Shared Value & Social Value: The Frameworks for Measurable Stakeholder Capitalism
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9-18David: We often hear this old idea, one that has really dominated business for decades, that a company's only real job is to make money for its shareholders. But it feels like that idea is starting to crack. Today, we're seeing these new frameworks emerge that are asking a much bigger question: what is a company's purpose, really?
Mia: That's right. For the longest time, the business world was guided by Milton Friedman's doctrine: the social responsibility of business is to increase its profits. Full stop. And while that shaped decades of corporate life, there’s a growing pushback. People are looking at issues like climate change or social inequality and saying, wait a minute, is a purely financial scorecard really enough?
David: I see. So, this isn't just a theoretical debate. It's a response to real-world problems. But why was Friedman's idea so powerful for so long? And what's fundamentally changed now?
Mia: Well, the logic was pretty compelling in its time. The argument was that by focusing on profit, companies become super efficient, they create jobs, they innovate, and society benefits from that economic growth. The problem is what economists call negative externalities—the costs that aren't on the balance sheet, like pollution or a strained workforce. The critique today is that this singular focus on profit has allowed those costs to pile up, creating a need for a new definition of corporate purpose.
David: But there's a counterargument, right? That if a company gets too distracted by trying to solve all the world's problems, it might lose its competitive edge, fail, and then it can't provide any value—economic or social.
Mia: That’s the classic pushback, and it's a valid concern. But the new frameworks we're talking about today—specifically Shared Value and Social Value—don't see it as a trade-off. They argue that the most successful businesses of the future will be the ones that embed social good directly into their core strategy. It's a shift from just doing good on the side, like through charity, to doing good *by doing business*.
David: So it’s not about giving away a slice of the pie, but about fundamentally baking a different kind of pie altogether.
Mia: Exactly. It’s about moving from a shareholder-only view to what's often called stakeholder capitalism, where you're creating value for everyone involved—employees, customers, the community, the environment, and yes, still the shareholders. The potential here is huge: businesses can become powerful engines for solving social problems, not just contributing to them.
David: Okay, so both of these new frameworks start from the same place: profit alone is not enough. But they must have different approaches. Let's start with the first one, from Porter and Kramer. What is Shared Value?
Mia: Right, so Michael Porter and Clayton Kramer are strategists. Their core question is: How can companies innovate to align profit with social good? They move the conversation away from CSR as a philanthropic afterthought and place it right at the heart of business strategy. Their idea is that solving societal needs can actually open up new markets, boost productivity, and make a company more profitable.
David: That sounds like the ultimate win-win. How does a company actually do that? Is there a roadmap?
Mia: There is. They lay out three main avenues. First, you can reconceive products and markets. Think of a food company developing healthier, affordable options for low-income communities. Second, you can redefine productivity in your value chain. This could be anything from reducing energy consumption and waste in your factories to improving working conditions for your employees, which in turn boosts morale and efficiency.
David: That makes sense. It's about finding efficiencies that are both good for the bottom line and good for society. What's the third one?
Mia: The third is enabling local cluster development. This means investing in the ecosystem around your business—strengthening local suppliers, improving local infrastructure, or supporting training programs. A stronger local environment makes the company more competitive, and the community benefits directly. It’s a very strategic vision.
David: It sounds incredibly powerful, but also… a bit idealistic. Does it have a weak spot? I could see a company picking only the easy, profitable social problems to solve and then patting itself on the back. It feels like there's a risk of greenwashing here.
Mia: You've hit on the central critique. The Shared Value framework is brilliant at providing the why and the how-to from a strategic perspective. It gives managers a clear, compelling vision. But its biggest weakness is the measurement gap. It's less explicit on how you rigorously *measure* the social value you're creating. Without that, how do you hold companies accountable beyond their financial reports? How do you know it's not just good PR?
David: Right. So you can have this amazing strategic vision, but if you can't prove the impact, it might just be a nice story. And that seems like the perfect place to bring in the other framework, from Retolaza and Alzola. It sounds like they're focused on exactly that problem.
Mia: Precisely. If Porter and Kramer are the strategists asking how can we do this?, Retolaza and Alzola are the philosophers and accountants asking, How do we *prove* it? Their starting point is fundamentally different. They argue that any claim of corporate responsibility is essentially meaningless without credible measurement.
David: So for them, it's all about credibility. It’s not enough to say you’re doing good; you have to show the receipts.
