by Bruce Piasecki and Bill Shireman
It’s a new age of stakeholder activism, and corporations are reeling. From single billionaires seeking to disrupt boards to activist “Davids” in the field launching stones at the temple of these global Goliaths, more and more passionate — and very vocal — critics are scrutinizing how corporations handle issues like energy, water use, conservation, and social justice. In fact, it’s not unusual these days for one firm to hear from 40 or 50 aligned social responsibility investors coordinated by groups like Ceres, one of the coalitions of forces that pressure leaders to adopt more sustainable practices.
As we struggle to keep our footing in the midst of this turmoil, it’s become clear that the very identity of the corporation has evolved into something new. We call these entities “corporate mansions”.
Corporate mansions have taken on the role formerly held by nation states like France or England. In fact, since the turn of this swift century, they’ve made up more than half of the world’s largest economies.
This new role implies an expanded sense of responsibility that reaches far beyond the old “making money for shareholders” focus. The problem is that too many corporate leaders forget that each of these mansions is set square in a social neighborhood, where lawyers, investors, regulators, and concerned citizens can see through the windows.
These stakeholders ask four fundamental questions. They are: Is there a human being in there running this place? Why do they not answer my call? Is this mansion a genuine part of our neighborhood, or can we convince them to be? and What do the residents of the mansion make or do that might impact my children’s future?
It’s time to redesign the corporate mansion with more and larger windows, more transparency from the top to the actionable managers, and more ways for outsiders to sprint up their stairwell to the key executive councils. This can seem like an overwhelming task to leaders who feel — often rightly so — that they are being demonized. Yet it can and must be done, for the good of the company and the community.
Humanizing Stops Demonizing.
Stakeholder engagement breaks the hold of corporate demonization. Your first objective, when dealing with outraged activists, can be summed up in one word: humanize.
Humanize your company, and
Humanize even your adversary.
It’s only by displaying your place and awareness in the neighborhood of concerns that you can be trusted again and made part of the debate and discussions before you. Corporate strategy, once the realm of only the general council, the business P and L leaders, and the board, is now something more available for inspection.
We do not advocate disclosing your corporate strategy, your competitive advantage. Instead, companies like Coca-Cola, Toyota, and even Warren Buffett firms are beginning to offer stakeholders a chance to reply to key public choice points about their supply chain, their choices of energy selection, and, at times, even glimpses into their product redesign choices. We see this in the energy section, the makers of cars and trains, and you see GE doing it in their entire Ecomagination program.
Of course, disclosure is only the start. The essence of sophisticated and successful stakeholder engagement is dialogue and sustained structured exchange.
That is why it is a mistake to begin engaging your stakeholders in a formal, scripted manner. If you want to reinforce your company’s image as a profit-maximizing machine, super-rational and non-emotional, then invite your stakeholders to a day-long lecture, to educate them about why their perceptions of you are wrong.
Doing so is like courting your love interest via charts and graphs in a PowerPoint presentation. What we recommend is more like a dance of dialogue, what the best trial attorneys call ‘structured discovery’ or mutually derived ways to outsmart an impasse.
The key to a successful “dance of dialogue”? It is understanding the emotional make-up of human beings.
Some social scientists believe humans are wired to respond to challenges with six major core emotions. They are anger, fear, disgust, surprise, sadness, and happiness. As Darwin pointed out, ‘the same state of mind is expressed throughout the world with remarkable uniformity.’ The fact that we’re all hardwired to be emotional in fundamental ways is applicable in business as it is in the realms of poetry, theatre, and literature. As you seek to redesign your corporate mansion, it’s good to keep these fundamentals in mind.
Redesigning the Steps from Your Mansion into the Neighborhood.
So how do you engage stakeholders? Here are ten steps Future 500 and the AHC Group often follow when helping companies and stakeholders find common ground.
1. Set your business objectives.
2. Inventory and map your stakeholders — by category, risk, opportunity, and modes of engagement.
3. Select priority and strategic stakeholders — you cannot work with everyone in the neighborhood, but you must have balanced representation.
4. Plan your engagement process — so you can seek quick wins, add momentum, anchor change in the results.
5. Train your team — there is a magic in teams that is inclusive and best run when transparent.
6. Engage informally.
7. Engage formally only when necessary.
8. Validate leadership opportunities; share ownership.
9. Develop a shared vision — this offers the neighborhood a set of shared actionable understandings.
10. Follow through: lead change and share credit.
Humans do not live by bread alone, nor only by profit, habit, sex, or even the love of our children. We are complex, and that is what makes life worth living.
In all cultures, people tell stories about Davids and Goliaths. They recite poetry about the quest for social justice. They perform rituals that display that the powerful can be questioned. They decorate the surfaces of where they meet. They wonder about the causes of good and bad fortune. And they concoct theories of the universe and how we think.
But in the end, it is only through participation in the actions of the neighborhood that corporate leaders can regain trust and be given the license for further growth. It is the job of stakeholders to remind business owners and managers of their world view and preferences. The corporations that survive, profit, and grow in the near future will be more open, transparent, and responsive than ever before.
Dr. Bruce Piasecki is the author of “Doing More with Teams: The New Way to Winning” and president and founder of AHC Group, Inc., a management consulting firm specializing in energy, materials, and environmental corporate matters. Piasecki is the author of several seminal books on business strategy, valuation, and corporate change, including the Nature Society’s book of the year “In Search of Environmental Excellence: Moving Beyond Blame“, as well as recent New York Times, USA Today, and Wall Street Journal bestseller “Doing More with Less: The New Way to Wealth“.
Bill Shireman is the coauthor of upcoming book “Engaging Outraged Stakeholders: How-to Guide for Uniting the Left, Right, Capitalists, and Activists” and president and CEO of the Future 500. He is also coauthor of the book “What We Learned in the Rainforest: Business Lessons from Nature“.