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"An idea that is pervasive in corporations in both America and Europe and prevalent in business schools, management journals and textbooks is that the goal of a firm is to maximize shareholder value. It’s prevalent even though leads to unsound management practices. Jack Welch, considered by many to be a leading practitioner of the idea, recognized in 2009 that shareholder value is a result, not a strategy. Worst of all, maximizing shareholder value creates the risk of disruptive innovation."
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They [Apple] can do it because Apple hasn’t optimized its organization to maximize profit. Instead, it has made the creation of value for customers its priority.
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As a result, the transition from shareholder value to customer delight, as well as to the radical management principles needed to support the transition, is now inevitable.
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"You might disagree with Milton Friedman's famous claim that the sole social responsibility of business is to increase its profits. But you can't deny that it sounds simple and straightforward."
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The closest it comes is with Taft's definition of stewardship: "the proposition that one's true purpose — and that the ultimate purpose of organizations and of our communities — is to serve others."
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Business-as-purely-altruistic endeavor won't get you far.
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"We live in a world of mounting performance pressure. Our Shift Index reveals that return on assets for all public companies in the US has eroded by 75% since 1965. Companies clearly are failing to respond effectively to these mounting pressures. If we hope to turn this around, we need to step back and take a systematic look at the performance levers that drive these results and question the approaches of the past. "
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Most businesses can be understood as bundle of three core operating processes, each driven by a unique performance lever. These three operating processes are: customer relationship management, product innovation and commercialization and infrastructure operation
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In most industries, customer loyalty is eroding, leading to a significant reduction of the average life of a customer. To make matters worse, margins are eroding as well, diminishing the profit generated per year of a customer relationship. In many industries, the cost of customer acquisition is also rising
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"Le thème de l'innovation sociale est apparu dans les années 1960, porté par des théoriciens du management comme Peter Drucker ou des entrepreneurs sociaux comme Michael Young, le fondateur d'Open University. Mais il n'a vraiment pris son essor que depuis une dizaine d'années, en redessinant la frontière parfois floue entre entreprise et société civile, l'une s'inspirant de l'autre et réciproquement."
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Depuis longtemps les modèles d’affaires et de management se sont haussés au niveau de l’innovation technologique. L’art d’organiser les hommes, de jouer de leurs interactions, est au cœur de la création de valeur. Certains économistes vont plus loin, en se demandant si l’innovation sociale ne jouera pas demain un rôle comparable.
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James Taylor la définissait en 1970 comme “de nouvelles façons de faire les choses dans le but de répondre à des besoins sociaux”. Cela peut tenter deux types d’acteurs: les militants et, comme chez Schumpeter, les entrepreneurs.
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"Another obstacle to the impact economy's expansion came crumbling down earlier this week when New York Governor Andrew Cuomo signed legislation creating a legal structure for social enterprises in his state.
The bill allows corporations to organize themselves as Benefit Corporations, for-profit entities that have a specific social mission. It had languished for several months on the governor’s desk until a spate of late-year legislation was completed, but passed New York’s divided legislature unanimously."
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The law mandates that company directors consider not just bottom-line profit, but also their business’ social and environmental impact, as they make governance decisions. Without the new framework, businesses seeking to combine profit-making with good works face potential legal challenges, difficulty attracting capital and thorny issues around how to sell or scale their firms.
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Now, the biggest challenge is to induce ever-larger and more varied companies to adopt the governance framework. Coen Gilbert hopes to see more startups and established companies taking advantage of the legal change, and perhaps even larger public companies.
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The JWT’s trendspotters recently included The Rise of Shared Value in their Top Ten trends for 2012:
“The Rise of Shared Value: Rather than simply doling out checks to good causes, some corporations are starting to shift their business models, integrating social issues into their core strategies. The aim is to create shared value, a concept that reflects the growing belief that generating a profit and achieving social progress are not mutually exclusive goals.”"
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A big part of the problem lies with companies themselves, which remain trapped in an outdated approach to value creation that has emerged over the past few decades. They continue to view value creation narrowly, optimizing short-term financial performance in a bubble while missing the most important customer needs and ignoring the broader influences that determine their longer-term success.
"A growing number of companies known for their hard-nosed approach to business—such as GE, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart—have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance. Yet our recognition of the transformative power of shared value is still in its genesis. Realizing it will require leaders and managers to develop new skills and knowledge—such as a far deeper appreciation of societal needs, a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it."
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A growing number of companies known for their hard-nosed approach to business—such as GE, Google, IBM, Intel, Johnson & Johnson, Nestlé, Unilever, and Wal-Mart—have already embarked on important efforts to create shared value by reconceiving the intersection between society and corporate performance. Yet our recognition of the transformative power of shared value is still in its genesis. Realizing it will require leaders and managers to develop new skills and knowledge—such as a far deeper appreciation of societal needs, a greater understanding of the true bases of company productivity, and the ability to collaborate across profit/nonprofit boundaries. And government must learn how to regulate in ways that enable shared value rather than work against it.
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Companies providing workplaces that are more effective for knowledge work are seeing higher levels of employee engagement, brand equity, and profit, with profit growth up to 14 percentage points greater than those with less effective work environments.
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Our research indicates that if organizations provide work settings that support today's dynamic ways of working, they can reduce real estate and improve their company's performance at the same time - they can do more with less."
To prevent the negative tangible results organizations must comprehend and manage the intangibles.
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