Everybody wins when stakeholder engagement is done well

Author: Peter Paul van de Wijs

In my last blog I mentioned having the wrong objectives as a key reason for failing stakeholder engagement programs. In this edition I am taking a closer look at 5 objectives that can really make a difference for a company.

According to Sir Richard Branson succeeding in business is all about making connections. Trust is the foundation of successful long-term connections and relations. Yet, as for example independent research consultancy GlobeScan’s long-term trust data shows, companies have systematically ignored this. Or, more precisely, they have taken a very limited view of the need to build lasting relations, and the trust those require.

© GlobeScan

Obviously the majority of companies underestimate the importance of reciprocity in relations and they have a limited view of the groups they need to build strategic relationships with. As a result these companies not only take a gamble with their societal license to operate but also miss key growth opportunities. As the following examples illustrate, understanding the benefits for both company and stakeholders opens up wonderful new business opportunities for growth and/or reputation enhancement. They all take strategic stakeholder engagement beyond the narrow idea of needing to build good relations with a few selected audiences to manage potential risks.

  1. Strategic Stakeholder Engagement supports the achievement of business objectives.

When Unilever developed its Sustainable Living Plan, the company reached out to a wide range of stakeholders to understand their expectations and perspectives. This input was essential for the development of what is widely regarded as a groundbreaking growth strategy based on sustainable principles.

  • Benefits to Unilever: identification of the right topics to address, understanding of the expectations of the stakeholders regarding the company’s performance and broad public support for the goals.
  • Benefits to stakeholders: the opportunity to ensure that a large corporation addressed their concerns in realistic, measurable action plans.

 

  1. Strategic Stakeholder Engagement provides access to knowledge and ideas, which can stimulate innovation and, even, co-creation of products and solutions. While at the same time providing an opportunity to become part of designing future products that meet stakeholder needs and reflect their values.

At events across the United States, GE invites design thinkers to participate in an open innovation process called GE Garages. Participants work in labs outfitted with 3D printers, injection moulders, laser cutters and more to bring their wildest ideas to life.

  • Benefits to GE: identification of new ideas and people that can help develop these ideas.
  • Benefits to stakeholders: access to a community of like minded people, opportunities to share ideas and, maybe, even find a job, all while having some fun (personal development).

In 2008 the The LEGO Group started a new website called LEGO Ideas which invites customers to submit ideas for new LEGO Products and help select the ones that are put into production.

  • Benefits to LEGO: opportunities to strengthen relations with ‘hard core’ customers, develop products that align with customer interests and cut design costs.
  • Benefits to stakeholders: opportunity to share their knowledge and ideas, recognition and fun. As an extra incentive the original designer also receives 1% of the royalties.

 

  1. Strategic Stakeholder Engagement enhances a company’s reputation by demonstrating a commitment to address societal needs, expectations and challenges as well as business challenges. And builds additional business.

To address concerns from customers regarding food waste, Intermarché, the 3rd largest supermarkets chain in France, decided to sell (30% cheaper) non-calibrated and imperfect fruits and vegetables: “the inglorious fruits and vegetables”. Since the launch of this campaign retailers all over Europe have started similar campaigns.

  • Benefits to Intermarché: 1.2 tons of sales per store in the first 2 days of the campaign, positive reputational impact (300% increase in social media mentions in first week).
  • Benefits to stakeholders: Addresses the public outcry over food waste and odd EU rules. Farmers got a better price for their crops.

Here you can see the campaign: https://adsoftheworld.com/media/print/intermarche_grotesque_apple

 

  1. Strategic Stakeholder Engagement provides a platform for stakeholders to address their concerns in a constructive manner and work on solutions.

When cutting trees on their properties companies in the Netherlands have to replant an equal amount of trees somewhere else. Typically they will do this on their own property. The Community Advisory Panel from DOW Benelux convinced the company to work with local farmers and place the trees on their land in stead; further away from Dow’s production location and thus addressing concerns of ‚visual pollution‘.

  • Benefits to DOW: The company still met legal requirements while at the same time addressing a long-standing societal concern and strengthening its reputation.
  • Benefits to stakeholders: The trees now block the view on the chemical facilities enhancing the perceived quality of life in the area.

 

  1. Strategic Stakeholder Engagement provides an opportunity to stakeholders to be part of a community they aspire to be part of. They can use their engagement as a means to ‘badge’ themselves and differentiate them from peers.

The San Francisco ride-sharing start-up LYFT recently raised $83 million and expanded to 24 new markets. It asks riders to pay a suggested donation based on distance travelled. All LYFT cars sport bright pink moustaches and riders are encouraged to give drivers fist-bumps when they first get in the car.

  • Benefits to stakeholders: cheap transportation, opportunities to meet like-minded people, for drivers an opportunity to make some money.
  • Benefits to Company: Opportunity to build strong relations with a highly committed customer base and ability to reach out to new drivers with a compelling story.

