Companies stuck in the same gear of doing things in the old way – merely oiling the moving parts of the aging corporate machine, making money, and delighting shareholders – are slowly slipping into obscurity. Instead, we are now seeing the increasing rise of the business that puts all stakeholders at the centre of all things. It is a new form of stakeholder capitalism that shifts the business compass from what it perceives to be doing good – to actually doing good.
Stakeholder capitalism is by no means new. In the raw sense of the term, it focusses on entire communities invested in the success of a company, whether that be the local community, its partners, or its supply chain. It is a model that positions private corporations as trustees of a society looking to address today’s social and environmental challenges. And it is being fuelled by the consumer, with buying power, wanting to do business with organisations that are invested in more than just themselves.
Some argue that the model has struggled, as many enterprises continue to focus on one thing – the bottom line. But the future success of stakeholder capitalism is directly related to the current shift in communities, and people, where there is a demand to focus on what is important in the world today, and achieving that goes beyond merely applauding a successful bottom line.
The social impact that humanity is having on the world, is potentially the most significant factor influencing this about turn. This manifests itself in opting to change the way they operate, throwing a wider net, and using their resources to benefit all stakeholders more broadly. You could argue that the environment is now a stakeholder to us all, and that we need to find ways to do things that protect and lessen our impact on it.
For pure stakeholder capitalism to take root, we need to realise that with every action, there is an equal or opposite reaction. If you are a mindful company, that is invested in the quality of life of your employees. You will know that to reset the balance for people who reside in high density, and traffic plagued areas, you need to allow individuals to work remotely, drive traffic away from the corporate office, and give them tools to do their job from anywhere. This could mean looking at where you could potentially base your office, which could inadvertently increase your bargaining power as a preferred company to work for.
A quick, easy win for businesses to date, has been philanthropy. But now, instead of throwing money at a charity and waiting for it to be reflected on your tax certificate, philanthropic endeavours need to be as strategic as they are sincere. We have a practice called #TIBCO4Good. One aspect of this programme focuses on investing in universities and colleges, training the youth, and putting software into the hands of upcoming professionals, so that they become more equitable in the job market. Partners see this as an opportunity, because they can identify which institutions are their ‘hiring pool’ and guide us to invest more in partnerships with these organisations. The knock-on effect is that the community benefits from the investment; local talent is upskilled, local business grows, and so does our company performance. More performance means more disposable income to do more good.
None of this would be possible if companies were still solely fixated on the shareholder. Companies hell-bent on this archaic approach are going to get outmaneuvered by companies that have a broader view of success and the value of sharing it. This more expansive view of success, centres on understanding the importance of the stakeholder environment as a collective, and not just a pure shareholder environment. It also takes into account the ‘buyer’ and their desire to see their money doing good, while avoiding businesses with a profit-at-all-costs for shareholders view.
At the heart of this shift is data. There is so much public data available today that you can mirror what is right for your business and what is suitable for your stakeholders. They are no longer mutually exclusive. This is indeed a world with so much data, and data opens up opportunities. It takes an exceptional talent to unearth the value of this data and to drive stakeholder capitalism forward. As an example, we recently used public health data to gain insight into the OxyContin dilemma, and you could argue this has nothing to do with our business. Still, it does have everything to do with our community
But the world is a big place, and finding projects to support as part of giving back to your stakeholders doesn’t have to mean you have to find the most significant cause and focus on it. You can start internally with your employees, and smart companies are doing this through diversity programmes and programmes that support minorities, for example. Remember, what you do within your walls is as important as what you do for the world. Being considered a great place to work, speaks volumes in the future hiring economy. This comes back to letting your teams work remotely, and walking away from the model where people are chained to their desks and their bloated, expensive, deskbound hardware.
We are no longer in a world where only giving things away to ease a corporate conscience is a good or respected practice. What you do that has far-reaching effects, and a long-lasting impact, is far more important. This represents business balance, and it is this balance that will make the concept of stakeholder capitalism succeed.
That’s why smart companies use data to identify problems and opportunities amongst their internal and external stakeholders. It is data that drives us further down the road that ultimately leads to a greater good for everyone.
Photo by Roberto Nickson on Unsplash
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