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CASE EXERCISES FOR DISCUSSION

Contents

Case Exercise Page

Shared Value Recap: Bendigo 2

Opportunity Sourcing Exercise: Arauco 5

Initiative Design Exercise: BD 7

Shared Value Measurement Exercise: Novo Nordisk 9

Shared Value at the Enterprise Level Exercise: Nestlé 11

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Day One Shared Value Recap Exercise: Bendigo’s Community Bank Model

Bendigo Bank, headquartered in Bendigo, Australia, is a financial

institution that operates primarily as a retail bank. Bendigo was originally

created in the 1850’s as a fixed-term building society to improve

conditions in the Bendigo gold fields during the Victorian gold rush. Since

then, it has evolved and molded over time into a robust network of over 500 bank branches throughout all

states in Australia. In the larger Australian market context, Bendigo Bank is a relatively small player relative to

the “big four banks”, which collectively hold 80% market share nationally (National Australia Bank,

Commonwealth Bank, Westpac, and ANZ), and is continuously seeking ways to grow its market presence.

The “Community Bank” Model is Born

In the mid-1990’s, many communities across Australia experienced

massive bank branch closings, due to a shifting competitive landscape, the

rise of centralized banking services, and high marginal costs involved in

serving remote, rural communities through the traditional branch model.

In the broader economic context, these communities were seeing

consolidation of local agricultural business and centralization of

government services. As a result, local communities were facing economic

vulnerability and decline, as well as broad feelings of disempowerment.

Bendigo Bank’s leadership saw this as a market opportunity: a dearth of bank branches in marginalized, hard-to-

serve areas nonetheless showed high revenue potential when there was a strong interest in community

engagement and advancement, as well as sufficient initiative by community leaders to self-organize.

In order to capitalize on this market opportunity, Bendigo Bank in collaboration with those very communities

designed the “Community Bank” in 1998, an innovative model for shared value banking. A franchise model,

Bendigo’s Community Banks empower communities to manage their own branches, while also mitigating

Bendigo’s costs associated with sustaining branches in hard-to-reach areas. Some of the key elements of this

program include:

Local community leaders apply to become franchisees. Applicants assess the community’s readiness and

receptivity to a new Bendigo Community Bank branch through community engagement activities and by

conducting local market research.

Start-up capital is raised in the community by community leaders from local investors. The community

company also pays the branch’s operating costs and employs the local staff. Directors of the public

company are volunteers.

Between 1993 and 2000, more than 2,050 bank branches closed across Australia. These closures represented a 29% reduction in branch numbers in just seven years and many communities were left without branch banking facilities.

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Bendigo Bank provides the entire banking infrastructure and support, i.e., its license, coverage and the

benefits of a scaled model across many branches in the market. Communities are responsible for local

marketing, acquiring customers, and building on their relationships within the community.

Profits are split between Bendigo and the local community company. The franchisee is required to

reinvest a portion of profits back into community development and advancement, through dividends

and community grants.

Results to Date

Since the program’s inception in 1998, Bendigo Bank’s Community Bank model has resulted in significant

business and social benefit. The program has turned Bendigo’s distribution costs into variable costs, instead of

fixed costs, has helped Bendigo expand into new geographies, and has enhanced brand relationships with

customers and employees across Australia. As the banking business grows in each of these communities, the

local economy grows and prospers. Some of the key business and social results to date are highlighted below.

Business results:

• New business (over 1 million new accounts) in over 300 communities and continued demand for new branches; Community Banks represent ~20% of Bendigo’s business

• $24.9b and 18% CAGR in total business, with the leading franchisee community bank company posting 41% returns on equity

• Total lending growth of 4.8% in FY13, highest amongst competitors (see graph to the right)

In addition, Bendigo’s brand has enjoyed a strong

boost from the continued maturation of Community

Bank over time. Bendigo Bank was voted “Australia’s

favorite bank”, “best day to day banking”, and also

“Business Bank of the year” in 2011 and 2012.