Each of these examples is compelling in its own right and was initiated to address a specific challenge. However, while reviewing these case studies it struck me that there is good news for all companies considering to step up stakeholder engagement. The common factor of all these is the absolute willingness by the stakeholders to engage if a program is designed correctly. So, there is really no excuse for missing the opportunities co-creation and cooperation offer companies.

About Peter Paul van de Wijs

Peter Paul van de Wijs

Peter Paul van de Wijs is senior corporate communication, advocacy and stakeholder engagement strategist. Over the past 20-years he has helped businesses and non—governmental organisations capture the opportunities and manage the reputation risks linked to stakeholder expectations. He is the former Vice President, Communication and Engagement at the LEGO Foundation, ran his own consultancy focused on reputation and sustainability, was a member of the Executive Team of the World Business Council for Sustainable Development and held various leadership positions at The Dow Chemical Company.

www.ppvandewijs.com

Twitter: @ppvdw

Skype: vandewijs

“But we had such a good plan!“: Why stakeholders programs still fail (Part 2)

Author: Peter Paul van de Wijs

Despite the compelling business case for on-going strategic engagement and the good intentions from companies and practioners, too often engagement programs miss the mark. There are some clear practical reasons for this failure. Most of them can be traced back to ill-defined strategies, underestimated organisational barriers or external developments.

Strategic reasons

The strategic barriers listed here are all variations of the lack of understanding of either the potential value stakeholder engagement can bring to a company or what is required from the organisation to capture this value.

  • Wrong objectives. A company should spend ample time on setting the right objectives for specific stakeholder engagement. Strategic Stakeholder Engagement can provide:
  1. support the achievement of business objectives,
  2. access to knowledge and ideas,
  3. Enhancement of a company’s reputation and builds additional business,
  4. a platform for stakeholders to voice and address their concerns,
  5. an opportunity to stakeholders to be part of a community they aspire to be part of.

However it is not enough just to pick one or more of these overall objectives. It is still paramount to establish specific objectives for the specific program activities.

  • Lack of insight into which stakeholders are really relevant for the company. The ability to do business is directly impacted by actions of a broad range of stakeholders. Unfortunately, most companies still focus on a very narrow set of stakeholders. And typically these are defined in very broad terms: shareholders, customers, employees and government. Much more definition and differentiation is needed if engagement is to be successful. In order to build relations and have discussions about topics that have value for various stakeholder groups it is important to carefully define them with the potential value in mind. The larger the group the harder this will be. For example the general public is NOT a workable stakeholder group as it is too diverse to be engaged in a meaningful conversation around a topic. It never ceases to amaze me that on the marketing side companies can slice their audiences very well but corporate communications does often not apply the same discipline. Interestingly companies, which have come under pressure from specific stakeholders, often do extend the list with stakeholders who oppose them and make the most noise. But still forget to assess whether the loudest opponents are also the most influential and materially relevant stakeholders for them.
  • Lack of a real insights in the members and convictions of the stakeholders. Compounding the barrier above, stakeholder engagement is still too much driven by the mistaken believe that managers in companies understand what is concerning their various stakeholders and by second-guessing them. A very rewarding and valuable first step in building relations with stakeholders is simply asking them what their concerns are.
  • Treating regaining trust and maintaining a societal license to operate only as a PR issue. The Public Relations department can play a key role in coordinating stakeholder engagement and organising the regular flow of communications, but it is an assessment of all activities of an organisation that ultimately influence the trust stakeholders place in the organisation. Words and actions need to be seen to line up. Afterall, in homage to Michael Iapoce famous quote: reputation is brand minus what you have been caught doing.

Organisational factors

  • Disconnects in the organization not addressed. Companies are naturally siloed. After all only by divvying up the work can things get done. The down side of this reality is that each organisation suffers, by definition, from connection problems. Since engagement entails a commitment to follow up, it is important to ensure that the internal stakeholders are aligned on the objectives and understand what is expected from them.
  • Lack of coordination and no clear ownership of the engagement process. The coordination of stakeholder engagement can be delegated to Public Affairs, corporate planning or another staff function but its ownership needs to reside at the highest level of the company in order to ensure the participation and commitments from all parts of the organisation. Furthermore, this public high-level commitment is also a factor in building the trust among the stakeholders that their engagement is valued.
  • Reluctance to collaborate. Quite a large group of employees and functions maintain, as part of their job responsibilities, relations with stakeholders. For example, Marketing feels that the own the customer relation, Government Affairs ‘owns’ the relations with regulators, local or regional public affairs typically ‘owns’ community relations, Investor relations ‘owns’ the relation with the financial stakeholders, etc. From first hand experience I can tell that this fragmentation sometimes leads to a reluctance by certain leaders/departments to participate and even can trigger unwanted internal political plays. As a result companies do not capture the benefits from effective stakeholder engagement.

