In today’s interconnected world of well-informed individuals not engaging with stakeholders is costing companies money and can potentially even threaten their existence. In a series of five blogs I will take a closer look at strategic stakeholder engagement and how companies can optimally use it. This first blog lays out the business case, blog #2 dives into the relation between the stakeholders, blog #3 takes a closer look at the benefits and the last two blogs examine barriers to success and practical reasons for failed engagement programs.
Stakeholders are all groups within the company, its direct business environment and across the broader society with which a company interacts and/or, which are (perceived to be) affected by a company’s actions. In addition it includes groups whose opinions can inform decision making in the company and whose decisions, actions and or communications can have an impact (positive or negative) on the company’s ability to thrive.
Strategic Stakeholder Engagement is the company wide, coordinated approach to capturing the value of maintaining strong relations with an ever-evolving range of stakeholders to help manage the business and strengthen its reputation, based on mutual respect, understanding and collaboration.
On the positive side stakeholder engagement can help with the identification of new products and business models, optimising processes and create support for approaches as well as with building great and lasting reputations. The Aspirationals research from GlobeScan and BBMG, for example, shows that stakeholders are increasingly keen to engage with companies and help drive innovation, business growth and positive impact. Thus creating opportunities for companies to tap into whole new sources of insights and ideas.
While on the defensive side it can help protect the license to operate and inform response strategies when a strategic decision is taken that might be contested by certain stakeholders. Scrutiny off a company’s behaviour has increased and is not limited anymore to what happens within their premises. It is extended to include company behaviour in the whole supply chain as well as how they conduct themselves as members of the broader society. The real threat stemming from this increased scrutiny is that stakeholders are today more inclined to act on their convictions then ever before; especially now that there are options widely available to respond (communicate) and or to replace a company or its products.
And, finally, the sheer complexity of the world and the challenges the world faces, such as limits to and competition for resources means that the business paradigm has shifted. Companies simply cannot ignore the need to work together within in their sectors, up and down the value chain, across the world and with other non-business stakeholders. Collaborations can range from knowledge sharing, resource management (one company’s waste becoming another’s input) and all the way through co-creation of products and services.
So, if the business is case is that obvious, why are so many companies still treating stakeholder engagement merely as a communication tool aimed at “turning them around to our way of thinking”. The recognition of the importance of integrated stakeholder engagement as a key success factor for overall business success is only slowly taking hold. I believe that engagement should be an integral part of the business management tool kit and needs to be well coordinated throughout the corporation to capture the full value.