Mia: Exactly. Think of it this way: if a company boasts about its positive social impact but can't provide any data or clear metrics, it feels like an empty promise. It’s just a PR statement. Retolaza and Alzola's work is about building the methodological tools to quantify that social value. They are trying to solve the trust problem by making social impact verifiable.
David: That sounds incredibly difficult, though. I mean, how do you put a number on things like community well-being or improved public health? It's not as straightforward as a profit and loss statement.
Mia: It's extremely challenging, and that's the core of their work. They grapple with how to translate these often intangible benefits into meaningful metrics. But their argument is that we have to try. Pushing companies to move beyond just stating their good intentions to demonstrating actual, measurable impact forces a huge shift in how they operate, how they collect data, and how they report. It’s about creating a system of accountability.
David: But does that focus on measurement create its own blind spots? Could it lead companies to only focus on easily quantifiable projects, while ignoring deeper, more complex issues that are harder to measure, like a company's impact on local culture?
Mia: That's a very real risk. It’s the classic what gets measured gets managed problem. If you can only measure certain things, you might neglect others. But the goal of their framework isn't to create a perfect, all-encompassing system overnight. It’s to build a foundation for accountability. It ensures that when a company claims it's creating value for society, that claim can actually be scrutinized and validated.
David: Okay, I think I'm starting to see the full picture now. These two frameworks aren't competitors. They’re two sides of the same coin.
Mia: That's the key insight. They are incredibly complementary. Shared Value, from Porter and Kramer, provides the strategic vision. It’s the engine, showing companies *how* to innovate and find opportunities where business success and social progress intersect. But it lacks a robust dashboard.
David: And the Social Value framework from Retolaza and Alzola is the dashboard. It provides the tools to measure, verify, and report on the impact, ensuring the engine is actually taking you in the right direction.
Mia: Exactly. One provides the why and the strategic how-to, while the other provides the how to prove it. Shared Value without Social Value risks being aspirational but unproven. Social Value without Shared Value might have great measurement tools but lack the strategic drive to create impact at scale. You really need both.
David: So when you put them together, you get a much more complete model for what people are calling stakeholder capitalism. It’s not just a vague idea anymore.
Mia: That's the real power here. It transforms stakeholder capitalism from an abstract ideal into something concrete and operational. A company can use the Shared Value lens to identify a new product that addresses a health crisis in an underserved community. Then, it can use the Social Value tools to measure the actual health outcomes, the economic benefit to the community, and the impact on employee engagement. It creates a complete loop of strategy, action, and proof.
David: This sounds fantastic, but also like a lot of work. Is this really feasible for anyone other than giant multinational corporations with huge resources?
Mia: It's a valid concern. The implementation is complex, and it requires a real shift in mindset and organizational structure. For smaller companies, it might not mean developing complex, bespoke accounting models. It might start with a simpler commitment: identifying one key social metric linked to their core business and tracking it transparently. The principle scales. The goal is to move beyond rhetoric and start building a system of genuine accountability, no matter the size of the business.
David: So, to bring this all together, we've really traced a major evolution in business thinking. We started in a world where the only thing that mattered was shareholder profit, a very narrow definition of success.
Mia: Right. And what both of these frameworks do is radically broaden that definition. They argue for a world where corporate success is measured by both economic prosperity and social well-being. Porter and Kramer give us the strategic blueprint for how to get there, the vision. And Retolaza and Alzola give us the tools for verification, for ensuring those claims of social good are credible and accountable.
David: So the true power here is in combining them. Shared Value provides the strategic how-to, and Social Value provides the how to prove it. Together, they make the whole idea of stakeholder capitalism something real, something measurable, and something that businesses can actually act on.
Mia: Exactly. It's the synergy between vision and verification. That’s what can finally turn the abstract concept of a more responsible capitalism into a practical reality.
David: The journey from a singular focus on shareholder profit to a holistic embrace of stakeholder value represents a profound evolution in business philosophy. While Shared Value ignites the strategic imagination for how businesses can proactively create societal benefit, Social Value grounds these aspirations in verifiable reality, ensuring that good intentions translate into tangible, accountable impact. This powerful synergy compels us to ask: as businesses increasingly navigate a world fraught with complex social and environmental challenges, how will this integrated approach to value creation redefine not just corporate success, but the very fabric of our global economy, fostering a more equitable and sustainable future for all?