Overall banking satisfaction, which includes a

weighted average of its consumer banking and

business banking functions, also outpace its

competitors as indicated in the graph to the right.

Social results: 1

1 For updated statistics see http://www.bendigobank.com.au/public/community/community-banking/about-community-

bank

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• More than 300 local community banks (over 90 of which are in areas without any other form of banking) have been created, with 1,900 volunteer directors and 73,000 shareholders

• $1.3b AUS in revenue has been shared with communities since the model’s inception

• 1,500 staff are employed locally throughout the network

With a Community Bank in town, communities also find that they are better equipped to deal with crises that

affect the community, such as major flooding or drought. The Community Bank provides a governance structure

which enables community leaders to prioritize and coordinate local priorities for community investment.

Lessons Learned

As the Community Bank model has matured, Bendigo has incorporated several learnings about what makes their

approach to shared value banking successful:

The process for assessing new community branch franchises is atypical. Oriented around “community

readiness”, the assessment process is highly collaborative and involves the engagement of several

community members. The data used to analyze the feasibility of a new branch include non-economic

indicators of community readiness, such as measures of community engagement, community

demographics, and economic growth.

Because of the heavily regulated nature of the banking industry, the management team at Bendigo

recognized that they needed to provide a structure for innovating around the Community Bank model.

Therefore, Bendigo initially created a separate community bank team to focus exclusively on that subset

of the business. Over time, Bendigo integrated the Community Bank into its core retail business.

Great franchisees are more than business leaders, and are actually community leaders who respond to

the idea of “community strengthening” through banking. Bendigo has created mentoring programs with

mentor-directors from other branches in the community bank network to ensure that this type of

leadership is replicated throughout the network.

Bendigo’s leadership team continues to ask “what is the next innovation?” in store for the Community Bank

model, even as online platforms test the need to demonstrate value-add services for its branch banking

customer base, and competitors benefit from Bendigo’s “demonstration effect” of showing there is a profitable

franchise model that is possible in hard-to-reach areas. Shared value is seen as a way for Bendigo Bank to

remain relevant, valued and connected.

Discussion Questions

1. In what ways do you view Bendigo’s Community Bank initiative as an example of shared value? How is

Bendigo’s model different from a business-as-usual approach to growth, or a philanthropic or CSR

initiative?

2. To what extent does the Bendigo’s Community Bank program fit within the intersection of (1) business

opportunities and challenges, (2) social needs, and (3) corporate assets and expertise? To what extent is

the shared value virtuous cycle represented in this case?

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Day One Opportunity Sourcing Exercise: Arauco

Arauco, a Chilean-based global company, is one of the

largest pulp and paper companies globally. For nearly

45 years, it has been in the business of sustainable

development of forestry products. The company was

founded in September 1979 as result of the fusion of

Celulosa Arauco S.A. (1967) and Celulosa Constitución S.A. (1969), both companies had been privatized during

the Pinochet Era. The three main businesses within Arauco are 1) a forestry business, where Arauco owns and

harvests trees, 2) a wood pulp production business (for paper manufacturing and other uses), and 3) an

engineered wood business (where customers can purchase wood for construction). Arauco owns and operates

pulp processing plants and engineered wood manufacturing plants in Chile, Argentina, Brazil, Uruguay, the US,

and Canada. Arauco has over 13,000 direct employees, as well as 27,000 contract workers.

Social and Business Challenges

Starting in 2011, Arauco management started taking a

more active approach in thinking through opportunities

for shared value engagement. They were facing pretty

negative reputations in some of the communities where

they operated, and increasingly felt that being

competitive as a business in the long-term would require

a robust shared value strategy. Specifically, Arauco

identified several potential threats to their business.

From a productivity perspective, the threats of limited

supply of raw materials, inconsistent quality of forestry,

sawmill, and pulp contracts, and low workforce

engagement loomed overhead. In addition, the threat of scarce labor supply was growing. The mining

companies forecasted they would need an additional 23,000 workers for mining projects over the next 5 years,

and found it difficult to attract and retain talented employees to live in the poor communities where it operates.

