Chapter 9
Identifying Your Stakeholders and Mapping Their Needs
Stakeholder orientation is fundamentally about a shift in how you think about your business: from a shorter-term, transactional approach to a systems and relationship model focused on creating greater long-term value among all stakeholders. PwC illustrates this transformation in figure 9-1. The critical shift is from thinking in terms of maximizing profit to focusing on maximizing value in the stakeholder system. This is a fundamental shift in focus and in mindset. By seeking to create maximum value in the system, the system itself is larger and therefore the share of that value, represented by profit, that comes to the shareholder is larger.
Figure 9-1: Profits maximization to stakeholder’s value maximization model
You can shift this mindset by better understanding both who your stakeholders are and how well you are presently working with them while also shifting how your top team and the rest of your organization think about stakeholders. We describe this shift in thinking as taking a win-win approach to business decision making—the key to a sustainable stakeholder orientation in your business. We will address the core issue of understanding and working with stakeholders in this chapter, and in chapter 10, we will illustrate possible ways to shift the broader organization’s approach to stakeholders. A stakeholder-oriented culture can take years to build. The systemic approach we will discuss in these next two chapters can accelerate that transformation.
In this chapter, we will help you to clarify three issues:
- Where your organization is today on the journey to a stakeholder orientation
- Who your stakeholders are, and what the opportunities are to improve stakeholder relationships
- Where value-creation opportunities exist with underserved stakeholders
As described in the following case, one company in Brazil identified these three issues to its advantage.
Porto Seguro, a major Brazilian car insurance company, started its stakeholder-orientation journey focusing on insurance brokers. Jayme Garfinkel, at the time, CEO of the company, knew that if brokers had a good product and knew how to sell it to customers, the company would be strong. During one of Brazil’s economic crises, the company almost went bankrupt. At that time, it learned about a US study on the impact of a third brake light, which had been found to reduce rear-end collisions by 25 percent. The finding was the company’s impetus to launch a new insurance plan. All brokers were invited to come in and learn about the new plan, which would offer a third brake light for all insured cars. Every broker had to come in with his or her own car. During the presentation of the new product, all brokers got their cars upgraded. The upgrade turned out to be a great marketing tool. Everyone knew the cars with the third brake light had insurance, and as predicted by the study, collisions dropped by about 25 percent.
The company had a long-running practice of meeting monthly with brokers. The CEO decided to start monthly meetings with authorized repair workshops to listen to feedback from their interactions with customers. These monthly discussion forums uncovered more ideas to improve the insurance product. Customers were complaining that they needed their cars to get to work; being without a car for up to a week was really inconvenient for them. The company started to offer customers a loaner car during the repair process.
Another complaint that surfaced was that customers lost a lot of time trying to figure out how to tow the car to the workshop. Another improvement was added to the insurance service: towing service for any kind of car failure.
Next, the company started monthly discussions with another group of stakeholders: tow-truck drivers. This helped the company identify more improvements. One truck driver shared that he liked to offer a bottle of water to the person involved in a car incident. He found that this gesture would lessen the person’s anxiety. The company decided that every tow truck working for the company should have water to offer; later, it decided to offer snacks as well, since most people involved in accidents ended up stuck for many hours trying to figure out a solution for the broken car.
Over time, more and more stakeholders have been identified, and the discussion forums have become fundamental to develop, innovate, and grow the business.
Introduction to Understanding Stakeholders and Their Needs
Introduce the stakeholder-orientation concept to your senior team. As a leadership group, work through the following exercises, and reflect on how stakeholder orientation applies to your organization. The goal is to identify your stakeholders and understand their needs.
The following case illustrates this process and is a good warm-up exercise for your team.
The leader of a business that distributes prostheses (artificial limbs) was concerned about potential new entrants into the market. As an exercise to explore stakeholder orientation, read the dialogue below, and then draw the stakeholder map on the following page.
Who is your customer?
I sell the prostheses to doctors.
Who do you buy them from?
From European manufacturers.
What is your major concern at this point?
I fear that a Chinese manufacturer might enter the market.
Can anyone come in and sell prostheses?
Not really. They need US Food and Drug Administration approval.
After the approval, can anyone sell it?
