Authors: Onyemaechi Nweke, DrPH, MPH is an Advisory Board Member for C3MD and the Founder of Triconcepts International, LLC, Savage, MD & Nneka Chiazor, MBA is the Regional Vice President for Government and Public Affairs, Cox Communications, Richmond, VA
Conscious Capitalism of Central Maryland (C3MD) in collaboration with 1776 sponsored a webinar event on May 13, 2020, to explore the practice of integrating the needs and interests of stakeholders into business strategy. The audience included business leaders wanting to transform their organizations and stakeholders interested in encouraging organizations they are affiliated with to become stakeholder-oriented. The objectives were to: 1) define the persona of stakeholder-oriented companies; 2) examine the value of integrating stakeholder needs and interests or lack thereof through the lens of results or impacts; and 3) explore the practice of becoming stakeholder-oriented through the experiences of a practitioner organization as shared by Nneka Chiazor from Cox Communications. In this writeup, we offer some insights from our conversation during the session about the distinct nature and actions of stakeholder-oriented businesses. Embedded in these insights are valuable tips and strategies for businesses to start or catalyze their journeys to integrating stakeholder needs and interests.
- Stakeholder orientation must be wired into an organization’s DNA: Businesses can tailor their operations and products to meet the needs and interests of stakeholders; the key is to start with purpose, mission, and a set of values that embody this ideal. Cox Communications’ ability to run a company aligned with the needs of its stakeholders has roots in its foundation. In 1898, the company was founded by James M. Cox in response to an observed socioeconomic inequity in information access given that many could not afford a newspaper at the time. In addition to a stakeholder-centered purpose, he adopted a business philosophy that success was only possible if the newly founded organization did the right thing for customers, employees, and community, i.e., its stakeholders. One hundred and twenty-two years later, the original motive and business philosophy have not aged, and continue to effectively guide the current leadership, the organization’s business strategy, and its operations. That foundational philosophy still carries through its current mission statement of “a better future for the next generation,” and underpins how Cox Communications views its work in relation to its stakeholders’ needs. (These tips and strategies can also be seen below in the Drawn Dialogue from the event, drawn by Mary Jo Neil). For instance, inequities in access to information, also commonly referred to as the digital divide, continue to be a societal problem. In addition, the Covid-19 pandemic has exacerbated this divide and is yielding other negative impacts on businesses and other stakeholders such as community residents and customers. Because the values of equity and doing the right thing for the stakeholder are strands in Cox’s DNA, it can quickly maneuver its corporate strategy to meet these emergent stakeholder needs. For example, the organization is exploring ways to collaborate with stakeholders such as fellow businesses that are hurting and is reaching out with support. It is evaluating what information access may look like for future generations that might never work in an office or who may have to practice social distancing for a long time given the realities of the day. The Cox Communications story strongly suggests that to be stakeholder-oriented is to weave this pillar through the fabric of an organization. How an organization is wired to think and act relative to its stakeholders determines whether it can consistently integrate stakeholder interests and needs over time. It also determines whether the organization is sufficiently malleable to evolve alongside stakeholder needs and interests in its ecosystem while doing what it does best.
Drawn Dialogue by Mary Jo Neil.
- Stakeholder-oriented companies consider the business ecosystem a sea of opportunity: Stakeholder-oriented companies see beyond the traditional “inner circle” stakeholders, i.e., customers, employees, suppliers, and shareholders. They recognize that other stakeholders such as advocacy groups, competitors, host communities, and even regulators have interests and needs that if integrated into a business strategy can prevent liability, increase operational efficiency, foster brand loyalty, yield new opportunities to create value, and spark innovation. For example, residents of host communities can enlighten a business about unknown externalities related to business operations before they happen because they understand their communities best. Employees can offer innovative ideas that reduce production inefficiencies, improve customer service, and increase business income because they are most knowledgeable about pain points in the daily operations of an organization. Even competitor businesses in an ecosystem can interact synergistically in the spirit of “co-opetition” to meet each other’s needs and create economic value in the process. Basically, to be stakeholder-oriented is to appreciate the contribution of each stakeholder and to create the space for collaboration. At Cox Communications, they created an employee resource group to provide a platform for employee stakeholders to channel novel ideas, which are then shared with executives in the company for consideration and adoption. In some instances, teams are created to nominate ideas that are voted on to select winner ideas, which then proceed to implementation. In effect, the stakeholder-oriented business appreciates the extent of its ecosystem, is a prolific collaborator, and creates the space for co-learning and co-production of value with all stakeholders. Indeed, the stakeholder-oriented mentality is that what can be achieved together is greater than what is possible working in isolation.