Turnover was also very high (5-7% turnover per month among forestry contractors), which led to administrative

challenges and cost challenges in constantly sourcing and training new workers. Not only were low-skill workers

in demand, but Arauco also would need to recruit approx. 900 technical workers in the pulp processing

operations, and other employees with specific skills in forestry, sawmills, and maintenance services. In areas

where high school graduation rates were less than 40%, unemployment 12-17%, and lack of vocational program

options, meeting Arauco’s workforce needs would be challenging.

As demand for wood was forecasted to grow, Arauco also was starting to feel constrained by the lack of

availability of additional forest land in their areas of operations in Chile. There were many smallholder farmers

in the surrounding areas that cultivated eucalyptus, but Arauco knew that working with smallholders would

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require new processes, building trust, and designing new business models. Similarly, the smallholders lacked

the inputs, technology, and knowledge to productively harvest eucalyptus that would be attractive to companies,

and were wary of the long payback cycle it would entail.

Shared value opportunity?

Arauco already had an existing portfolio of social and environmental activities that they wanted help in assessing,

and also identifying new opportunities that might closely align with social and business objectives. Arauco’s

activities at the time included:

A program for the efficient use of water within the pulp plant locations

An artisan program to support young artists that carve intricate art out of Arauco wood

A mobile health clinic that treats the workforce on-site to avoid costly, time-intensive medical absences

or trips to the city to a clinic

An investment vehicle through which Arauco helps to fund local infrastructure and public services in

order to increase the environmental protection of surrounding tributaries and improve quality of life for

surrounding communities

Training programs for local population around forestry occupations such as honey production or forest-

compatible crops

Scholarships for local community members

In terms of Arauco’s expansion plans, the timing couldn’t have been better – Arauco was planning to invest US

$2.1 billion in Chile (including investing in a new pulp plant open up a new pulp plant), and saw this new

investment as an opportunity to do things differently. Within this context, Arauco leadership felt that the

company could be doing more, and key internal stakeholders were intrigued by the concept of shared value. The

company invited FSG to help them assess their current efforts and to identify potential shared value

opportunities.

Discussion Questions

1. How would you assess Arauco’s existing social and environmental efforts using the 2x2 portfolio

framework?

2. Identify the social problem(s) and key business needs and opportunities in the case, and identify Arauco’s

corporate assets. Based on this analysis, what is the full shared value opportunity set? How do IHG’s

existing efforts address these opportunities? What opportunities is the company not yet addressing?

3. What criteria would you use to determine Arauco’s strongest shared value opportunities? Using these

criteria, which potential initiatives present the strongest shared value opportunities? What information

would you need to make the business and social case for these two efforts?

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Day Two Initiative Design Exercise: BD

Becton, Dickinson (BD), founded in 1897, is a global medical technology

company that manufactures and sells medical supplies, devices, laboratory

equipment, and diagnostic products. Based in New Jersey, BD operates in

over 50 countries worldwide and employs 30,000 people, with $8.1 billion in

annual revenue (2013).

Context

In the early-to-mid-1980s, journal articles, Center for Disease Control (CDC) data, and advocacy by academics

and healthcare worker unions raised the issue of needle-stick injuries and their potential to transmit the HIV

virus and other infections to healthcare workers. Several visible cases of injury, combined with effective

activism, gained the attention of the health field. BD recognized this health and safety problem as a social need

and a business opportunity, and in 1988, it introduced the first safety syringe, incorporating a sliding safety

shield to protect the needle after use, reducing the risk of injury and infection. To pursue this opportunity:

• BD needed to understand the range of usage circumstances that presented sharp object injury risks to

health workers and understand how product innovations could address the issue

• Given the initial lack of prioritization of this issue by healthcare organizations, BD would have to develop

a strategy to engage healthcare facilities, frontline workers, and their stakeholders

