Michael Porter, arguably the best-known scholar in the corporate strategy field, recently wrote about “creating shared value” in the Harvard Business Review. This marks an important development in the history of strategic thinking because Porter had not until then acknowledged that building new interactions with entities outside the firm can in itself be a source of competitive advantage. His focus had always been on the firm mastering something unique in its value chain and defending it ferociously against potential attackers, such as competitors, new entrants – or customers.
I first got a little annoyed when I saw the article, because my colleague Venkat Ramaswamy and I (and C.K. Prahalad before us) have long argued that co-creation with other stakeholders outside the traditional definition of the firm is increasingly the source of competitive advantage in the 21st century. In other words, yes, it is about creating shared value, and co-creation is the process that gets you there. We put out a book (The Power of Co-Creation) and a Harvard Business Review article of our own (“Building the Co-Creative Enterprise”), and while both are generating good attention, the buzz we are creating is a fraction of what Michael Porter’s article caused. It felt like the Rolling Stones had stolen a tune from the punk rockers that we are.
This was before I came to my senses and realized that Michael Porter is more than a guru; he’s a brand. Although barely a month old, his article has done more for the co-creation point of view than anything else until then. Now that Michael says it’s OK to seek to create shared value, the number of objections to co-creation has diminished exponentially. “Have you heard the latest tune by the Rolling Stones?” I ask people. “It’s about shared value and co-creation.” Some have already heard it. Others go and buy the CD. Even those who do neither know we’re now cool.
I wrote a brief (and admittedly) snide entry in the HBR blog below the Porter article. Because I was (gently) questioning his legitimacy in the shared value/co-creation field after close to 30 years of saying “strategy is about controlling and defending your value chain,” he patiently explained how the concept of shared value had emerged in his thinking. In the process, he also explains that the new thinking on shared value and co-creation does not replace what he has written in the past, but is additive to it. In doing so, he minimizes the role of shared value and co-creation, limiting it to the icing on the cake (with a narrow sustainability flavor, it seems). The punk rocker in me thinks that he has electrified his guitar a bit but still does not understand the essence of the new music. But it’s OK. Michael and me, we’re now buddies.