The 4th Stakeholder Framework

Article 20

The voice of X

2-3 minute read

CAPSULE SUMMARY – All other business stakeholders maintain a two-way dialogue and relationship with the company. Society should be no different.

20.1 Every time a new stakeholder has been truly embraced by business, it has been granted the power and opportunity to engage in ongoing, sometimes painful discussions with the executives running the business to ensure that its concerns are addressed and balanced against the other stakeholders. I will refer to that back-and-forth dialogue, with its associated transparency, as the Voice of Shareholder, Customer, and Employee respectively.

20.2 The Voice of Shareholder flows fast and furious through multiple channels: board meetings which include major shareholders, recurring shareholder meetings that include report-outs and votes on critical business issues, the real-time trading and selling of a company’s stock (which is an instantaneous signal of whether shareholders have faith in the overall business strategy/priorities), and more.

20.3 In terms of transparency, the accounting and reporting standards set by the FSB and codified and refined in the 1970s ensure that all shareholders of a company have a consistent, standardized way to assess the key financial health measures of the business.  When a company fails to deliver on what the shareholders want to see (increasing revenue, increasing cash-flow, increasing stock price) the Voice of the Shareholder comes through loud, clear, and demanding.

20.4 Customers were the second major stakeholder to truly get embraced by a bi-directional relationship of transparency and influence. Of course, nearly every business ultimately succeeds or fails based on the service or product that it delivers to its customers, but it wasn’t until the advent of the Internet and the massive increase in the velocity and quantity of feedback that companies started to really get religion about ‘delivering for customers’.

20.5 In our new perpetually connected world, where review sites and social media channels instantly amplify customer pain, the best customer experience wins. On top of that, formal industry initiatives like Net Promoter have provided a crisp new global short-hand metric and defined feedback processes for capturing Voice of Customer. Today, pretty much every business and product leader understands that you need to perpetually gather direct customer feedback, prioritize the most important customer issues, action them, and communicate the improvements back to your customers.  

20.6 Employees have just recently joined the cycle of feedback, action, and transparency en masse. Over the last two to three decades, the historic, sometimes adversarial relationship between ‘labor’ and ‘management’ has evolved into a two-way relationship where, even without the formal support of Unions (participation in which has fallen to a historic low of just over 10% of workers in the U.S.), employees in many industries are now able to voice their concerns, engage with leadership, and have an active say in the work environment, benefits, and culture of a company.

20.7 Here again, the hyper-transparency that the Internet has brought into the world leaves its mark. Sites like Glassdoor ensure that companies who systemically fail or abuse their employees will have a very hard time hiring good talent as that knowledge distributes into the public view for all to see. And new waves of employees entering the workforce (Millennials, Gen Z), having grown-up in a world of continual feedback and input, carry an expectation that the Voice of Employee--their voice--will be taken into account. Although we are still at the early stage of this macro change, the floodgates have been opened.

20.8 As we shift our attention to the 4th stakeholder, these same considerations and feedback loops now must be put into place for the societal stakeholder. Attempting to do this without a direct feedback mechanism from society would be akin to saying that you are going to improve your customer experience without ever talking to your customers, or you are going to build a highly engaged workplace for employees without ever asking them how they feel about their work environment. It would be insanity to think that you can legitimately serve a stakeholder without getting that stakeholder’s input.

20.9 So how do you actually make this work in practice? The simple question of “Who in society am I actually getting feedback from?” doesn’t have an obvious answer. You can’t simply take a random survey of the broad population when the vast majority of them have no knowledge of your product and aren’t being impacted by your business footprint. In addition, the issues being discussed can be highly complex, technical, and/or may require broad or deep business context in order to think through them critically. You need to install a societal feedback process that deals with all of these dimensions.

20.10 So what does that look like? The answer comes in three parts, each of which will be covered in the next three articles.