More Than a Product Solution

Realizing that product development alone would not be enough, BD built a more comprehensive shared value

strategy:

• Reconceiving products and markets: BD developed the industry’s broadest array of safety-engineered

devices, including “needleless” systems that eliminated the need to use traditional needles in the

highest-frequency category for sharps injuries

• Improving the local operating environment: BD forged local partnerships and health clusters to help

raise awareness of the issues, influenced national policies on healthcare worker safety, trained hospital

workers, and provided unrestricted grants for tracking and analysis of needle-stick injuries. This served

to accelerate the health system’s adoption of safety devices

Over a 25-year period, BD’s safety strategy, first in the US and then globally, has led to substantial business

growth and reduction in sharps injuries.

Business results:

• BD’s safety devices grew from approximately $5 million in revenue (1988) to approximately $250 million

in revenue (1999) to about $2 billion in revenue (2013)

• Sales of safety devices in emerging markets have accelerated, with 2012 growth of 25%, and over 42%

growth in China alone

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• Safety devices have been BD’s single largest source of growth over the past 25 years, and BD leaders

anticipate that safety-engineered devices will continue to be a source of positive sales growth for the

company over the next five to ten years

• BD has gained competitive advantage and enhanced its margin in a traditionally lower-margin, high-

volume business

Social results:

• Data from the International Healthcare Worker Safety Center indicated that sharps injuries to health

care professionals declined by 51% between 1993 and 2004

• By the late 2000s, BD supported policy changes in many countries, including the United States, the

European Union, Russia, Brazil, and Taiwan; key legislation required the use of safety devices in health

facilities

BD’s remarkable growth in safety products has illuminated at least two key lessons:

• BD was able to design products and provide comprehensive education to local providers by partnering

with leading scholars, researchers, and healthcare worker safety advocates

• BD continues to innovate, developing new safety products and incubating opportunities in developing

countries through its Global Health function; products such as the Emerald Syringe, which has reuse

prevention and safety features, will reach more health workers globally while also reducing cost and

waste

BD believes that there are still substantial opportunities to improve safety:

• In the U.S., non-hospital sites have not fully transitioned to safety technology

• Internationally, most countries have lower rates of transition to safety devices versus the US

• Based on the high infectious disease prevalence among patients in many developing countries, there is

an important need for safety products in areas such as sub-Saharan Africa

Discussion Questions

1. What were the key factors that led to BD’s success?

2. What social and business goals could BD set for its safety initiative going forward?

3. In what ways might BD evolve its safety strategy to take advantage of emerging opportunities?

4. Using the lessons from the BD case, design your own shared value initiative.

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Day Two Shared Value Measurement Exercise: Novo Nordisk

Context In the early 1990s, China was an undeveloped diabetes market. Though the prevalence of diabetes was rising

rapidly (the number of people with diabetes was predicted to reach 130 million by 2030), 70 percent of Chinese

diabetics were undiagnosed. Of the remaining 30 percent, just one in 10 successfully managed his or her

condition. These challenges presented Novo Nordisk, one of the world’s largest healthcare companies and a

leader in diabetes care, with a promising opportunity to pursue shared value. Given the significant growth

opportunity in China and the potential to make a meaningful impact on a pressing health problem, Novo Nordisk

entered the Chinese insulin market in 1994.

Comprehensive Multi-Pronged Strategy

As Novo Nordisk prepared to enter the market, the company identified many factors limiting the scale and

effectiveness of China’s existing diabetic care system. In order to improve patient outcomes and build the

Chinese insulin market, the company designed a comprehensive shared value strategy to address the following

barriers:

Low diagnosis rate of diabetes

Low awareness and widespread misunderstanding of diabetes treatment options among the general

population

Insufficient number of properly educated healthcare professionals

Novo Nordisk was able to strengthen its presence in China through a range of activities at all three levels of

shared value creation:

1. Reconceiving Products and Markets

In 2002, Novo Nordisk established an R&D center in China, which has helped the company tap into a

talent pool of highly qualified Chinese scientists and develop appropriate products that were well

adapted to local needs. The improved market understanding that Novo Nordisk gained through its local

operations has strengthened its competitive advantage. For example, Novo Nordisk’s improved

understanding of differences in culture and language led the company to rename its Novolin insulin

product to “Nuo He Ling,” which, when spoken aloud, sounds similar to its English name, but also

translates to “commitment, harmony, and effectiveness” in Chinese. Furthermore, the product was

optimized with a modified dosage to better match Chinese physiology.

