In nature, change management is part of everyday life. Change isn’t something done every few years as a programme, it is inbuilt into everything. Animals and plants are continually sensing and responding to the environment. Changes are made as a direct response to the need for survival, both of the individual in the short term and the DNA in the longer term. This scenario will be familiar to businesses, balancing the short-term needs with the long term.  This is not about evolution, which was explored in The Partner 2010 (Richardson 2010), this is about the interaction between one organism and everything in its environment.  Other organisms become the stakeholder and the need to sense and respond become a critical element of both short and long-term survival. Stakeholder engagement is a core capability of survival.

It has long been recognised that those businesses that consider all of their stakeholders rather than just their shareholders, perform better. There are also a number of examples where organisations have underestimated particular stakeholder groups and this has affected the organisations ability to achieve its objectives. Any business considering a change in strategy will see the benefits from carrying out a review of the external environment, the internal environment and the stakeholders.  This becomes increasingly important for those who are building their partnering and collaboration strategy. This paper concludes with a suggested approach  that would support a fresh look at strategy analysis.

What is a stakeholder ?

A stakeholder is “any group or individual who can affect or is affected by the achievement of the organisations objectives” (Freeman 1984) By taking Freeman’s definition it is possible to see that the range of stakeholders for any business can be significant. Recent work with a train operating company identified 39 stakeholder groups. By having a better understanding of these groups, the business was able to develop appropriate strategies for customer insight, property development and carbon management. In each case, the important stakeholders were outside the ones they had traditionally considered.

Understanding stakeholders

Starting with a list of the potential stakeholder groups the first step is to understand their demands.  Each group will have one or more demands on the organisation and a clear understanding of the demands will help later in the prioritisation of engaging with the stakeholders. (Pearce and Robinson 2003) It is worth reiterating that the demands need to be considered from the context of the new strategy and its objectives.

Once you have identified the stakeholder groups and their demands you need to understand how they relate to your business and to each other.  Based on the complexities of relationships between organisms, the Thoughtcrew Symbiosis Relationship model (Figure 1) can be useful here. Initially the stakeholders are plotted based on their relationship to the business. Once plotted the relationships between stakeholders are represented by a line, which in turn can be varied to reflect the strength of the relationship.  With a better understanding of the relationship the stakeholders can be classified into primary or secondary depending on the resources they supply to achieving the business objectives (Argenti 2003) .

Figure 1: Thoughtcrew Symbiosis Relationship Model

The Winstanley Power Matrix (Winstanley 1995) is then useful in helping understand the power each stakeholder group has over the organisation. Winstanley’s matrix plots criteria power ( the ability to change the rules) with operational power (resources) so it is possible to see which stakeholders have comprehensive power over the organisation (high on both criteria and operational power) and those that are disempowered ( low on both axis). The importance of this analysis can be seen by examining Monsanto who, in 2002, underestimated the impact Greenpeace would have on their launch of genetically modified foods into Europe. The influence of Greenpeace on the supermarkets and the subsequent boycotting by consumers meant that Monsanto was unable to gain any ground in Europe even though they had been very successful in the USA.

Knowing the power of each stakeholder is only part of the story.  A more informed view can be taken by also considering the legitimacy and the urgency of the stakeholder group. This is called the stakeholder salience (Agle, Mitchell et al. 1999) and is used to help prioritise the approach to stakeholder engagement.   Finally all the analysis can be brought together to create a stakeholder insight picture (Figure 1).  In the Stakeholder Insight Model all of the key analysis can be viewed in a single picture. This format can be used to communicate with other managers to inform the discussion about the prioritisation of stakeholder engagement.

All of this is relevant to the fundamentals of business survival and it is worth considering reviewing the demands of business survival and stakeholder survival. This can be achieved using the MRSGREN diagnostic tool introduced in The Partner 2009 (Richardson 2009).

Analysing your stakeholders

Having argued the benefits of clearly understanding your stakeholders, the next step is to know how to do this. What follows is one approach that will help provide a better understanding of the stakeholder whether you are embarking on a major transformation programme, building a high performance partnership or getting better alignment between your customers and your business.

