The 4th Stakeholder Framework

Article 1

Who is the 4th Stakeholder and what is the 4th Stakeholder Framework?

1-2 minute read

THE CAPSULE SUMMARY – We are making solid progress towards building businesses that balance societal (4th Stakeholder) needs, but we still have major gaps that need to be overcome. These bite-sized papers are designed to highlight those gaps and move towards actionable solutions.

1.1 Our society continues a positive push towards more accountable and responsible corporate and business leadership. It’s a fundamental shift that continues to gain steam and traction with the development of Corporate Social Responsibility initiatives, new purpose-driven corporate structures like B-Corp and Benefits Corporations, the rise of beacon institutions like Conscious Capitalism, grass-roots demand from consumers, growing government pressure, and much more.

1.2 The pull of these disparate threads is successfully shifting us away from a singular stakeholder focus, where a business exists purely to serve the financial needs of shareholders (the 1st Stakeholder), and into a more inclusive vision of accountability that embraces customers, employees, and society at large (the 2nd, 3rd, and 4th Stakeholders respectively).

1.3 We have made solid progress in terms of the 2nd and 3rd Stakeholders, but we are only at the earliest stage of true 4th Stakeholder balance. Businesses are still significantly challenged with balancing just the customer and employee stakeholders while maintaining a profitable, competitive enterprise—let alone dealing with the added complexity of also solving for broader societal impact.

1.4 The goal of the 4th Stakeholder Framework is therefore not to create a spark of change towards more responsible business management (that train has fortunately already left the station) but rather to accelerate the progress already underway by shining a spotlight on the major gaps that gate our progress.

1.5 I will specifically focus on for-profit, commercial businesses. Still, many of the principles discussed apply to any organization that balances multiple stakeholders and has enough scale to impact society in some way. Non-profits, associations, trade groups, and government organizations could all easily fall under this umbrella.

1.6 A final note on format: although my first inclination was to try to put these thoughts into an unnecessarily lengthy form reminiscent of the Federalist Papers, I was luckily inspired by the Ted presentation of Jim VandeHei (the Art of Smart Brevity) and have opted for a simpler, less verbose form. Every section has been streamlined into a stand-alone, roughly two-minute read. Hopefully, I’m somewhere close to the mark. Your attention and your sharing of this content will be the final verdict.