Get the highlights in your inbox every week.
Your organization can be more open with stakeholders
4 ways to engage your organization's various stakeholders
Open organizations are more transparent and accountable to people who they impact—and who impact them in turn.
I've spent most of my professional life helping organizations be more open to their stakeholders. I'm a partner in a consulting company in Chile, whose typical customer is a for-profit organization wishing to develop some kind of public works project (for example, an electricity generation station, a transmission line, a mine, a road, an airport, or something similar). Projects like these typically aim to fill a social need—but they're often intended for locations where development and operation can have negative impacts (or, in economic terms, "externalities").
Old school development theory, based on John Stuart Mill's Utilitarianism, is willing to sacrifice local good for overall benefit to society. Recently, however, a number of factors (including improved communications and the growth of interest in rural tourism, as well as the non-essential "needs" that many of us hope to satisfy) have created a situation in which local interests are not at all willing to sacrifice any more of their immediate neighborhood to provide benefits to people who live and work far away. Today, we see a growing amount of well-coordinated and very visible resistance to this kind of development.
In situations like these, encouraging stakeholder engagement and participation is critical for helping all parties reach agreement on the most acceptable development plan for everyone. And modern development organizations—private- and public-sector alike—are creating increasingly sophisticated approaches to deal with this situation.
And most of these approaches involve opening up their organizations in such a way as to incorporate local needs and desires into the design, implementation, and operation processes in order to ensure that real benefits get shared equally among both local and more global interests.
The work I've done over the years has shown me that an open approach really is the best way to handle situations like these. On top of that, though, it has shown me that best practices for improving relationships between external partners can actually help us create better workplaces inside our organizations, too.
Here are four examples of this kind of open approach.
The forest and the trees
The Forest Stewardship Council (FSC) invites forest managers to certify their operations to FSC sustainability standards "to take care of our forests and those who rely on them: by protecting plant and animal species, Indigenous Peoples rights, forest workers' safety, and much more". FSC policies, standards and procedures are developed in an open and transparent fashion, for example through the work of public committees and consultations; FSC itself is not only an open organization but its organizational workings are documented and subject to change based upon the will of its members. Moreover, organizations certified by FSC work together with employees and stakeholders to assure effective consultation and engagement according to formal standards; for example, FSC Principles and Criteria for Forest Stewardship creates the general normative framework that FSC considers as defining "forest stewardship", while Stakeholder Consultation for Forest Evaluations is a specific tool to assist in effective consultation with stakeholders in the evaluation process.
Someone reading the previous paragraph could be forgiven for thinking "what does forest stewardship have to do with making my IT infrastructure company open?" Two replies come to mind: first, remember that FSC is itself an open organization, and therefore probably has many lessons to offer to the rest of us on how to run a successful open organization; and second, FSC offers the tools it has developed and proven for open planning, consultation and measurement to anyone who might wish to adopt their standard or adapt it to other uses.
How complex is your supply chain?
FSC policy, standards, and procedures all focus on a very broad definition of the supply chain, incorporating employees, contractors, stakeholders, regulators and the environment. Another organization, the World Business Council for Sustainable Development (WBCSD), takes a similar perspective on the broadly-defined supply chain and offers two excellent toolkits for its management: the Natural Capital Protocol tookit and the accompanying Natural Capital Protocol, which focuses primarily on the environment as key component in the supply chain, and the Social Capital Protocol and related tools, which deals primarily with the social aspects of the supply chain, including employees, contractors, stakeholders and society at large. For those interested in fostering open culture, the Social Capital Protocol recognizes:
People are at the core of business. They are companies' employees, customers, suppliers, distributors, retailers and neighbors. They determine whether a company has a productive workforce, loyal customers, healthy value chains, vibrant local communities, and supportive governments and stakeholders now and into the future. Their growth and well-being matter to the bottom line.
- Step-by-step guidance through four stages
- Best practice recommendations
- Company case studies
- Relevant tools and references
Openness is core to the Social Capital Protocol process and is particularly evident in the materials provided by the WBCSD. And, from my perspective, the concept of an open supply chain is a powerful and transformative business tool.
Another organization that seeks to foster openness and excellence is B Corporation, whose web site explains:
- B Corp is to business what Fair Trade certification is to coffee or USDA Organic certification is to milk.
- B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, and transparency.
- Today, there is a growing community of more than 2,100 Certified B Corps from 50 countries and over 130 industries working together toward 1 unifying goal: to redefine success in business.
- B Corporation therefore extends many of the ideas present in FSC to a broader audience.
In my experience, quite a few business people have some familiarity with B Corporation. I've often heard dismissive comments like "Oh yeah, B Corps. They just try to replace 'profit' with 'value.'"
While many of these impressions may have some truth, in my experience they completely miss an important point: Companies that spend all their effort on being ferocious competitors in order to maximize returns to shareholders can—and sometimes do—cause great harm to others. And this great harm can—and sometimes does—result in unsatisfied customers and angry shareholders.
Therefore, it is at least worthwhile for companies to think about the real size of their supply chain (see above) and try to measure their risks in relation to that supply chain. In this context, one of the coolest things about B Corporation is that they offer any company the tools required to evaluate how the company is really doing in terms of social and environmental performance, accountability, and transparency.
And, once again, while the focus of B Corporation is something other than openness per se, it is completely clear that social performance, accountability and transparency cannot occur without first establishing an open environment.
Finding the balance
Finally, the Balanced Scorecard rises above many other tools as an effective and proven way not only to promote openness within an organization as well as among its clients and supply chain, but to define strategy and regularly measure and report on both financial and non-financial outcomes in an integrated fashion. I like The Balanced Scorecard Institute's Balanced Scorecard Basics as a good introduction to this fine tool:
The balanced scorecard (BSC) is a strategic planning and management system that organizations use to:
- Communicate what they are trying to accomplish
- Align the day-to-day work that everyone is doing with strategy
- Prioritize projects, products, and services
- Measure and monitor progress towards strategic targets
Notice key components of openness, including communication, strategy alignment and priorities, as well as the need to measure and monitor progress. Of course, it's possible to build specific openness work programs and measurements into an organization's BSC implementation.
Over to you
So, there we have it: a broad range of tools and frameworks that either directly address aspects of openness or can be used to help design, implement, and measure organizational change leading to open culture.
How might these help us reimagine the way our organizations operate today?
Let's start with re-imagining the supply chain, as per the Forest Stewardship Council and the Social Capital Protocol. Recognize that it's not just production building blocks, but people—our employees, our suppliers, our neighbors. Some of these people are also our customers and shareholders. Can we develop engagement strategies to keep our employees, suppliers, neighbors, customers, and shareholders positive about our company? Can we even imagine such a thing being possible unless we are prepared to be open and transparent?
Then, we can think about how to design a strategy for open and transparent engagement. Here, the B Corporation's assessment framework and the Social Capital Protocol and Balanced Scorecard methodologies can provide a way to determine what's working, what's not, and how to go about fixing it.
I'm going to look into these two ideas more deeply in future articles. Meanwhile, I'll leave you with a quote from Umair Haque's Betterness that talks about the need for open and transparent engagement:
People, communities, society, governments, investors, and employees alike are all starting to say: "I'm not interested in your business. Business is obsolete. The real question is: can your company do anything more than just 'business'? What can you do to inspire, amaze, delight, surprise, elevate, enlighten, and better me, and the community around me? What can you do to evoke my fuller potential, and that of the people I care about? What can you do to authentically matter to me?