Reading Notes: Managing for Stakeholders

Freeman, Harrison, and Wicks

I was assigned the 5th chapter but skimmed the rest for context. 

Overview: Business is all about delivering value to a range of stakeholders. Traditionally these have just been investors and (kinda) customers, but it’s important to take a broadder view of how other stakeholders define the business environment.

 Effective stakeholder management (and, according to Freeman et al, all effective business) is about getting the interests of stakeholders to line up. If you can regularly please enviros, employees, investors and customers all at the same time you’re well on the road to success. Tradeoffs are necessary some of the time, but generally they are a sign of   a lack of innovation.

There are no answers on how to make this magical alignement happen, but the book provides an interesting framework for getting to know stakeholders well enough to work with them effectively:

  1. Map your stakeholders, what they want, and your current relationship with them.
  2. Break them up in terms of potential change. Ask yourself “what’s the worst case scenario for this relationship and what does it mean for us? What’s the best case scenario for this relationship and what does it mean for us?”
  3. Develop strategies based on those potential changes. 
    • If there’s nowhere to go but up, try to squirm your way into aligning with their interests.
    • If there’s nowhere to go but down, reinforce whatever makes the relationship work now.
    • If the relationship can go both ways examine the conditions that can change it and try to establish more favorable ones. (This last part is the sketchiest to me, IMHO.)
  4. Once you’ve got the beginnings of a strategy go out and talk to stakeholders about it.
    • A lot of organizations just try to have in-house people guess what stakeholders want. This is called “implicit negotiation.”
    • When you go out and hit the pavement, your goal should be to create an environment of ongoing, informal negotiation. Formal negotiation may be necessary to establish trust though.
  5. Once you’ve gathered needs of various stakeholders put them all in front of you and innovate strategies which serve multiple groups.
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