The Collective Impact Framework to Achieve Shared Value
Creating shared value, both financially and socially, has recently become an imperative for corporations, for two reasons:
- The legitimacy of business has often been put into question, with companies seen as developing and prospering at the expense of community.
- At the same time, many of the world’s problems are impossible to be addressed without the expertise and scalable business models of the private sector. Examples around the world have demonstrated that for-profit organizations are able to pursue financial success in a way that also yields societal benefits.
However, businesses inevitably confront many challenges when pursuing shared value strategies as they don’t operate in isolation. Societal conditions, government policies, cultural norms are among a range of conditions that may impact the businesses efforts while being out of the control of any company. In other words, governments, NGOs, companies, and communities all have essential roles to play in the ecosystem of shared value
Kania & Kramer (2011) introduced a Collective Impact
framework that facilitates successful collaborations in the social sector allowing companies to not only advance social progress, but also find economic opportunities that others miss. The framework is based on the idea that social problems exist because of a complex combination of actions and role players from all sectors, therefore they can only be solved by the coordinated efforts of these players.
THE FIVE ELEMENTS OF COLLECTIVE IMPACT
- A COMMON AGENDA. Before employing a collective impact approach, each players has typically treated the problem solely from its own perspective. This framework fosters a shared understanding and requires a shared vision for change and joint approach to solutions. The agenda must take each stakeholder’s perspective and interests into consideration.
- A SHARED MEASUREMENT SYSTEM. A short list of indicators on performance measurement should be agreed by all parties. This can help formalise the common agenda, establish a basis of common understanding on what works and what doesn’t work as each participant takes action, and set the stage for ongoing course corrections.
- MUTUALLY REINFORCING ACTIVITIES. Each participant plays a different role in collective impact efforts, so the engagements for each are different. As a part of the effects, each participant should focus on what it can do best that mutually reinforces the effects.
- CONSTANT COMMUNICATION. All stakeholders should engage in frequent and structured communication to build trust, review progress, and solve problems with a joint effort. In addition, effective group communication can foster legitimacy, momentum, and learning.
- DEDICATED COORDINATOR. A separate, independently funded staff to support and coordinate the project is needed to guide the strategy, provide support, review progress, coordinate resources allocation, and keep various working groups aligned and informed.
Companies that use a collective impact frame to achieve their shared value are able to address the question of legitimacy of their business, create competitive advantages while implementing social progress with other involved parties, and improve their financial prospects by justifying the company’s investments.
Kania, J. & Kramer, M. (2011). Collective Impact. Stanford Social Innovation Review.
Kramer, M. & Pfitzer, M. (2016). The Ecosystem of Shared Value. Harvard Business Review, 94 (October), 81-89.