Four Steps to Putting Shared Value into Practice

A growing number of organizations in the United States, Asia, and Europe are using the concept of “shared value” to guide their transition to becoming more socially responsible. Our company, Eli Lilly, is among them.

For us, shared value is created when a business applies its assets and expertise to a societal need in which it has a vested interest. That may seem like something we already do. As a multinational biopharmaceutical company, our core business creates fundamental social advancements through the medicines we discover, develop, and manufacture to extend and improve lives. In our 14 decades in operation, Lilly has contributed more than 100 medicines and significant medical advances, including the first commercially available insulin, and the manufacturing and global distribution of the Salk polio vaccine.

Yet companies like ours depend on skilled health care professionals and robust delivery systems to supply medicines. In many low- and middle-income countries, a lack of health infrastructure not only impacts our business, but also impedes the efficacy of traditional medicine donations. Both Lilly and our NGO partners need some degree of sophisticated capability on the ground before we can properly distribute and utilize donated medicines.

These and other factors led us to launch a number of shared value initiatives, beginning with the Lilly NCD Partnership (short for non-communicable diseases) in 2011. Its aim was to address the global diabetes epidemic from a shared value perspective—by training health care professionals and strengthening the delivery of solutions for people with diabetes in under-resourced countries. We began to lay the foundation for Lilly to formally align its business goals with measurable social impact.

For large organizations with storied histories like ours, such an effort is no small feat. As we mark the fifth year on our shared-value journey—and our 140th anniversary as a company—we’ve identified four core lessons that could help other large, multinational organizations looking to embrace shared value and more effectively blend purpose with passion.

Change has to start at the top. The call to change has to come from the very peak of the organizational pyramid; the CEO is in a unique position to drive real change. The CEO must commit to defining the role of the company’s philanthropic efforts, devising new approaches to serving other segments of society, recruiting senior business leaders to join in the effort and, very importantly, clearly communicating a vision to the rest of the company.

This is true for virtually every component of organizational change, and corporate responsibility is no exception. If employees perceive a shared value commitment as the purview of a localized office, there is little chance of it taking root at the heart of the company’s culture.

Our CEO, Dr. John C. Lechleiter, who initiated and continues to oversee our transition from traditional corporate philanthropy to new public-private partnerships with a shared value approach, recognized that traditional giving rarely provides long-term solutions. He embraced the need for change, and clearly articulated it both internally and externally. In an article on reimagining Lilly’s role as a profit-driven enterprise, for example, he wrote:

While it may seem counterintuitive, the mission of a for-profit enterprise is not to make money. Rather, it must have a mission that, when achieved, produces a profit. In other words, a corporation must be aimed at meeting a demand or fulfilling a need; as the corporation serves society, it earns a return for investors.

Set a realistic timeline. Managing expectations is a universal key to success. Ambition and drive are vital to reorienting a company’s approach to business, but large organizations simply can’t change overnight. Efforts to enhance social impact need to fit within reasonable timelines. Employees, customers, shareholders, and investors alike need to be operating under reasonable expectations, clearly set by organizational leaders and communicators.

Lilly has been around since Ulysses S. Grant was president. Our company culture has taken over a century to build. We’re now a large enterprise with about 41,000 employees. For organizations like ours, developing a shared value approach first requires a tremendous amount of internal learning about how our businesses across the world deliver value to local communities, coupled with coordinated and purposeful realignment.

For example, when our CEO aimed to expand on the gains we made through the NCD Partnership, he first created a cross-functional team to develop a shared value-based business model for important markets. The models then needed to be evaluated by a broad group of senior leaders, designed for implementation, and phased into the appropriate markets. These steps necessarily have taken considerable time.

To take another example, Nestle is a stand-out leader on the shared value front, adopting this approach for most every business decision the company makes today. But it didn’t assume this position overnight—in fact, it’d been at it for more than a decade. In 2005, then-CEO Peter Brabeck-Lemanthe initiated the effort to develop shared value as a concept with Michael E. Porter and Mark R. Kramer. The company’s consistent leadership commitment—and ability to adapt and evolve—has positioned it as a shared-value standard-bearer among major multinational corporations.  

Demonstrate success. Sharing success stories regularly with employees helps them see the impact—and the promise—of shared value. It’s also important to champion achievements externally and advocate for change.

We purposefully founded our shared value efforts on rigorous metrics. We share the results throughout the company and with external stakeholders, and make sure they feed directly into future decisions on programs and business goals. Since 2011, the Lilly NCD Partnership has impacted tens of thousands of lives and achieved some significant milestones. The Mexican government, for example, modeled its new national obesity initiative on the successful diabetes program our local partners CASALUD and The Carlos Slim Foundation created. We’ve invested in sharing stories like these not just by distributing press releases, but also by writing executive blogs and op-eds in respected international publications.

Step outside your comfort zone. Change can be uncomfortable. But when 9 out of 10 Millennials—our future workforce—say they believe the “success of a business should be measured in terms of more than just its financial performance,” failure to change can be much worse. Bottom line: You can’t make a big impact without taking big risks.

Our new initiative in China, Lilly Expanding Access for People (LEAP), is our biggest step yet outside of our comfort zone. The program strengthens primary health care systems by educating communities on diabetes and training doctors to better identify and treat the disease. It’s the first shared-value endeavor we’re running directly through our emerging markets business—weaving together our approach to business and social impact at the core. The program will run at a loss for at least two years, while priming the Chinese market for better diabetes care and stronger uptake of treatments (including our competitors). The investments aim to make a positive impact on the communities where we work today, with the hope of strengthening our core business down the road.

There is no simple path to reorienting a large, multinational corporation around social impact. It has taken years to establish our shared-value programs, and it will take several more to realize their full potential. And we’ll continually learn and adjust along the way. These four steps are helping us make shared value more meaningful every day. I hope they’ll offer guidance and encouragement for others facing a challenging—but highly rewarding—road ahead. 

Read more stories by Rob Smith.