1. Define your business purpose, identify strengths and the strength gaps
2. Identify all of the stakeholder groups that are relevant to your purpose ( which may not be what you do today)
3. Decide whether they are primary or secondary
4. Discuss their demands and see what commonality of demand exists
5. Agree the stakeholder legitimacy, urgency and power ( the salience)
6. Examine the type, strength and outcomes of relationships
7. Plot the power as operational power vs criteria power
8. Overlay the data analysis to create the Stakeholder Insight

Figure 2: Stakeholder Insight Model

The combined analysis can be reviewed using the following key:-

Stakeholder Insight Model – key

• Circle shows the position of the stakeholder group
• Segments in the circle represent the proportional power, legitimacy and urgency – the salience
• The lines show that there is a relationship and the thickness represents the strength of the relationship.  Figure 1 shows two relationship types, the first ( shown in red) is a relationship where the demands of the stakeholder and the objectives of the business are more aligned. The black dotted square shows a relationship type that is weak and stakeholders here could be at odds with the organisation’s new purpose.
• The arrows show how the stakeholder group is moving
• A red outline on the circle represents a primary stakeholder group
• The notes describe briefly the demands
• Setting your organisation at the centre defining the goals and purpose using the Past Casting Model™ (further information on this model is available from www.thoughtcrew.net

Key next step

Now that you have an integrated view of your stakeholders you are in a much better place to decide the best way to engage the people who will be impacted by the changes you plan to implement. By having a better understanding the communications, story-telling, leadership behaviours, levels of empowerment and education mean that you will be able to design the approach required to support the change. With this understanding the key next step is to manage the engagement not only for the short term but also to achieve long term engagement so that this becomes business as usual.

About the author

Dr Phil Richardson is the Chief Executive of Thoughtcrew Limited

phil.richardson@thoughtcrew.net

References

Agle, B. R., R. K. Mitchell, et al. (1999). “Who matters to CEO’s? An investigation of stakeholder attributes and salience, corporate performance, and CEO values.” Academy of Management Journal 42(5): 507-25.

Argenti, P. A. (2003). Corporate Communications. Boston, MA, McGraw Hill.

Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston, MA, Harper Collins.

Pearce, J. A. and R. B. Robinson (2003). Formulation, Implementation and Control of Competitive Strategy. Boston, MA, McGraw -Hill Irwin.

Richardson, P. J. (2009). Symbiosis: natural partnering. The Partner. T. Lee. London, PSL: 42-46.

Richardson, P. J. (2010). Fit for the future. The Partner. T. Lee. London, PSL Limited: 75-78.

Winstanley, D. D., Sorabji, S. and Dawson S. (1995). “When the pieces don’t fit: a stakeholder power matrix to analyse public sector restructuring.” Public Money and Management,: 19–26.

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Very expensive mistakes have been made by designing and implementing solutions for symptoms. Little, if any time has been spent examining and challenging these clues to determine the real problem.

Intuition kicks in with the enthusiasm to create tangible growth and soon phrenetic activity is underway. Teams of consultants are deployed and 18 months later questions are being asked why it’s taking longer and costing more than expected.

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Exclusively Kitchens is a high end bespoke kitchen designer and installation company. Focused on providing the best possible quality and value Exclusively Kitchens operated from its base in Bath across the South West. Having been in business for 12 years the directors of the business felt it was time to take a strategic view of the business and look for ways in which to accelerate the growth. Phil Richardson of Thoughtcrew worked with the directors to identify ways in which they could tap into the huge amount of existing customer information. A new IT system was developed based on ACT to go with a new website, customer case studies, a new PR campaign and finally the relocation of the business to a higher footfall area and the creation of a new division called Exclusively Bathrooms. Sales and profit increased year on year.

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CRM
Leadership
Governance
Marketing
PR
Product and service development

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Northern rail is a successful train operating company with 472 stations and 11 million passenger journeys per year. A key component in running the railway is the development and maintenance of stations. At Northern the quality of stations has an impact on the customer service score carried out by the DfT and failure to achieve certain levels can result in the franchise being withdrawn. Whilst the existing station services team was providing a service that achieved the minimum requirements the leadership team at Northern felt that there was an opportunity to provide an excellent service to internal and external customers and stakeholders
Thoughtcrew worked with Northern’s vision to develop a new department called Estates Management. Processes were designed, a new organisation design was put in place and a new way of working developed. The latest feedback shows a marked improvement in the customer satisfaction.

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