External factors

  • Bad timing. The success of stakeholder engagement is directly related to the ability to engage with the right stakeholders at the right time on the right topic. The right timing is determined by one of two variables or both. Neither of these has precedence over the other.
    1. The company’s timing is dictated by the company strategy and business cycle.
    2. The Stakeholder timing is driven by their (perceived) sense of urgency.
  • Lack of trust in companies. Over the past decade the trust in companies has constantly declined, fuelled in part by the economic down turn, scandals and a constant flow of negative media. Companies need to realise that it is against this background that they are engaging with stakeholders.
  • Conflicting objectives might make engagement difficult. Good intentions on the part of the company alone are not enough to ensure successful engagement. Unless a company and the stakeholder group are willing to at least consider compromising or agreeing to disagree then there is no base for engagement. Companies which made their fortune and satisfied their shareholders with a confrontational approach (fx, Exxon’s approach to climate change) and NGOs which have build their reputation and following (funding) on strict, unwavering believe in their causes, will NOT be natural partners for an engagement process.
  • The volume of potential stakeholders can be daunting. Companies need to clearly define, based on measurable criteria, which stakeholders are material to them, which they care about and want to engage with.

None of these barriers are insurmountable and should never be a reason for not engaging. When stakeholders are used as a natural extension of the knowledgebase of a company a whole world of new opportunities opens. Have a look at Jane Hiscocks’ and the Farland Group’s work on customer advisory boards or the BBMG, GlobeScan study on the Aspirational customers, or at the growth of jams as a tool to develop new products and ideas; all evidence that treating stakeholder engagement as merely a PR tool is missing the point.

About Peter Paul van de Wijs

Peter Paul van de Wijs

Peter Paul van de Wijs is senior corporate communication, advocacy and stakeholder engagement strategist. Over the past 20-years he has helped businesses and non—governmental organisations capture the opportunities and manage the reputation risks linked to stakeholder expectations. He is the former Vice President, Communication and Engagement at the LEGO Foundation, ran his own consultancy focused on reputation and sustainability, was a member of the Executive Team of the World Business Council for Sustainable Development and held various leadership positions at The Dow Chemical Company.

www.ppvandewijs.com

Twitter: @ppvdw

Skype: vandewijs

Treating stakeholder engagement as merely a PR tool is missing the point (Part 1)

Author: Peter Paul van de Wijs

In today’s interconnected world of well-informed individuals, not engaging with stakeholders is costing companies money and can potentially even threaten their existence. In two blogs I will take a closer look at strategic stakeholder engagement and why, despite the right intentions, quite a few engagement programs fail.

Stakeholders are all groups within the company, its direct business environment and across the broader society with which a company interacts and/or which are (perceived to be) affected by a company’s actions. In addition it includes groups whose opinions can inform decision making in the company and whose decisions, actions and or communications can have an impact (positive or negative) on the company’s ability to thrive.

Strategic Stakeholder Engagement is the company wide, coordinated approach to capturing the value of maintaining strong relations with an ever-evolving range of stakeholders to help manage the business and strengthen its reputation, based on mutual respect, understanding and collaboration. 

Stakeholders are keen to engage

On the positive side stakeholder engagement can help with the identification of new products and business models, optimising processes and create support for approaches as well as with building great and lasting reputations. The Aspirationals research from GlobeScan and BBMG, for example, shows that stakeholders are increasingly keen to engage with companies and help drive innovation, business growth and positive impact. Thus creating opportunities for companies to tap into whole new sources of insights and ideas.

While on the defensive side it can help protect the license to operate and inform response strategies when a strategic decision is taken that might be contested by certain stakeholders.

Scrutiny off a company’s behaviour has increased and is not limited anymore to what happens within their premises. It is extended to include company behaviour in the whole supply chain as well as how they conduct themselves as members of the broader society. The real threat stemming from this increased scrutiny is that stakeholders are today more inclined to act on their convictions then ever before; especially now that there are options widely available to respond (communicate) and or to replace a company or its products.

Working together

And, finally, the sheer complexity of the world and the challenges the world faces, such as limits to and competition for resources means that the business paradigm has shifted. Companies simply cannot ignore the need to work together within in their sectors, up and down the value chain, across the world and with other non-business stakeholders. Collaborations can range from knowledge sharing, resource management (one company’s waste becoming another’s input) and all the way through co-creation of products and services.

So, if the business is case is that obvious, why are so many companies still treating stakeholder engagement merely as a communication tool aimed at “turning them around to our way of thinking”? The recognition of the importance of integrated stakeholder engagement as a key success factor for overall business success is only slowly taking hold. I believe that engagement should be an integral part of the business management tool kit and needs to be well coordinated throughout the corporation to capture the full value.

Part 2 of this blog article will be published soon…

 

About Peter Paul van de Wijs

Peter Paul van de Wijs

Peter Paul van de Wijs is senior corporate communication, advocacy and stakeholder engagement strategist. Over the past 20-years he has helped businesses and non—governmental organisations capture the opportunities and manage the reputation risks linked to stakeholder expectations. He is the former Vice President, Communication and Engagement at the LEGO Foundation, ran his own consultancy focused on reputation and sustainability, was a member of the Executive Team of the World Business Council for Sustainable Development and held various leadership positions at The Dow Chemical Company.

www.ppvandewijs.com

Twitter: @ppvdw

Skype: vandewijs