How Technology for Good creates sustainable competitive advantage
Editor's note: This is reposted from Ericsson's Technology for Good blog. You can find the original post here.
In recent years, the work of some industries has negatively impacted society, from environmental damage to lack of access or inclusion. There is an increasingly widespread belief that many companies are profiting and prospering at the expense of broader communities, despite an increasing global focus on CSR activities.
“Thin” value, as described by economist Umair Haque in his book The New Capitalist Manifesto, is when companies create value for the business by taking it from consumers without considering the externalities caused by their products. On the other hand, “thick” value is when companies create value for society as well as for shareholders.
Companies that create thick value do it by being so efficient that they decrease the carbon footprint of their operations and create new products that positively impact the environment and people’s lives.
There is an ever growing awareness that governments and NGO’s lack sufficient capabilities to fully meet all of the social problems we face today. And here is where the profitability paradox of thin value becomes clear.
When new innovations, products and technologies become widely adopted, competitive advantage is lost. Consumers want even better performance, usability, and they start asking about societal impact; this is the technology adoption lifecycle that Geoffrey Moore calls Crossing the Chasm.
Businesses that make a profit without “purpose” will ultimately burn their competitive advantage to ashes and end up in a red ocean. Companies infused with purpose, on the other hand, will have the passion to seek out the “shared” value that confers sustainable advantage.
So what companies should do by then? It’s a serious question, and the answer is not simple because it might impact the course and the strategic positioning of a company.
Ericsson was one of the first private companies to add an additional stakeholder to its corporate business strategy along with customers, employees and shareholders, and it is “society”.
Technology For Good is Ericsson’s platform for engaging customers, employees and partners. It builds on our technology leadership and our skilled employees, as we engage in public and private partnerships to help meet global challenges.
Technology for Good engagement creates sustainable competitive advantage and thick value. It is also a source of innovation within the company aimed at societal impact. Aligning our strategic positioning with the Technology for Good concept fundamentally opens up new ways of thinking about our business.
Furthermore, high performing employees are motivated not only by financial compensation but a sense of purpose, which Technology for Good offers. In a marketplace where talent is at a premium, companies that are seen to be contributing to society with thick value have a clear advantage.