Article 19
The fourth major gap preventing 4th Stakeholder balance
1-2 minute read
CAPSULE SUMMARY – We must build a living feedback and accountability loop directly with Society in order to close the final 4th Stakeholder gap.
19.1 Welcome to Part 4. In this final section of the 4th Stakeholder Framework, I will delve into the last major gap preventing us from achieving overall stakeholder balance: the lack of societal input into business prioritization. Before we start this exploration, however, we need to first delve into what it actually means to be ‘accountable’ to a stakeholder.
19.2 In order for a company to be accountable to any given stakeholder, it needs to provide: 1) full transparency to that stakeholder in terms of the nature of the relationship (what value is being exchanged between the company and the stakeholder?) and 2) a mechanism that allows the stakeholder to influence or modify that value exchange (how does the stakeholder actually change the company’s behavior?).
19.3 In life, if you’re going to have a relationship with someone, you need to be honest with them and you need to be in a two-way, not one-way conversation. The same holds true for businesses and their stakeholders.
Your interaction with your key business stakeholders has to be a two-way, honest conversation.
19.4 For the first three stakeholders, the trajectory of this transparency and feedback engine, although imperfect, continues to head in a very positive direction. Businesses have become responsive to these first three constituents in a way that two or three decades ago might have seemed radical or untenable. Shareholders, customers, and even employees now have a direct and often unavoidable say within most companies in terms of how they are treated, how the business prioritizes their needs, and more.
19.5 Unfortunately, this transparency and feedback system has not been granted (yet) to the 4th stakeholder—but it needs to be. Few if any companies have put in place formalized processes or operating mechanisms to capture what I will call the Voice of Society (the direct input and feedback from the societal stakeholder). Although many businesses selectively monitor customer experience points, social media trends, blogger mentions, etc. to try to understand the collective outside-in buzz around their brand or products, they haven’t condensed that broad, messy cloud of public noise into a set of focused, publicly exposed action.
19.6 This lack of feedback and transparency in prioritization makes up the fourth critical gap that we need to overcome to achieve 4th Stakeholder balance. To overcome it, companies will ultimately need to embrace three simple actions: 1) adding a persistent mechanism to capture Voice of Society; 2) incorporating that new societal input into decision making and prioritization, and finally 3) significantly elevating the transparency of this entire process and reflecting it back to society.
19.7 Although this might sound like a radical idea (I’m going to open up my business prioritization to the mass chaos of society and allow it to determine how I allocate resources!?) I’m here to tell you that it’s not. All the other stakeholders at the table are treated with this reciprocation, even though initially that relationship might have felt foreign and unnatural. It only makes logical sense that the 4th stakeholder, when invited to the stakeholder table, would receive the same treatment.