2. Redefining Productivity in the Value Chain

To secure a steady future supply of high quality insulin, Novo Nordisk invested in building out local

production capacity. It opened its first local production facility in Tianjin in 1995, hoping to gain

production efficiencies and respond more quickly to market demand. In addition, the Tianjin factory was

designed to achieve a 20% improvement in CO2 emissions, energy efficiency, and waste performance

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compared to the best in class Novo Nordisk production facility in Brazil, while also decreasing the

construction and operating costs of the plant. The Tianjin factory and Novo Nordisk’s other in-country

investments were expected to create jobs and stimulate economic development while reducing

transportation costs and shrinking the carbon footprint of Novo Nordisk products sold in China.

3. Enabling Local Cluster Development

Prior to Novo Nordisk’s entry into the market, China lacked the necessary services, institutions, and

infrastructure to provide the physician training and patient education needed for effective diabetes

care. In the early 1990s, only about 1% of China’s two million physicians had up-to-date knowledge of

diabetes treatment, and knowledge of diabetes in the general population was even lower. There was

also a significant stigma associated with the disease, stemming from the misconception that insulin was

addictive and similar to taking heroin. Finally, among those who did seek treatment, most were treated

with animal insulin, which physicians in developed countries considered to be unsafe for human use.

Given the Chinese market’s limitations, Novo Nordisk invested in a broad range of cluster-strengthening

initiatives. First, it partnered with the Ministry of Health and the Word Diabetes Foundation to facilitate

physician training with a focus on prevention, screening, and optimizing treatment. Secondly, Novo

Nordisk operated several education programs to support patients in using Novo Nordisk’s insulin

products optimally, and to facilitate important lifestyle changes. Lastly, the company worked with the

World Diabetes Foundation and the Chinese government to develop and update national standard

treatment guidelines.

Novo Nordisk’s comprehensive set of interventions enabled reinforcing activities that strengthened the value to

all actors in the diabetic care system. In the process, Novo Nordisk’s approach demonstrated the company’s

long-term commitment to changing diabetes in China, enabling the company to build trust and reputation

among physicians, and strengthen relationships with key government agencies. Today, Novo Nordisk is the

leading diabetes care company in China, and is leveraging its experience in that country to expand its presence

in new markets.

Discussion Questions

Using the shared value measurement

framework, design a measurement strategy that

would enable Novo Nordisk to understand what

areas of their strategy are making the most

progress and what the long-term social and

business impacts of this approach are.

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Day Three Shared Value at the Enterprise Level Exercise: Nestlé

In 2006, Nestlé Chairman and then-CEO Peter Brabeck-Letmathe made Nestlé the first company to publicly

adopt shared value as an enterprise-wide strategy. As he noted in his biography, “It is clear that you can’t run a

business without a society to run it in. Therefore, our responsibility, besides to our shareholders and investors, is

also towards society.”2 The commitment to create shared value finalized a transition that had begun at the

World Economic Forum in Davos the year before, when Brabeck-Letmathe stated, “I do not believe that I have

to give something back to society, because I haven’t stolen anything from it; I am convinced that through our

business activities I have already created value for society.”3

What remained, however, was to roll out the new company-wide shared value strategy across 328,000

employees in over 80 countries.

Background

Nestlé had a long history of creating positive societal impact. As far back as 1997, Brabeck-Letmathe reoriented

the company from its focus on food to a broader focus on nutrition, health, and wellness, setting the stage for

the adoption of shared value as a guiding principle.