Well, customs are a bureaucratic burden on this product. You might need help from a specialist to clear customs.
Okay, once you clear customs, can you sell and deliver the prostheses to doctors?
It is not that simple. The doctors cannot carry them around. They have to be delivered to a hospital and need proper storage.
So, once it’s sold, you send it to the hospital, right?
Almost. The insurance provider has to approve the surgery before we send it out, unless it is an emergency.
I see. The doctor buys in, the insurance provider approves the surgery, and the hospital receives the prosthesis. Then it’s time for surgery, right?
Yes, but we have to have a technician available at the hospital who stands by in case there are any technical questions about the product. After the surgery, we have a physiotherapist specialized in our product to help the patient recover.
Throughout this discussion, a few stakeholders were identified. Work with your team to identify them, and list them in the space below.
Who are potential stakeholders for the prosthesis company?
- __________________________________________________________________
- __________________________________________________________________
- __________________________________________________________________
- __________________________________________________________________
- __________________________________________________________________
- __________________________________________________________________
- __________________________________________________________________
Compare your team’s answers with the potential stakeholders that the prosthesis company listed:
Identifying Your Stakeholders
As a team, take ten to fifteen minutes to identify the primary stakeholders in your business. Most organizations identify five to seven of them. If you have more than seven, ask which ones are your primary stakeholders and which could be considered secondary stakeholders. In this exercise, we’ll focus on only the primary stakeholders. Remember, primary stakeholders are those that your business affects and is affected by every day. Secondary stakeholders are not directly interacted with on a regular basis, but nevertheless can have an impact on your business. Examples might be media, government, or your competitors. Use the diagram in figure 9-2 to list your primary stakeholders.
The next step is to reflect on what the different needs of each of your stakeholders might be. The key to this exercise is to put yourself in the position of that stakeholder. What are this stakeholder’s fundamental needs? Try to shift and see things from this perspective; walk a mile in the stakeholder’s shoes.
Figure 9-3 presents an example from First United Bank.
Now try this with your team. List your stakeholders below. Identify at least three needs for each stakeholder.
| Stakeholder | Primary needs of this stakeholder |
How could you and your team “reality check” that you have correctly identified the needs of your primary stakeholders? What might be a next step to do this?
Now that you’ve identified your stakeholders and their key needs, lead a discussion with the team members about which stakeholders they feel are underserved.
- Which stakeholder do you feel is most neglected, and why?
- Identify the stakeholder relationship that, if we could strengthen it, would have the greatest impact on the business.
- Do we have any “silent” stakeholders that we may not have considered?
Food for Thought:
Can All Stakeholders Win Equally All the Time?
Have we ever had to make a decision in which not all the company’s stakeholders benefited? Probably, but I’ve never really thought of it that way. I usually try to think about how something will benefit all the stakeholders. And since they’re interdependent, I don’t like that question because it gets you thinking in a way I don’t think we ought to be thinking. It means you start thinking about tradeoffs and the assumption that if someone is winning, then someone else must be losing. Something about human nature makes us want to think that way; maybe it’s our culture of competitive sports. We tend to think that if someone wins, then someone loses. But that is limited thinking. The stakeholders are in relationship with one another. It’s like a relationship you have with a friend or a marriage. In marriage, one partner can’t be always gaining whenever the other loses. If that happened, the marriage would fall apart. The couple has to be simultaneously winning and both be gaining. If that happens the relationship deepens and it grows. When you begin to exploit the other in a marriage or a friendship or in business, you’re on the path to ruin. Instead, think about how you can create value for all your stakeholders and can create win-win relationships.
—John Mackey, CEO, Whole Foods Market
Deepen Your Stakeholder Understanding and Engagement
Having identified your stakeholders, their needs, and potential areas for improvement and business impact, you can now go deeper in your understanding of stakeholders and how you might engage with them.
