Palladium and Dr. Robert S. Kaplan of Harvard Business School discuss how to deliver Positive Impact with the Shared Value Approach in Indonesia
“A true shared value strategy requires the creation of a shared understanding and commitment from multiple players: the corporation, the municipality, the province, NGOs, and local community leaders. The shared value strategy should offer economic benefits to the company, to attract sustainable support from its shareholders and board, as well as environmental and social benefits to the community. And all must participate and contribute if the multiple benefits are to be achieved” - Prof. Robert S. Kaplan -Emeritus Professor at the Harvard Business School and co-creator of the Balanced Scorecard.
Palladium Indonesia was delighted to welcome Professor Robert Kaplan, Emeritus Professor at the Harvard Business School, to meet with over 500 business leaders and senior government officials to explore how Indonesia could unite the success of business with that of wider society through the adoption of the Shared Value approach.
An intensive two-day program consisting of four separate events allowed different groups of leaders to meet with Professor Kaplan and better understand how the Shared Value approach could be become a new source of competitive advantage for businesses and contribute to resolving some of the major societal issues that Indonesia faces. Palladium was supported by United in Diversity (UID), a not-for-profit organization established to galvanise leaders from business, government, and civil society to come together and agree on concrete actions to address the root causes of Indonesia’s problems.
On the 31st of May, Palladium hosted a day-long conference on Executing Shared Value: Delivering Positive Impact in Indonesia that was attended by 300 senior representatives from business, government, NGOs, the media, academia and donor agencies. Following opening remarks by Palladium Country Director Oliver Mathieson, two keynote speeches provided the national context and broader framework for a deeper exploration about what is being done in Indonesia, the challenges faced and opportunities.
Mr Sofjan Wanandi, Chief Advisor to the Vice President set the scene and provided an overview of Indonesia’s economic priorities and how the government hopes to work with the private sector to deliver these.
Professor Kaplan then provided a fascinating insider’s view into the historical context in which the Creating Shared Value approach was developed at Harvard Business School. How the global financial crisis of 2008 – which coincided with the centenary of the school – created renewed impetus for the development of business models and strategies that clearly demonstrate the compatibility of profit and social benefit objectives.
He then set out the case that strategies that create Shared Value will become a powerful force to drive growth in the global economy and help businesses break the cycle of zero-sum completion. He juxtaposed the limitations of some approaches to Corporate Social Responsibility (CSR) with those of Creating Shared Value (CSV). CSR strategy is seen as separate to core business strategy and a company’s profit maximising objectives. As such the resources needed for strategy execution depend on discretionary budgets, are seen as a cost and therefore often fail to deliver impact at scale. Conversely, CSV strategy is integral to core strategy, the way a business competes and maximises profit. CSV realigns the entire company budget to deliver both profit and economic and societal benefit and by doing so, has the potential to deliver impact at a much wider scale, with impact that can be sustained.
Professor Kaplan highlighted the value of the Balanced Scorecard as a tool for managing Shared Value strategy and in particular the value it provides in helping multiple partners develop a shared understanding, developing an agreed approach to handling difficult issues and building trust between all stakeholders involved in strategy execution. ‘Co-creating the strategy map and scorecard creates consensus, commitment and a common agenda’. Professor Kaplan challenged businesses to go further still and broaden the process for strategy development to include representatives from communities and beneficiary groups….developing strategies that result in value created ‘by the people or of the people.’
Two panel discussions then explored the experience of businesses in Indonesia working to deliver shared value and the opportunities and challenges for multi-stakeholder partnerships to create value that addresses societal needs. Panellists included Indonesian business leaders recognised as being at the vanguard of how business can create long-term value for the communities in which they serve as well as representatives from the American and Australian aid programs in Indonesia, academia and social enterprise.
- Charlie Cappetti, President Director, Danone Indonesia.
- Fleur Davis, Minister Counsellor, Australian Department of Foreign Affairs and Trade.
- Aida Greenbury, Managing Director / Chief Sustainability, Asian Pulp and Paper Group.
- Irvan Kolonas, CEO Vasham.
- Cherie Nursalim, Vice President, Gajah Tunggal Group.
- Professor Dr Djisman Simandjuntak, President, Prasetiya Mulya Business School.
- Matthew F. Sinder, Director of Strategy and Development, Gunung Sewu Group.
- Dr Andrew Sisson, Mission Director of USAID Indonesia.
- Josef Winter, President Director and CEO, PT Siemens Indonesia / Executive Board Eurocham.
- Joan Cabezas, APAC Regional Director, Strategy Execution, Palladium.
On the 1st of June, Palladium and UID supported three additional events with Professor Kaplan:
- Professor Kaplan delivered an inspiring speech in front of more than 100 senior government officials at an event organized by Lembaga Administrasi Negara (LAN) - the Indonesian Institute of Public Administration - and supported by Palladium and UID. Professor Kaplan presented two different strategies for the Government to improve its contribution to the development of the Republic. First, to increase its own efficiency by adopting the Balanced Scorecard (like many nations have done successfully in the past) and second, to partner with the private sector and communities to address complex socio-economic challenges like unemployment, regional development or health.
- Professor Kaplan was also a keynote speaker at the Annual Meeting of the International Group of the Indonesian Chamber of Commerce (KADIN). This event was chaired by the Minister of Trade, the Minister of Industry and the Director of the Indonesian Investment Board and attended by 75 Presidents and CEOs of Indonesia’s largest businesses. Professor Kaplan invited all Indonesian businesses to embrace the principles of creating Shared Value to (a) contribute decisively to the development of the Republic and (b) deliver sustainable value to their shareholders.
- Professor Kaplan and Joan Cabezas, Palladium’s Regional Director for Strategy Execution, attended the internal Executive Committee of GT Group (one of the biggest Indonesian conglomerates), chaired by its CEO Mr. Christopher Chan. During the first part of the meeting, GT Executives presented their Shared Value initiatives as well as their newly developed Strategy Map and Balanced Scorecard. This was followed by a vivid discussion about suggested next steps for the execution of the strategy. Professor Kaplan and Joan presented examples of international best practice and case studies that were enthusiastically received by the executives, who expressed their commitment to implement them in GT Group.
Professor Kaplan’s busy final day in Jakarta was rounded off by an interview by Desi Anwar, CNN’s senior anchor and journalist for Indonesia.