Nestlé’s business had other obvious intersections with societal issues beyond nutrition. Its products depended

on agricultural inputs from farmers, whose wellbeing – along with the wellbeing of their rural communities –

was critical to Nestlé’s success. Among other shared value initiatives focused on farmers, Nestlé had been

developing “milk district” clusters that built agricultural capacity and created jobs in rural communities since the

1920s. In addition, Nestlé was committed to promoting effective water use management practices to reduce

business and social risks related to water quality and availability.

Nestlé’s shift towards shared value occurred in the context of a rapidly evolving external environment for

consumer product companies. By 2030, the world will need 30 percent more water, 40 percent more energy,

and 50 percent more food to keep up with rising demand.4 As two billion people rise to join the middle class

worldwide, pressures on resources and demand for high-quality, nutritious products will increase. 5

Furthermore, Nestlé projects that must of its future growth will take place in emerging markets. In 2011, the

company’s business in emerging markets grew by 13%, compared with 4.3% growth in developed markets.

Enabling Shared Value at the Enterprise Level

“There was a conscious desire to look for opportunities where the interests of society most closely intersect with

the interests of our shareholders in the most scalable way,” said John Bee, Nestlé’s Public Affairs

2 Friedhelm Schwarz, “Peter Brabeck-Letmathe and Nestlé.”

3 Friedhelm Schwarz, “Peter Brabeck-Letmathe and Nestlé - A Portrait: Creating Shared Value,” Stämpfli, 2010.

4 “The Stress Nexus,” BusinessDay, 24 January 2013,

http://www.businessdayonline.com/NG/index.php/analysis/commentary/50585-the-stress-nexus. 5 Peter Voser, “The Stress Nexus,” Project Syndicate, http://www.project-syndicate.org/commentary/the-coming-age-of-

energy--water--and-food-scarcity-by-peter-voser.

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Communications Manager. “It was as much about deciding what not to do as deciding what we should do.

We’ve seen a situation where, for example, pharmaceutical companies declare their intentions to go carbon

neutral. That’s an honorable thing to do, but it’s not going to solve climate change because relatively speaking,

they are not a big emitter.”6

The mandate to focus on the subset of societal issues where Nestlé could achieve the largest impact in the most

scalable manner led the company to target its shared value activities in three areas – nutrition, rural

development, and water. With a strong commitment to create shared value across the company, Nestlé turned

to its operational units to set specific shared value goals in each of the three areas.

The goal-setting process resulted in the following commitments across the three shared value themes:

Nutrition: To help address undernourishment and malnutrition as well as the burden of obesity and

related non-communicable diseases, Nestlé committed to:

Using science-based solutions to improve consumers’ health and wellbeing through food and

diet, particularly for low-income people with specific nutritional needs

Generating greater awareness, knowledge, and understanding among consumers through clear,

responsible communication

Rural Development: To help both secure and improve the quality of raw materials, lower procurement

costs, and build brand preference, Nestlé committed to:

Doubling the amount of Nescafé coffee purchased directly from farmers

Increasing the percentage of cocoa purchased through Nestlé’s Cocoa Plan7 to 11% of the global

supply

Conducting responsible sourcing audits across all locations and spend categories

Developing and implement a responsible sourcing traceability program

Water: To protect the long-term availability of raw materials including water, reduce costs, and reduce

operational risks, Nestlé committed to:

Achieving water efficiency across operations

Advocating for effective water policies and stewardship

Treating operational and manufacturing discharges effectively

Working with suppliers, especially farmers, to improve their water management practices

Raising awareness of water access and conservation8

Many existing policies and procedures could be adapted to support these goals. For instance, Nestlé’s existing

60/40+ approach to product development helped guide the development of enhanced nutrition products. The

approach required at least 60% of participants in a blind taste test to prefer the new nutrition product over the

most prominent competitor, to ensure commercial viability. The approach also required a nutritional “plus”

6 FSG interview with Janet Voûte, Global Head of Public Affairs, and John Bee, Public Affairs Communications Manager,

1/31/13. 7 The Cocoa Plan is a Nestlé initiative through which the company works with small-scale farmers to ensure the supply of

high-quality, sustainably sourced cocoa, supporting community development and meeting certified ethical and environmental standards. 8 Nestlé, Creating Shared Value Report 2011, http://www.Nestlé.com/csv/Nestlé.

