“He (Michael Porter) has influenced more executives – and more nations – than any other business professor on earth. Now, at 65, he and an all-star team aim to rescue the US economy,” Geoff Colvin of Fortune, wrote in the October 15, 2012 issue. Here’s what Porter and his valued co-author, Mark Kramer, are scripting via “creating shared value”!

Within a few weeks of drawing me into the organising committee of the inaugural Porter Prize in India, academic Amit Kapoor of the Institute of Competitiveness got me face-to-face with Mark Kramer.

Now, what got my adrenalin pumping wasn’t that Kramer and Porter have written, “Creating Shared Value,” for Harvard Business Review in January 2011 and won the 2011 McKinsey Award of the most influential Harvard Business Review article of the year. More impressive was that in a field where the stack of papers you write drive your career, Porter, in 39 years of teaching, has written just seven!

That’s the sort of influence backing CSV (twitter: #sharedvalue) which Porter, 65, has described as “the next thing in strategy.”

So, here’s what CSV is and a dummy’s guide on what’s up on the concept, some of it right here in India: CSV states that business is no longer a fixed pie of value that forces us to try to maximize the amount of that pie that we can take home (meaning our competitors and our customers receive less value).

The pie is no longer a fixed size and we’re not playing in a zero-sum game, the theory states. “It is actually a company’s job to try to make the pie bigger by increasing the amount of value that it offers to the consumer, meaning that both, the company and the consumer, take home more pie. What this boils down to is beginning to think with the mindset that creating social benefits for the community is a powerful way to create economic value for business.”

Enter products that are actually good for the consumer and fulfil their human needs, which in turn increases our profit. Exit, the old model of trying to create a competitive advantage by cutting costs and improving features. That’s no longer sustainable.

A sustainable advantage lies within CSV with more and more communities, meeting their underlying needs. If business can accomplish this, the consumer will even be less price sensitive.

So, as Kramer shared with me in a dual-platform chat, CSV is the ultimate differentiator. Take the Novartis example. They saw a shared value opportunity in selling their pharmaceuticals in rural India. The obstacle wasn’t the prices they charged, but social conditions in the region: a chronic lack of health-seeking behaviour in the community, healthcare providers with virtually no healthcare training, and tens of thousands of local clinics without a reliable supply chain. Novartis saw these social problems as business opportunities: it hired hundreds of community health educators, held training camps for providers, and built up a distribution to 50,000 rural clinics.

In the coming decade, emerging markets with similar challenges are predicted to account for 75% of the growth in global pharmaceutical sales. For 42 million people in India, results can improve the level of healthcare that neither government nor NGOs were providing.

So, CSV isn’t corporate social responsibility (CSR) or even “sustainability.” It is businesses grabbing hold of a social issue that is at the core of their business, and figuring out how to wrap that into their strategy and operations. For example, Mahindra rural loans are aligned to seasonal EMIs, not monthly ones. You can see more examples of Indian companies hosted on fsg.org in a report co-authored by Veronica Borgonovi, Simon Meier, Manjari Sharda, and Lalitha Vaidyanathan. Away from home, McDonalds is substituting raw apples for potatoes, so that US children get healthier.

These CSV companies are using the resources and capabilities of business to solve very specific social problems in ways that are aligned with the company's strategy, that strengthen its competitive positioning, and that enable it to make more money.

As I sign off on the printer’s deadline, Steve Cook of Apple has announced he will make some of his computers in the US by 2013. If Cook gets his CSV right, expect Apple and the Mac to get as much attention as the Big Mac’s raw ones!