—by Liz Richardson, C3MD President
Over the past couple of weeks, I have been taking time to share with my team at Indigo Ink a little bit about Conscious Capitalism and the 4 Pillars, or Tenets. While the values and business practices of Conscious Capitalism have long been a part of our daily dialogue and operational process, we haven’t necessarily spoken the “lingo” and terminology used by Conscious Capitalism or the wider business media. In fact, until a couple of weeks ago, if you were to ask anyone on my team about “the 4 Pillars,” they might not have known what you were talking about – but, to be clear, they likely know more about their own “on the ground” practical experience with these ideas and values than many (not to brag). One thing that came up in our recent discussions was the observation that business lingo and jargon can sometimes be hard to understand, inaccessible, or downright off-putting. My team is not alone. I’ve gotten this feedback quite a lot over the years.
One of the most confusing (and contentious) terms out there is “Stakeholder Orientation,” which is not only one of the 4 Pillars but also the pillar that Conscious Capitalism of Central Maryland (C3MD) has been focusing on during the first quarter of 2022. To explain what this pillar is all about, I thought it might be helpful for me to share with you exactly what I shared with the my team during our discussion about this topic recently:
Going back well over a decade, as I was reading just about anything I could get my hands on about business best practices in order to help us do better at Indigo Ink, I started to get really stressed out and confused because it seemed like I was reading a lot of conflicting information and I just didn’t know who to believe. Over time I began to notice that these “business experts” – and the business media – tended to fall into two distinct schools of thought. At the time, I wasn’t aware of any term for these divergent ways of doing business. Since then, I’ve learned that these schools of thought have names.
Shareholder Orientation VS Stakeholder Orientation
What do these fancy terms mean?
Shareholder orientation is the economic theory that a business’s only purpose is to create and maximize value and generate income for company owners or owners of stock. Stakeholder orientation is the economic theory that a business’s purpose is to create value for all who are impacted by the business, including creating value and generating income for the owners or owners of stock. The simple way of describing the difference is the first is “Zero Sum” and the second is “Win-Win.”
Who are stakeholders?
It depends on the specifics of the business and location, but generally it can be owners, employees and their families, vendors, customers, community, the environment, and even the Government.
What does it look like when a company is choosing to operate from a stakeholder orientation?
It can look different for each business, but you are likely to find questions like the following being asked by the management and decision makers:
- What is our environmental impact? How can we reduce this?
How are we creating value for our customers? How can we better serve them?
- If we were to disappear, would our clients miss us?
How do our employees like working at this company? Are they able to thrive and develop?
- Are wages fair?
What is the quality of working life like? Is it sustainable?
Do we have a trusting relationship with our vendors and suppliers? Do they get paid on time?
How does this business impact our local community?
I think of operating from a stakeholder orientation position as generally good business practice – while also recognizing that it can be quite overwhelming to do all of this really well. A company who takes “Stakeholder Orientation” seriously is not always (likely never) going to be doing it perfectly. Operating a business is hard. However, the argument for making this “Stakeholder Orientation” top of mind is that by operating this way, over time you are more likely to create a sustainable, stable business that can thrive and survive in our increasingly volatile and uncertain world. It builds resiliency. I also like to think it’s just more fun and enjoyable overall.
I hope this helps clear up some of the mystery around this topic. As always, I welcome your thoughts and feedback and always enjoy hearing other people’s stories and experiences. If you have a story to share, please reach out via email, and/or follow us (and engage) on Instagram, LinkedIn or Facebook.
Join us for our next virtual Coffee & Collaboration in April, where we’ll focus on Higher Purpose, another of the 4 Pillars. Register here.