2 Stakeholder Value

Introduction

Have you ever been surprised by the announcement of a new organization policy? Have you ever thought, “What were they thinking?” What did you say to your coworkers? What did you say to your boss? What did you do? Effective organizational and management design depends on an in-depth understanding of key stakeholders.

Understanding stakeholders’ needs is the center of the Leadership System and the first step in the Design Framework (See Chapter 6). In many cases, taking a little more time to consult key stakeholders during the design process can prevent or mitigate surprises and missteps. Stakeholder value is the center of the leadership system because it informs and helps align the other eight components, from vision and strategy to the scorecard and learning.

An underlying assumption of this framework is that sustainable excellence requires creating value for ALL key stakeholders. In other words, designing an organization that creates “win-win” solutions for all stakeholders vs. simply taking from one to serve another. In this context, there are at least six key stakeholder groups: customers, workforce, investors, suppliers and partners, society and community, and the natural environment.

Read Chapter 2, Stakeholder Value, in the [Re]Create Book.

Objective – Understand the concepts, components, and relationships of Stakeholder Value and how they contribute to leadership and organization [re]design for sustainable excellence.

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In this lab, you will apply the key stakeholder value concepts to your organization. You will first identify the key stakeholder groups and subgroups for each of the six stakeholder categories and their requirements for your organization. Then, you will identify the listening and learning methods for each group and subgroup and develop empathy profiles for each stakeholder group. Finally, you will create a stakeholder systems diagram to better understand the stakeholders and their interrelationships.

Stakeholders 

Video 0:53

Identify the key stakeholder groups and sub-groups for each of the six stakeholder categories.

Note – A single individual might be a member of several stakeholder groups. For example, one of your employees might also buy and use your products or services and might also invest in your company. At the same time, they might be members of the community that you operate in and be impacted by the natural environment. Avoid identifying specific individuals and focus on their role when they are wearing a specific stakeholder “hat.”

Stakeholder Requirements 

Video 6:51

Objective – Identify the requirements for each stakeholder segment.

For each segment, answer the following questions. What does this stakeholder segment want? What influences their initial decision (purchase your product, accept a job offer, etc.)? What influences their decisions to repeat or stay? What influences their decision to refer your products, services, or organization to people they know? Start with what you already know about the stakeholder segments, including existing survey data. As you develop your methods to gather stakeholder requirements, continue to revisit and revise the requirements. Your knowledge of stakeholders’ needs, wants, desires, and the associated decision-making is never complete. Learning about your stakeholders is an ongoing process for as long as you are in business.

Listening and Learning Methods 

Video 11:20

Objective – Identify the listening methods for each stakeholder group and segment. Understanding the listening and learning methods for each stakeholder segment includes the listening method (including instruments), the frequency the method is used, who uses the information, and for what purposes.

Listening Method 

For each row, identify the method that is used to listen and learn from the stakeholder group or segment. Examples include surveys, purchase patterns, repeat business, referral business, media and analysts, regulations and regulatory audits, focus groups, one-on-one interactions, complaints, social media, empathy maps, and activist group demands. You may need to make multiple copies of the worksheet to accommodate all the listening and learning methods.

Frequency 

For each listening method, identify how often it is used (e.g., monthly). Examples include annual, monthly, weekly, daily, continuous, ad hoc, and project-schedule-based.

Users 

Identify those who use the information that is gathered and analyzed. Examples include the senior leaders, marketing department, the research and development team, leadership team, operations, human resources, etc.

Uses 

Finally, what do they use the information for? Examples include strategy development and deployment; product design, development, and improvement; workforce development; supplier improvement; process improvement, and so on.

Each listening method requires resources, so choose the methods that will give you the best information for the purpose, whether it’s product development or organizational improvement. The best insights will deliver benefits worth the time, money, and effort to collect and analyze the data. Complete a new row for each stakeholder group and listening method combination.

To identify all the listening and learning methods, you might need to do some research within your organization. Often, no single individual in the organization is familiar with all stakeholder listening methods.

Empathy Profile 

Video 15:23

Objective – Develop a consolidated Empathy Profile for a key stakeholder group.

You first will need to define an experience such as a specific event (e.g., meeting) or artifact (e.g., policy) to provide a tangible focus for the participant’s responses. The data will be more focused and specific if you frame the questions using an actual event or experience. Then they can describe what they saw and what they heard in a thick, rich narrative. Starting on the left side of the framework, ask what the person saw and heard during the experience. This is their perception of the audible and visual inputs related to the experience. Then, working to the right, what do they think about those inputs, and how do they make them feel? Then how does what they think and feel influence what they say and do?

Stakeholder System 

Video 20:22

Objective – Develop a Stakeholder System diagram specific to your stakeholders and their relationships.

As your understanding of the stakeholders develops, so will your insights into the relationships among the stakeholders. In this context, “relationship” refers to the connections and influence among stakeholders. 

What is the value that is being exchanged? Capture those insights and make them explicit with a stakeholder systems diagram. To develop your diagram, start with WHAT the organization does (operations, products, services) and WHO they do it for: the customers. Understand how customers experience your products and services and the VALUE provided. Then identify the relationships between the suppliers and partners and the organization. Finally, incorporate the relationships between the workforce and the customers, suppliers, and partners. 

These components form the organization's value chain. Then, building on these value chain relationships, incorporate the investors’ resources and the value exchanged between the organization and the investors. Then incorporate society and community stakeholders, and the value exchanged with the organization. Finally, integrate the natural environment.

Conclusion

Creating an organization that addresses the needs of all stakeholder groups without making trade-offs is the central organization design challenge. Focusing on stakeholder needs and relationships provides a common alignment point for strategy, systems, scorecard, culture, and leaders. It is the “jumping-off” point for organization designs that create sustainable value for multiple stakeholders. Defining your stakeholders’ needs, wants, and desires, and understanding the stakeholder system, informs the development of a compelling directive in the next lab, which translates stakeholder requirements into overall guidance for the organization.