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component based on criteria recommended by nutrition experts. Finally, to validate the product’s viability even

further, Nestlé conducted local taste tests to ensure that the product met the nutritional needs and taste

preferences of local consumers.9

Given that Nestlé’s operational units needed to be involved in shared value strategy development and

implementation, Nestlé wanted to ensure that all employees understood shared value and the strategic

imperative to adopt it. As Bee notes,

“Shared value became the leitmotif for our management conferences. Every time we had an

opportunity to get in front of management, we talked about shared value. We created a course for the

top 3,000 managers and potential managers to learn more about the idea. We created a forum to build

public excitement about the idea, and got the [country] markets involved. We told business units that

we’d give them whatever support we could to help them implement shared value. Then we started on a

trial basis.”10

Reporting on shared value strategy also became a part of manager responsibilities. Market heads are now

expected to present plans to management every three years, and headquarters has helped to coach markets in

how to incorporate shared value into these plans.

Although each business unit implements shared value strategies at the country market level, Nestlé also created

global structures to support shared value across the company. The company has a CSV Alignment Board that is

chaired by the current CEO, Paul Bulcke, and three sub-groups (the Operations Sustainability Council, the Brands

and CSV Advisory Team, and the R&D Sustainability Council) report to this Board. The Board is responsible for

the broader shared value agenda as well as other aspects of Nestlé’s interaction with society, such as

compliance, sustainability, and social performance reporting.11

Nestlé also established an external CSV Advisory Board to assist in developing the shared value concept at

Nestlé. The Advisory Board includes international experts in shared value and experts in Nestlé’s three shared

value themes.12 The Advisory Board provides guidance to the CEO and Chairman on how to organize internally

and how to focus the shared value efforts.

The Challenges of Shared Value at the Enterprise Level

Despite Nestlé’s success in incorporating shared value into the business, some challenges identified at the

outset continue to affect how widely shared value is adopted at Nestlé. Because implementation of shared value

initiatives occurs at the market level, success depends on markets’ understanding of and belief in the strategic

benefit of shared value. For this reason, implementation can be uneven across geographies. “Quite a few

markets said, ‘this is a developing country and these themes make absolute sense.’ In developed markets, on

9 Ibid.

10 FSG Interview with Janet Voûte and John Bee.

11 FSG Interview with Janet Voûte and John Bee.

12 Nestlé, Creating Shared Value Report, 2011.

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the other hand, they say, ‘rural development is not relevant to us; we can’t talk about it,’” says Bee. “There are

European markets that find the concept more challenging.”13

Nestlé also encountered resistance from those who focused on sustainability and felt excluded by the focus on

shared value – at the perceived expense of successful sustainability programs that resonated with consumers.

“’Why am I less important?’ is something people struggled with,” says Janet Voûte, Nestlé’s Global Head of

Public Affairs.

Finally, while Nestlé has proven its commitment to long-term strategies – one of the reasons it has eschewed

publishing quarterly earnings – pressure from revenue and profit targets has caused managers to prioritize

short-term traditional business projects over long-term shared value opportunities in some markets.

Discussion Questions

1. What elements at the enterprise-level were most relevant for Nestlé to address?

2. What internal factors were most powerful in bringing about Nestlé’s shift to embedding shared value in the

company?

3. What next steps would you recommend to address Nestlé’s ongoing challenges?

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Ibid.

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Appendix 1: Nestlé’s 2011 Growth Highlights

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Appendix 2: Nestlé’s Corporate Principles

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