes and philanthropy, supports our civic economy.
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Within this framework (full size) we can start to see the connection between collective impact and shared value. Both concepts call on us to stretch across the porous boundary between our market and civic economies to collaborate and create new value. Collective impact sees this challenge from the perspective of the civic economy looking across to our market economy. Shared value sees the challenge from the market economy across the boundary to our civic economy. Both concepts call on us to discard the hard edged distinctions of neoclassical economics. They call on us to focus, instead, on creating new value collaboratively.
In both Flint and Lafayette, people are coming together to do just that. Yet, the tie between these two initiatives — Neighborhoods Without Borders, WOW Outreach and Advancing Manufacturing — runs deeper. Both initiatives rely on a new agile strategy process called Strategic Doing. Incubated at Purdue, Strategic Doing is a process which enables people to form action-oriented collaborations quickly, guide them toward measurable outcomes, and make adjustments along the way.
We’re finding that Strategic Doing yields replicable, scalable and sustainable collaborations, regardless of whether we call them “collective impact” or “shared value”. These collaborations are charting pathways to economic transformation, and, in the end, that’s what matters.