tion. Doing these things requires a far different approach
to both CSR and philanthropy than the one prevalent
today. Companies must shift from a fragmented, defen-
sive posture to an integrated, affirmative approach. The
focus must move away from an emphasis on image to an
emphasis on substance.
The current preoccupation with measuring stakeholder
satisfaction has it backwards. What needs to be measured
is social impact. Operating managers must understand
the importance of the outside-in influence of competitive
context, while people with responsibility for CSR initia-
tives must have a granular understanding of every activity
in the value chain. Value chain and competitive-context
investments in CSR need to be incorporated into the per-
formance measures of managers with P&L responsibility.
These transformations require more than a broadening
of job definition; they require overcoming a number of
long-standing prejudices. Many operating managers have
developed an ingrained us-versus-them mind-set that re-
sponds defensively to the discussion of any social issue,
just as many NGOs view askance the pursuit of social
value for profit. These attitudes must change if compa-
nies want to leverage the social dimension of corporate
strategy.
Strategy is always about making choices, and success
in corporate social responsibility is no different. It is about
choosing which social issues to focus on. The short-term
performance pressures companies face rule out indiscrim-
inate investments in social value creation. They suggest,
instead, that creating shared value should be viewed like
research and development, as a long-term investment in
a company’s future competitiveness. The billions of dol-
lars already being spent on CSR and corporate philan-
thropy would generate far more benefit to both business
and society if consistently invested using the principles
we have outlined.
While responsive CSR depends on being a good corpo-
rate citizen and addressing every social harm the busi-
ness creates, strategic CSR is far more selective. Compa-
nies are called on to address hundreds of social issues, but
only a few represent opportunities to make a real differ-
ence to society or to confer a competitive advantage. Or-
ganizations that make the right choices and build fo-
cused, proactive, and integrated social initiatives in
concert with their core strategies will increasingly dis-
tance themselves from the pack.