- Stakeholder-oriented companies thrive on interdependencies: The conscious capitalist’s perspective is that a sneeze in one part of the ecosystem can become a full-blown disease for a business, figuratively speaking. For this reason, the use of the term “ecosystem” in the community of practice is deliberate. It is a term that conveys the concept of a web/network of stakeholders that are interdependent, and also contextualizes decision making in the business environment. Simply put, conscious capitalists care about their influence on and interactions with stakeholders. When businesses think “interdependencies” they are more likely to do transformative collaborative work to co-create value with stakeholders for the sake of fostering a healthy ecosystem. In the early 2000s, the Cleveland Foundation, Case Western Reserve University, University Hospitals, and Cleveland Clinic came together to explore how they could align their interests with the needs and interests of their host community, the University Circle neighborhood. They wanted to foster inclusion of the community in the local economy by creating jobs, building wealth, and reinvestment in the community. Undergirding this proposition was the recognition of the interdependencies between the community and the three hospitals, such as the fact that part of the hospitals’ workforce resided in the community. The strategy to achieve this included leveraging the approximately $3billion procurement power and economic engine of these hospitals for a “local procurement” initiative, which subsequently birthed a local employee-owned cooperative known as the Evergreen Cooperative. This local employee-owned business currently includes a green commercial laundry business and an urban hydroponic greenhouse, both of which service local institutions. By partnering to invest in local wealth creation through this initiative, the University Circle Initiative businesses are collaborating to foster a healthier and more vibrant community and therefore business ecosystem doing what they do best.
The flip side is not valuing or ignoring these interdependencies. This corporate attitude can yield missed opportunities to create economic and other kinds of value for all stakeholders and the business. Even worse, it can foster “parasitic” relationships with stakeholders to the detriment of the entire ecosystem. Environmental pollution and sickened customers, communities, and employees are examples of detrimental impacts resulting from the lack of concern for stakeholders and interdependencies in the business ecosystem. Interestingly, these negative relationships ultimately trackback to the culprit businesses via negative consequences such as loss of the social license to operate, loss of customer trust and clientele, and hefty regulatory fines and legal liabilities from violating employee, client, and public trusts. These negative outcomes can result in avoidable loss of business income, and in worst-case scenarios business failure. There are one too many examples of the unfortunate impacts of not being stakeholder-oriented in the United States and globally.
- Assessing stakeholder needs is a critical strategy for becoming stakeholder-oriented: To meet the digital access needs of low-income communities, Cox Communications learned that marketing much needed low-cost options in open and easily accessible spaces such as grocery stores was not sufficient to recruit service users. What worked? Meeting people where they are with dignity, in spaces where they feel safe, and working with community leaders and organizations that are trusted in the community. It meant engaging organizations like the Urban League, the National Association for the Advancement of Colored People, and faith-based organizations. It also required partnering with government organizations such as schools, which have unique access to parents of students in need of affordable internet access. Understanding community needs and how to meet these needs required hosting focus groups and asking the community how they wanted to be served. While this example of assessing community stakeholders’ needs highlights the benefits of being a big business with the staffing capacity and budget for outreach, engagement, and assessment, being small-sized should not deter businesses from using similar strategies. Small businesses can identify peer partners for co-opetition type relationships by assessing competency gaps and locating business stakeholders that offer complementary competencies. To understand community stakeholders’ needs or provide services, small businesses can forge coalitions with other businesses and community organizations, to increase their access, reach, and impact. Lastly, it is worth noting that partnership opportunities with other stakeholders (competitors or otherwise) may emerge when approached differently from the perspective of a shared end and/or stakeholder. In the case of the University Circle Initiative in Cleveland, the desire to meet the needs of a shared stakeholder is what sparked uncommon collaboration among these competitor hospitals.
- Repurposing? Stakeholders hold valuable insights: The year 2020 ushered in a season of much pivoting with the onset of the COVID-19 pandemic. We will be remiss to not mention the power of harnessing stakeholder relationships in this regard. Stakeholders have valuable information about their changing needs and demands, which in turn may fall into the categories of problems businesses can solve. Unlike others, stakeholder-oriented businesses have easier access to this type of knowledge because they know their stakeholders, have valued relationships and trusted communication channels with them, and can therefore readily engage them to understand how their needs have evolved. At Cox Communications, they are leaning on relationships established with customers and communities prior to the pandemic to figure out emerging needs and how the organization can be supportive of doing what it does best. One strategy for reckoning with emerging ecosystem needs when these relationships are too new to be harnessed or yet to be established is to reach out to and engage organizations that organize and serve as conduits to other stakeholders in the business ecosystem. These include business communities of practice, issue and group advocacy organizations, service-oriented non-profits, professional associations, etc. These organizations tend to possess the trust and access to convene specific groups. They can rally those stakeholders in the ecosystem to share information and are repositories of knowledge about the groups and populations they work with and represent. Businesses leaning on these types of organizations for information can subsequently assess how their organization’s assets can be useful and adapt accordingly. As undesirable as repurposing may be when forced, it presents an uncommon opportunity for businesses to be part of the solution to emergent people, place, or planet problems (and therefore, new economy) using the advantage of assets in hand.
In conclusion, stakeholder orientation can be challenging but bears outcomes that make it worth the time of organizations that wish to do good by doing business. It takes the right business philosophy and a business environment that nurtures and sustains a culture of mindfulness, inclusion, and innovation under the guidance of selfless and thoughtful leadership. By design, it creates value for all stakeholders and therefore holds much promise as an important strategy for undergirding economic recovery efforts in a post-pandemic era.