Strategic Leadership with Stakeholders PDF Print E-mail
Written by Randall Rollinson   
Wednesday, 20 June 2012 17:10
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A pivotal role of any strategic leader is providing effective leadership to a broad range of stakeholders who, in turn, are beholden to their own set of leaders and their own set of priorities.  Of all the roles and responsibilities strategic leaders must shoulder, no role is more challenging and critical to the success of an organization than this one.

Respecting this fundamental reality, a strategic leader must be pragmatic; have a keen understanding of this requirement; and be able to consistently influence non-competitive stakeholders to think through and act in accordance with the best interests of his organization and its strategy.

So how does strategic leadership with stakeholders occur?  First, leaders know in their heart of hearts that before they can influence another’s behavior, they must build a meaningful relationship with each of their key stakeholder groups.  A relationship based on trust, open communication and a keen recognition of the value of win-win solutions.

To accomplish this objective, leaders must make time to learn what is important to each stakeholder representative. Then a leader establishes the ability to see the situation from the other person’s perspective. No mystery here…it means they take the time to listen and get to know the person and organization.  They probe to understand each stakeholder’s needs, their wants and most importantly their expectations.  By doing so they are in a much better position to execute on the organization’s objectives while meeting those expectations when the time comes.

Courting Stakeholders

Second, they invest in helping each stakeholder understand the vision of their organization and the strategic situation it faces.  They communicate these key messages in a way that can be heard by each stakeholder. At the core of each message is a compelling discussion which summarizes where the organization’s priorities intersect the priorities of the stakeholder.

To accomplish this level of effective communication leaders share strategic information with each stakeholder, drive home a sense of “we’re in this together” and understanding that before any significant change can be  made at the operational level, emphasis must first be placed on working through an action plan together.

This level of strategic leadership is aligned with co-creation of customer value as described by C.K. Prahalad and Venkat Ramaswamy, in The Future of Competition: Co-Creating Unique Value with Customers.   The authors argue three primary points in support of their model for creating sustainable value.

  • Value is co-created by the consumer and the organization (not the organization alone).
  • Co-creation experiences are the fundamental basis of value creation (rather than the products and services offered).
  • The individual is central to the co-creation experience (instead of consumers representing demand for the organization’s offerings).

I strongly believe this same logic model applies to all stakeholders be it a customer, a strategic partner, the board of directors, a key supplier, a subset of employees, a labor union, a creditor, a regulatory body, a local community impacted by the organization or ???  In most cases stakeholders are more likely to align with an organization who values the co-creation process, understands the power of “We” versus “I” and takes pride in being an active partner in creating a solution that works for everyone involved.

Theorists Prahalad and Ramaswamy propose four building blocks for co-creating value with customers – the DART Model.  I’ve taken the liberty to expand the model’s scope to be inclusive of all non-competitive stakeholders.  Here is the definition of the model.

  1. Dialogue – Interactive engagement and shared learning between the strategic leaders of the organization and a particular stakeholder – building loyalty as well as value.
  2. Access – Providing access to information and tools that enable a particular stakeholder to directly engage and consider potential sources of value creation at the organization.
  3. Risk assessmentHelping stakeholders understand the risks associated with the products, services and experiences they are creating – so informed choices can be made in co-creation.
  4. Transparency – Providing (and assuming) less asymmetrical information regarding prices, costs and processes – empowering stakeholders to be confident in the decisions they make in the co-creation process.

Below are a series of nine questions which can serve as a practical checklist for you to consider as you attempt to influence each of your key stakeholders to act in the best interests of your organization.

    Dialogue –

  1. What issues are of keen interest to the stakeholder in question as they relate to your organization?
  2. __________________________________________________________________________________________

  3. What are potential forums you can create for a dialogue with your stakeholder?
  4. __________________________________________________________________________________________

  5. What are some potential rules of engagement (explicit or implicit) that will make for an orderly, productive interaction?
  6. _________________________________________________________________________________________

    Access –

  7. What information might you provide to your stakeholder to enable them to directly engage in the value creation process for your organization?
  8. __________________________________________________________________________________________

  9. What tools might you provide to your stakeholder to enable them to directly engage in the value creation process for your organization?
  10. __________________________________________________________________________________________

    Risk assessment –

  11. What information can you provide to your stakeholder regarding risks associated with your organizations products, services and experiences – so informed choices can be made in the co-creation process?
  12. __________________________________________________________________________________________

    Transparency -

  13. What information can you provide to your stakeholders on pricing that will empower them to make confident decisions in the co-creation process?
  14. __________________________________________________________________________________________

  15. What information can you provide to your stakeholder on costs that will empower them to make confident decisions in the co-creation process?
  16. __________________________________________________________________________________________

  17. What information can you provide to your stakeholder on your internal processes that will empower them to make confident decisions in the co-creation process?
  18. __________________________________________________________________________________________

What lessons have you learned over the years in this regard? Which ones can you share that might help us all work more effectively stakeholders?  Please weigh in!

Prahalad, C. K., Venkat Ramaswamy, The Future of Competition: Co-Creating Unique Value with Customers, HBS Press.



0 #2 Randall Rollinson 2012-06-28 11:46
Thanks Kathleen. We are trying to shine a big bright light on this very powerful discipline that has much to offer to many.
+2 #1 Kathleen Rivero 2012-06-27 19:47
really useful info. now there is a process that strategic management can be patterned after.

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