0:01
We've been talking about stakeholders strategy.
And right now, we're focusing on a business organization's key stakeholders.
Investors, employees, customers, suppliers and
the broader community in the context within which that business operates.
Now remember, a key idea is that an effective strategist and
effective leader, a manager, or executive needs to focus on
how to align the interests of those different stakeholders.
Instead of just figuring out how to rank order them or
optimize in some way, we're trying to figure out how to get the interest and
the preferences and the way we're creating value for
each of those stakeholders, all sort of going in the same direction.
We wanna create value for those stakeholders simultaneously.
So, of course, to really figure out how to align the interests we'll need to
understand a variety of other things.
We need to understand the structure of the competitive context.
We need to understand how to differentiate.
We need to understand what our customers preferences are.
And of course, there are a lot of other tools to help zero in on each of those
important aspects of strategic management.
But here I wanna focus a little bit more directly on the tools and
frameworks we might use in a stakeholder analysis,
to help supplement some of these other analytical tools and frameworks.
So first of all, we might simply put together some sort of a stakeholder
issues matrix to help us understand what the different parties, the different
stakeholders to our business operations, what it is they're looking for.
So, what is it our employees are seeking?
What is it that our customers are seeking?
What is it that our financial investors are seeking, etc?
And of course, it depends a lot on our business,
on our industry, what it is that our value proposition is as a business organization.
And so it's important for every business organization to really understand
what it is that customers are looking for.
What it is that suppliers are looking for, etc.
So, it's important to kind of think through that sort of thing and
figure out what's more important to which particular stakeholder.
Maybe, job fulfillment maybe isn't that important to financial investors,
although it could be important to some types of financial investors to know that
it's a good place to work.
But it's, of course, going to be much more important probably to someone's employees.
So again, trying to figure out what each stakeholder is really seeking.
What's the value that they're looking to your business organization to create for
them, and it's important to kind of lay that out and try to figure out what it is.
This might require that you actually talk to some of your stakeholders, ask them.
It isn't just something that we have to infer from their actions.
But we might actually engage with them and
open up a dialog to understand how can we create more value for you?
What is it that we could do better either for you as a supplier, or
you as a group of employees or our financial investors, etc?
So that's often times a great place to start by just trying to understand
who the stakeholders are, what it is they're looking for.
And incidentally, we can expand that matrix beyond the sort of
primary stakeholders to secondary stakeholders.
There may be some secondary stakeholders that are very important to us.
Beyond just the supplier, customer, employee, investor, community group.
And so it's important to think about that as well and we can sort of expand this
exercise to think about all of our more peripheral stakeholders and
what it is they are looking for from us as well.
Then we might actually think as we're contemplating a different strategic action
whether it's an expansion of our business, or we're gonna move into a new geographic
market, or we want to offer a new product, or whatever it is.
3:40
As we think about the potential implications of our decision,
it's very important to think about what's the impact going to be
on each of these different stakeholder groups.
If we pursue a certain strategy, how is that going to impact our customers or
our employees?
But if we pursue an alternative, slightly different strategy, make a different
strategic choice, would that have a different set of implications or
a different impact on this set of stakeholders.
So it's important to go to exercises like these,
thinking about what it is our stakeholders value and how do they differ.
And thinking about what the impact is of our potential strategic actions.
It's important because this allows us to think about
the implications of our business decisions more broadly.
It forces us to kind of think about our value creation process from a number
of different perspectives and therefore it might help us avoid some pitfalls.
It might help us avoid some controversies, it might help us identify opportunities
to create value for stakeholders that we might not have considered before.
And that's maybe the idea that I'll leave you with, is that oftentimes when we think
about stakeholder values and how different types of stakeholders are looking for
something different from you as an organization.
Those tensions that can arise, these disagreements or the differing priorities.
Those are the key opportunities for innovation.
Innovating around your actual product or service that you offer.
Or innovating around the business processes and your business model and
the way that you do your business.
And if you can figure out a way to better align those interests of those
stakeholders, that's the key to long-term value creation.
Michael LenoxSenior Associate Dean and Chief Strategy Officer
Jared HarrisSamuel L. Slover Research Chair in Business Administration
