Who has the most power over your business? In a quick exercise, place the following people/groups in order of revenue influence: Board of directors, largest client, production team, media, sales team, competitors.
Not an easy task, I suspect. These groups are referred to as stakeholders: people and organisations who directly or indirectly affect a company’s performance and who are in turn affected by a company’s activities. As the business world moves from a shareholder-centric towards a stakeholder-centric style, we see the definition broaden. The natural environment has, in recent years, been classified as a stakeholder as more and more organisations adopt environmentally friendly choices and increase social responsibility.
Are all stakeholders equally important or do they act as links in the economic chain? It is a natural inclination to spend most of your resources on your largest client. Imagine for a moment losing that client to a competitor, leaving behind a considerable loss and a string of likely unsatisfied smaller clients (who rapidly become more significant than they used to be). Conversely, can you really afford to draw your attention away from such a large client? Consider the power that human resources have during a labour strike, the impact of the media after a bad report on your company, or the sway of a supplier who has reached a monopolising status in the market.
As these examples reveal, stakeholders can be volatile, their power is ever-changing, and managing them is more challenging in practice. We can also deduce that the behaviour of stakeholders at a given time is paramount to your success.
I introduce to you the concept of Stakeonomics: ‘The factors and effects of stakeholders’ behaviour on the performance of a business’. Adopt these proactive practices to forecast stakeholder behavior so you don’t get caught off-guard:
Identify your Stakeholders
Create a list. Include their needs (past & present) as well as previous incidents that resulted in a behaviour change. Make a concerted effort to research their needs. Are you in a position to meet those needs? Take into account that needs do not remain constant. Review what events or movements triggered certain reactions in the past to mitigate future risks. At what times are they most influential? Are your interests sincerely aligned with theirs?
In the age of perfect knowledge, external stakeholders know what they want and from whom they want it. Corny advertisements, crafty salesmen and the likes will no longer cut it. The bottom line is this: if a need is met, everyone wins.
Be Ahead of your Game.
- Embrace technology.
- Foster virtual relationships. Social media is a powerful tool today, people are quick to take to social sites to voice their opinions. It can work in your favour or against you. Positive comments about your business are always welcome but do not ignore comments and posts that are negative. Responding to complaints shows transparency and consideration.
- Invest in research and development.
- Keep a close eye on competitors. What are their recent developments? Do you have a defense plan to win the market share? It should be noted that while a defense plan is good, innovation is the best brand publicity.
Be Consistent in your Efforts:
Stakeholder mapping is a popular analysis conducted during startups or a project launch. However, this is not adequate. You can disengage stakeholders through your daily operations and not just during a significant event. It should be a regular activity.
Ethics at All Costs:
Consumers are more loyal to ethics than to price or convenience. Recent research from Mintel has shown that 56% of American consumers will not support a business that they believe to be unethical. Furthermore, 35% of them will not buy these products or services even if no substitute exists! (www.mintel.com). Trust is one of the main motivations for employee retention, content clients, strong supplier relationships and credibility with industry related professional bodies. Plus ethical companies are environmentally and socially responsible and this attracts all stakeholders.
From small businesses to large enterprises, Stakeonomics is relevant. Determining future needs and behaviour of your stakeholders is critical to shaping a sustainable operation or advancing to the next level.