Become a Better Business Citizen

For society to thrive, we must shed the Mercenary business approach and embrace a more balanced stakeholder model. Unfortunately, it’s hard to balance even just the first three primary stakeholders (Shareholders, Customers, and Employees). When you add Society (the 4th Stakeholder) to the mix, that balancing act becomes even more challenging. The 4th Stakeholder Framework and Articles were developed to provide a simple, easy-to-follow playbook to embrace Society as a formal stakeholder—enabling companies to become better Business Citizens as a result.

What kind of business are you?

The 4th Stakeholder Framework

Become a better business citizen by truly embracing Society as a 4th Stakeholder

INTRODUCTION

We haven’t achieved true stakeholder balance

If you are leading any organization you have multiple levers you need to pull to create positive societal impact (or just as importantly, avoid negative ones). This simple framework (Article 1) provides a roadmap for maximizing your impact and overcoming the four major gaps (Article 2) that still stand in the way of achieving true stakeholder balance.

PART 1

Build positive societal impact into your core business engine (Article 3)

Some organizations, through their inherent structure (Article 4), are focused on creating positive social impact. And although the rest can’t necessarily claim an ‘inherently good’ foundation, that doesn’t mean they can’t do amazing things for society. Companies can attach a fractional benefit (Article 5) to their business model and they can also redirect profits or employee time (Article 6) to fund social initiatives.

 

PART 2

Identify all high-impact first AND second-order business effects (Article 7)

Leaders must be accountable not just for the first-order impacts (Article 8) of their business but for the downstream second-order impacts (Article 9) as well—which can be even more damaging. Unfortunately, because second-order impacts involve distributed responsibility (Article 10), they require Collective Action (Article 11) and a simultaneous commitment from multiple companies (Article 12) to successfully mitigate them.

 

PART 3

Identify the biggest impact swings the business can take (Article 13)

Too often companies dabble with multiple, smaller tactics vs. consolidating their energy and focusing on the biggest impact areas first. It’s a thorny problem because of the lack of a common denominator for social impact (Article 14). Attempts to use financial ROI as that unifying metric are fundamentally flawed and must be avoided (Article 15). Instead, all companies should create a prioritized, weighted attack matrix (Article 16) of what’s most important, taking into account all first and second-order business impacts. This is easier said than done, but it can absolutely be done (Article 17) as long as you are willing to change some fundamental mindsets about impact and responsibility (Article 18).

 

Article Index

Your success is a societal gift. Repay it.

Sometimes in life, we are given the gift of having control over some scale lever in society. This could be running or founding a business, having a large consumer or media-based following, running a non-profit, working in government, and much more. I have always held a firm belief that if you have been granted this gift by society, you have a responsibility to ensure that you are using that scale for the benefit of society in some way. That doesn’t mean that we all need to run off and start a non-profit tomorrow. However, it does mean that every leader needs to be accountable to society at large and needs to ensure that their actions are not creating unexpected downstream harm.

Victor Cho

What Success Looks Like

You will have significantly improved your 4th Stakeholder balance when you have identified the biggest societal swings you can take, inclusive of both first and second-order business impacts, and you have a clear, transparent plan of attack that incorporates actual societal input.