Shared Value and Co-innovation

The Shared Value (Creating Shared Value) approach and co-innovation are two major levers to transform the Procurement function into a driver of growth and sustainability. By collaborating closely with suppliers, companies can not only optimize their costs and processes, but also develop innovative solutions that create value for all stakeholders: customers, employees, local communities and the environment. In this article, we will discover what the notion of shared value covers, how co-innovation is a performance catalyst and how to implement these approaches as part of a Responsible Procurement strategy.

What is shared value?

The concept of shared value (created by Michael Porter and Mark Kramer) consists of rethinking the role of the company in society, aligning its economic objectives with social and environmental benefits. Concretely:

• Creation of economic value: improving competitiveness, innovating on products and services, reducing costs, optimizing processes.
• Creation of societal value: contributing to local development, protecting the environment, ensuring the well-being of communities, while responding to customer needs.

Unlike philanthropy or « defensive » CSR, shared value involves reconfiguring core activities (production, distribution, procurement, etc.) to generate financial and societal benefits simultaneously. The Procurement function, as a key link between the company and its suppliers, plays a decisive role in bringing out this shared value throughout the supply chain.

Co-innovation: a lever for competitiveness and sustainability

Definition of co-innovation

Co-innovation consists of involving suppliers, customers and sometimes other partners (start-ups, research centers, NGOs, etc.) in the design and improvement of products, services or processes. It is based on a logic of collaboration, information sharing and collective creativity.

Why co-innovate with suppliers?

• Accelerate innovation: suppliers, close to the ground, often have technical expertise and original ideas. Involving them very early can reduce time-to-market and develop differentiating solutions.
• Share risks and investments: developing new projects involves costs and uncertainties. Co-innovation makes it possible to pool resources and diversify sources of expertise.
• Create additional value: by working together, it is possible to design products or services that better meet end customers’ needs, while integrating sustainability criteria (eco-design, circular economy, etc.).
• Strengthen the supplier relationship: co-innovation fosters a climate of trust and mutual recognition, conducive to long-term partnerships and to the emergence of other projects.

Implementing a shared-value and co-innovation approach in Procurement

Identify opportunities

• Analysis of internal needs: list the company’s strategic projects or operational challenges (reduction of the carbon footprint, new materials, digitalization, etc.).
• Mapping of the supplier panel: identify key, strategic or innovative suppliers with strong technological potential or particular expertise.
• Assessment of societal stakes: determine how each project can generate a positive impact (job creation, social inclusion, pollution reduction, etc.).

Select and involve suppliers

• Selection criteria: beyond price and quality, integrate criteria related to innovation capacity, CSR culture, willingness to collaborate and financial stability.
• Negotiation and contracting: favor incentive contracts, with sharing of intellectual property, equitable distribution of benefits and mutual commitment clauses (training, data sharing, R&D).
• Animating the ecosystem: create meeting spaces (hackathons, co-creation workshops, innovation events), encourage idea sharing and transparency.

Manage and steer co-innovation projects

• Agile methodology: favor short experimentation cycles (proof of concept, prototypes) and rapid feedback.
• Risk sharing: distribute R&D costs, formalize project governance rules, define a collaborative decision-making mode.
• Monitoring and progress evaluation: set up specific performance indicators (project progress, savings, carbon-footprint reduction, customer satisfaction, etc.).
• Internal and external communication: value progress, share successes and lessons, encourage the spread of good practices within the company and to other suppliers.

Examples of areas conducive to co-innovation

Eco-design and circular economy

• Development of more sustainable products, use of recycled or biobased materials, modular design to facilitate repair or recycling.
• Setting up of recycling loops or reverse logistics (waste collection and valorization).

Digitalization and automation

• Design of digital tools to optimize production, distribution, inventory management.
• Development of predictive algorithms to anticipate failures, reduce delays or optimize energy consumption.

Energy and resources

• Sharing of energy infrastructures, cogeneration, waste-heat recovery solutions.
• Innovations in energy storage, water capture and treatment, transport electrification.

Services and new business models

• Move from a product-selling model to a service model (rental, maintenance, pay-per-use), favoring equipment durability.
• Co-development of collaborative platforms between several value-chain actors.

Key success factors

• Management involvement and strategic alignment: a true shared-value and co-innovation approach must be supported at the highest level of the company, with clear objectives and appropriate resource allocation.
• Trust and transparency: co-innovation relies on the exchange of sensitive information (R&D data, feedback). Partners must be assured of confidentiality and an equitable distribution of gains.
• Organization and skills: train buyers in collaborative-project management techniques, understanding of CSR stakes and new technologies. Buyers must be able to animate ecosystems and play a facilitator role.
• Performance steering: define KPIs (savings, adoption rate of new products, societal impact, etc.) and regularly measure progress to value results and adjust the strategy if necessary.
• Long-term vision: shared-value creation and co-innovation require time and a trust-based relationship over time. Financial gains and societal impact are built progressively, project after project.

In summary

Shared value and co-innovation are two major axes to move the Procurement function towards a truly strategic and sustainable role. By involving their suppliers in a process of mutual value creation, companies can:

• Optimize their costs while reducing their environmental impact,
• Innovate faster to address societal challenges and consumer expectations,
• Strengthen their supplier relationships by fostering a climate of trust and collaboration,
• Contribute to a more solidary, circular and resource-respectful economy.

For Procurement professionals and students, this approach requires new skills in collaborative-project management, partnership negotiation and societal-impact assessment. It also opens up exciting perspectives to reinvent the way companies design their supplies, fostering the co-creation of innovative and responsible solutions, both serving economic performance and the common good.