Michael Porter: Why business can be good at solving social problems

Summary

The speaker addresses the persistent social issues faced globally, questioning why progress is slow despite awareness. He challenges the traditional view that business is part of the problem and argues that, in fact, businesses, through profit-making solutions, can be a powerful force for social good. The concept of 'shared value' is introduced as a way for businesses to create economic and social value simultaneously, emphasizing the potential for collaboration between NGOs, government, and businesses to drive meaningful change.

Takeaways

• 🌏 The world is facing numerous pressing problems such as poor nutrition, climate change, and lack of healthcare, which are widely recognized and discussed.
• 🤔 The speaker questions why society struggles to address these problems despite heightened awareness and asks if there is a role for businesses in finding solutions.
• 💼 The speaker's background is in business and finance, not social work, which provides a unique perspective on the issue of social problems and their solutions.
• 🏭 Historically, businesses have been seen as part of the problem, contributing to social issues like pollution and unsafe working conditions.
• 🤝 Solutions to social problems have traditionally been sought through NGOs, government, and philanthropy, but these approaches have not been able to scale effectively.
• 📉 The speaker identifies a lack of resources as the fundamental barrier to addressing social problems at scale, with current models insufficient to meet the challenges.
• 💡 The realization that businesses are the primary creators of wealth in society, as they generate profits by meeting needs, is key to understanding how to tackle social issues.
• 🔄 The concept of 'shared value' is introduced, where businesses address social issues through profitable business models, creating a synergy between social and economic progress.
• 🚀 The speaker argues that there is no inherent trade-off between social performance and economic performance, and that businesses can profit from solving social problems.
• 🌱 Examples are given of companies that have successfully implemented shared value strategies, such as Dow Chemical, Jain Irrigation, and Fibria, showing the potential for business to lead social change.
• 🤝 The importance of partnerships between businesses, NGOs, and governments is emphasized for effectively scaling solutions to social problems and creating a new era of collaborative capitalism.

Q & A

What is the main challenge the speaker identifies in addressing the world's pressing problems?

The main challenge identified is the difficulty in scaling solutions to social problems due to a lack of resources, which is a fundamental issue in making a large-scale impact.

Why does the speaker suggest that business is often seen as part of the problem rather than the solution?

Business is seen as part of the problem because in many cases, bad actors have contributed to worsening social issues, such as pollution and unsafe working conditions, for profit.

What role have NGOs and government traditionally played in solving social problems according to the script?

NGOs and governments have traditionally been seen as the primary entities to address social problems, with NGOs experiencing a significant rise in innovation, energy, and talent mobilization towards these challenges.

What is the 'awkward reality' the speaker refers to regarding the progress made in solving social problems?

The 'awkward reality' is that despite decades of effort, progress has been slow, and solutions achieved are small and incremental, with the problems remaining daunting and intractable.

Why does the speaker argue that business is the key to addressing the resource scarcity for solving social problems?

The speaker argues that business is key because it is the primary creator of wealth in society. Business generates resources when it meets needs at a profit, which leads to taxes, incomes, and charitable donations.

What is the 'magic' of profit according to the speaker, and why is it important for solving social problems?

The 'magic' of profit is that it allows solutions to be infinitely scalable. If a business can make a profit, it can self-sustain and expand its solution to a larger scale, addressing social problems more effectively.

What conventional wisdom has historically suggested about the relationship between business profit and social performance?

The conventional wisdom has suggested that there is a tradeoff between social performance and economic performance, with businesses profiting by causing social problems.

How does the speaker's experience with social issues contradict the conventional wisdom about business and social problems?

The speaker's experience shows that businesses can actually profit from solving social problems, such as reducing pollution and improving workplace safety, which contradicts the conventional wisdom.

What is the concept of 'shared value' as introduced by the speaker?

Shared value is the concept of addressing social issues with a business model, creating social value and economic value simultaneously. It represents a higher form of capitalism that meets important societal needs.

What examples does the speaker provide of businesses successfully addressing social problems and creating shared value?

Examples include Dow Chemical leading the move away from unhealthy fats, Jain Irrigation providing drip irrigation technology to farmers, Fibria using eucalyptus for more sustainable forestry, and Cisco training people in IT skills.

How does the speaker believe we can change the world by rethinking the role of business in social problems?

The speaker believes that by changing how businesses see themselves and by fostering partnerships with NGOs and governments, we can tap into the power of business to scale solutions to social problems and create a fundamental synergy between social and economic progress.