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Thriving in a Stakeholder World - Purpose as the New Competitive Advantage
von: Paul Ratoff
Indie Books International, 2015
ISBN: 9781941870440 , 248 Seiten
Format: ePUB
Kopierschutz: frei
Preis: 10,69 EUR
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CHAPTER ONE
Surviving and Thriving in the Brave New Stakeholder World
THE BIG IDEA
To be successful in today’s world, an organization needs to think beyond maximizing shareholder value. Organizations need to manage from the perspective of stakeholder value and bring back purpose as an effective management tool.
In 1995, Larry Page and Sergey Brin met by chance at Stanford University. Their collaboration over the next three years would result in one of the most well-known and utilized services on the Internet. By 1998, the pair launched the search engine Google and incorporated the company with a clear purpose in mind. Google’s mission was, and still is, to organize the world’s information and make it universally accessible and useful.
As you are undoubtedly aware, Google radically transformed the way most people access information on the Internet. Throughout the years, the company added products like Gmail, Google Maps, and the Android operating system that would become fundamental to the lives of users across the world. Each month, Google is used for search by over a billion unique users. During the summer of 2013, a five-minute blackout of Google caused global web traffic to dip by 40 percent. You will probably use at least one of their products today.
What makes Google unique is not just its great success as a global enterprise but its commitment to making a huge contribution to society that is meaningful and important to most of the people who are impacted by them. In addition, Google recognizes that it is also impacted by the very same people and must address their needs as well.
Google realized from the start that if it were to achieve its mission, it would need to think beyond merely maximizing profits and instead balance the needs of all of its stakeholders including employees, customers, suppliers, governments, media, activist groups, competition, and the community at large. To honor that, it established one of its core values as “Don’t be evil.”
In the prospectus for their IPO in 2004, Google stated: “Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short-term gains.” What an incredible thing to put in writing. This ideal has not always been easy to live up to over the years. Google has come under criticism for censorship in China and violations of privacy that some feel conflict with their “Don’t be evil” ethos. But on the whole, Google is an excellent example of how a company can consider its many stakeholders in pursuit of its mission.
This book offers two fundamental concepts for leaders to consider when building a lasting organization. These concepts are not earth shattering or, for that matter, even all that new. But when they are embraced and practiced authentically, they can be transformative for organizational success. This book examines different applications of those concepts in developing successful business strategies to help you not only survive, but thrive.
What are these two concepts? First, one must look at an organization strategically as if operating inside of its own stakeholder world. This will be discussed in more depth, but essentially, the stakeholder world means or is represented by the many individuals and groups of individuals who impact, or are impacted by, the organization. The second concept is that, to ensure an organization’s long-term success, pursuing purposeful behavior will be the best practice for managing stakeholder value inside its stakeholder world. By purposeful behavior, we mean taking actions that are consistent or aligned with a purpose that is meaningful and important to all the organization’s stakeholders.
These two concepts were developed from three different insights: First, organic development in nature can be a useful model for understanding behavior in organizations. Second, the historical development of equity-capital markets and capital providers, and their influence over public companies, has shaped our view of responsible corporate behavior. And third, current world trends are shifting influence among various stakeholders, which in turn impacts organizational behavior. Let’s look at these in a little more detail.
Insights from Nature and Early Human Ancestors
We assume that all life-forms are dependent upon their environments (both internal and external) for survival and success. Life-forms that can adapt to or manage their environment are more likely to survive and thrive. By adapting or managing their environment we mean that they can direct and leverage resources to their advantage and as a result of chance (such as mutation and natural selection) or conscious choice, will be the successful ones in nature.
Yet, unlike most, if not all, other life-forms, human organizations are always the result of a conscious decision versus chance. That said, organizations still must adapt and respond to an “environment,” which can be represented by all of the stakeholders that influence or are influenced by the organization. We call this environment its stakeholder world. Every organization has its own unique stakeholder world, which by its very nature includes the sole beneficiaries of the actions the organization takes and the value (positive or negative) it creates. If we accept that statement, then an organization’s long-term survival and success depend upon its ability to optimize that value to all its stakeholders, which we call managing stakeholder value. A few of these stakeholder groups are:
Customers—those who pay the organization for delivery of its products or services. Note that a customer may be a channel of distribution, a consumer, or a donor.
Channels of Distribution—those who directly receive the organization’s products or services, typically for eventually passing on to customers or consumers.
Consumers—the end users of the organization’s products and/or services.
Donors—those who contribute resources to the organization, most typically in the case of a non-profit organization.
Owners/Equity Holders—those who own an interest in the organization, or, in the case of a board, represent the interests of the owners (in the case of a non-profit, the “owners” might be the community).
Debt or Equity Capital Providers—those who have provided money to the organization.
Employees—those who receive payments for working for the organization.
Executives—a subset of employees who lead the organization.
Suppliers—those who provide products and/or services to the organization.
Competitors—other organizations who provide similar products or services.
Community—consisting of the “local communities,” those who live and work in the geographic area surrounding the organization’s facilities, and the “greater community,” those who live beyond the local geographic area but who are impacted by activities pursued or engaged in by that organization.
Historical Role of Equity Capital
The historical development of equity-capital markets has played an important role in shaping all organizational behavior. In the early years, prior to 1950, it was a widely dispersed market. Publicly traded firms were listed on various stock exchanges or sold “over the counter,” predominantly through brokerage firms, which served as the primary intermediary. There was a relatively small mutual-fund industry and limited number of large buyers of securities. For the most part, individual investors expressed little interest in, and exerted little influence over, corporate management behavior.
The significance of this to organizational behavior was that organizations had the freedom to think long term if they chose to. Since the cost of capital was relatively low, longer-term investments with longer paybacks were more feasible. Furthermore, leaders could stay committed to the organization’s original purpose without worrying so much about investor interference.
After 1950, markets began to change and market influence became more concentrated. The fund industry grew rapidly due to the bull markets in the 1980s and 1990s. Many new fund products were introduced and retirement accounts grew significantly. In 1970, there were 360 funds with $48 billion in assets. By 2011, there were 14,000 funds managing $13 trillion in assets. With greater aggregation of capital among large pension funds, mutual and exchange-traded funds, and investment banking firms, more influence shifted to fund managers. Fund managers’ time horizons were far shorter than the company leaders’; their survival and compensation depended upon short-term performance for their investors. They expected, and often demanded, consistent returns from the companies they...