For decades business school curriculum has included the study of stakeholders.
A person, group or organization that has interest or concern in an organization.
Stakeholders can affect or be affected by the organization’s actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources.
Typically, students are trained on identifying key stakeholders and conducting what’s called a “Stakeholder Analysis” to understand their interests, influence, needs, and expectations. These analyses along with other basic business frameworks are generally integrated into corporate strategic planning efforts.
Stakeholders have always been there, but they’ve rarely had the importance or the influence they have today. The times have changed, and the stakeholder pool as expanded. Sure enough, a scholar has captured the phenomenon in a book.
Shapeholders: Business Success in The Age of Activism by Mark R. Kennedy addresses the rise and expansion in stakeholder power that has been progressing in lockstep with the rise in the abuse of power by Big Industry and the rise in consumer power brought on by, among other things, the Internet and our increasingly connected world.
Kennedy asserts that there is a new breed of constituents and that businesses are ignoring and treating them haphazardly. They are stakeholders but, according to Kennedy, they wield more power because “these actor’s lack of stake in a company gives them greater ability to constrain or expand a firm’s opportunities and risk.”
Who are these actors? The social activists, media outlets, politicians and regulators who have no direct stake in a company but a powerful ability to shape its future as shapeholders.
What drove Kennedy to write Shapeholders? He found that his colleagues in business and politics held too narrow a focus on short-term profits or winning reelection which prevented them from delivering on long-term value or governing, adding, “too few really embraced the belief that long-term success requires ensuring others in the victory.”
To expand their view, Kennedy calls for business leaders and politicians to:
Think and care about the kind of footprint their operations leave.
Anticipate unmet needs of others outside their organizations.
Address the thorns in their business now to avoid torpedoes to their reputations later.
Actively engage with society to enhance perceptions and prospects for win-win solutions.
Kennedy’s book defines who shapeholders are and how they derive their power. He devotes a chapter to each shapeholder and outlines a seven-step process to shapeholder success:
1. Align with a Purpose
6. Advance Common Interests
7. Assemble to Win
Kennedy’s unspoken but implied assertion to business leaders throughout the book is: “Do it because it’s good for business” (a loose economic argument.) He (smartly) speaks the language of his audience because he knows it’s the best way to drive change. However, at the end of the book, Kennedy changes direction: “Do it because it’s Good (an ethical argument).” Specifically, the book closes with a call for emulating Pope Francis.
Kennedy’s support for Pope Francis is well taken: The Pope does take The Big View and The Long View necessary to drive lasting change. However, with hundreds of religions across the globe (thousands if you count those with few followers), Kennedy’s singular focus on Catholicism’s leader may well cost him the opportunity to influence the masses—the people who support The Big View and The Long View, but don’t hold Pope Francis—or the Catholic religion—as their point of reference. Interestingly, in this area, Kennedy’s view is as narrow as the narrow view of others he’s trying to change.
There are some big ideas in Shapeholders, notably the expansion of stakeholders and their ability to wreak havoc on Big Industry. The book also shines a spotlight on the carelessness of powerful institutions to go about their business without going about ours—i.e., failing to seek to understand, acknowledge, or build solutions in alignment with the wants and needs of the masses. And there are some incredibly interesting (read: disturbing) insights—particularly about the inner workings of Washington. (Smarmy Alert!)
More than anything, this book is a warning signal to powerful leaders to “pay attention.” There’s something both reassuring and repulsive about this. Shouldn’t we already be paying attention to those with which we share our planet? Shouldn’t all of humanity already be on our radar screen? And shouldn’t we already be creating win-win solutions for our country and for our world?