Use the following chart to test how well you understand each of your stakeholders. Doing this exercise as a team has great value in making sure that you are aligned on what you know about the stakeholders, and what you don’t. Undoubtedly, some members of the leadership team will know more about some of these stakeholders than will others on the team. The assessment is a great opportunity to share that knowledge and insight and educate the whole team on your stakeholders. You may not be able to fill in each section completely for each stakeholder, but do your best—and notice where there may be some significant gaps in the team’s knowledge and understanding of your stakeholders. Do this assessment for each of your primary stakeholders. You may find it helpful to go through this quickly as a team and then assign members of the team to follow up and fill in the chart before your next meeting.
As you go through this exercise, you will soon discover some things you know about your stakeholders and other things you don’t. You will also start to see areas where you might work more closely with some of your stakeholders to create value and some areas where you are vulnerable to a business disruption if you don’t manage and connect with these stakeholders differently.
Enlist and Engage with Your Stakeholders
Thus far, you have assessed your stakeholders from an internal perspective. The next step is to validate these assumptions directly with selected stakeholders and with others in your organization who might be closer and more knowledgeable about these stakeholders. While it would obviously be good to do the following approach with all your stakeholders, we recommend that you begin with one or possibly two stakeholders that you have initially identified as having the greatest potential impact on your business—to either create value or disrupt your business (or sometimes both). For example, you could choose your largest customer and most important supplier.
The enlisting process begins with holding an informal meeting with the management team (or equivalent) of the stakeholder. Your goal is to create two-way communication with this stakeholder. You want to both communicate what you are striving for with your stakeholder orientation and listen and confirm what their needs are and how they see the opportunities and threats to the relationship. The following is a suggested agenda for that meeting;
- Introduce your stakeholders to the notion of stakeholder orientation. Explain why it is important to your organization and what you hope to achieve in building stronger stakeholder orientation throughout your organization and with them (value cocreation, closer cooperation, greater efficiencies, and win-win opportunities and thinking).
- Seek to explore and better understand their needs and how well or poorly you have met them in the past.
- Show them your initial analysis of the relationship, and discuss where you see things similarly and where things are seen differently and why.
- Brainstorm areas in which you might work more closely together to cocreate value and to improve the relationship and align your interests.
- Agree on some next steps, and establish a regular routine for future interactions.
After the meeting, debrief as a team. Use the following as a guideline for this:
- What did you learn? What surprised you?
- How has your team shifted its thinking about the opportunities and potential threats with this stakeholder?
- What are your next steps to follow up on after this meeting?
Document your findings from the meeting, and share them with the stakeholder—asking the stakeholder to add anything that might have been missed. Circulate this report to your organization’s relevant team members who interact with this stakeholder.
Next, we recommend that you form an internal team to decide how and when to move forward with exploring these value-creation opportunities. This step moves things from simply good dialogue to action. In the next section, we outline how your internal team can brainstorm on what actions or projects could explore a strategic experiment with this stakeholder. In addition, you should review what else could be done to enhance the communication, connection, and coordination with this stakeholder? Have this team come back with recommendations on how to go forward.
This exercise generally creates a new sense of purpose and opportunity in working with various stakeholders. It can also lead to some hard discussions and decisions about which stakeholders are no longer in alignment with your company’s approach to doing business. For one company, this process revealed that some of the financial institutions that it was working with on finance options were not acting with the same sense of purpose and values toward the company’s customers. Other financial institutions were clearly in alignment with the company’s values and purpose. This discovery led to a tough discussion about putting more time and resources into developing those better-aligned relationships and shifting business away from the institutions not aligned. The company’s shifting relationships paid off. One of the selected partners double downed on its relationship with the company and placed the company in its strategic partner program, offering access to the partner’s latest technology and preferred pricing.
In this chapter, we sought to make the notion of stakeholder orientation more relevant to you and your organization. You have identified your primary stakeholders and their most important needs. We asked you to focus on the stakeholders with the greatest opportunities for improvement and to identify what you can do with them to realize those opportunities.
We also challenged you to further examine your stakeholders’ needs to uncover those that have the greatest potential to either create value or disrupt your business. For these high-priority stakeholders, we suggested a way to enlist and engage with them to create meaningful action plans.
In going through these exercises with your team members, you have no doubt increased their awareness and understanding of stakeholder orientation. In the next chapter, we discuss how to take this notion deeper into the entire organization by helping people understand what this orientation might mean to them personally and how they can think in terms of win-win opportunities every day.