To Her Majesty’s Revenue and Customs I am a ‘customer’. But I don’t feel like one. To my bank I am ‘Mr and Mrs Adrian Wheeler’, though this hasn’t been the case for years. To Starbucks I am ‘Andrian’, but at least it looks as if they are trying.
Large organisations talk about the importance of ‘stakeholders’ but how many really mean it? The 80:20 rule has taken root: if 20 per cent of our stakeholders generate 80 per cent of our income, we’ll save money by ignoring the rest. This may have been a sound strategy before 1996, but in an online world all stakeholders wield influence – active, passive or latent.
Michael Eisner, who turned Disney into a $35 billion brand, understood this: ‘A brand is a living entity, enriched or undermined cumulatively over time, the product of a thousand small gestures’. Virgin understand it: who doesn’t know someone who’s received a note of apology from Sir Richard Branson when their flight was cancelled?
My eleven-year-old daughter won’t let me buy biscuits from a company she believes is ‘bad’. Where does she get this from? For that company, her teachers are stakeholders, as are her friends’ parents. Where do they get it from? The media, obviously, but also from other people like themselves – as Edelman’s Trust Barometer demonstrates.
The Cluetrain Manifesto predicted in 1999 that companies who don’t bother to interact with stakeholders were doomed. It coined the word ‘conversation’ to describe what stakeholders would demand; organisations which had previously broadcast to stakeholders would need to learn a new behaviour. They would have to listen.
Some have, most are adapting. Not surprisingly, large firms are slower to come to terms with the reality of stakeholder relationship management – a frigid term to describe treating human beings as people. But it makes the point: genuine interaction doesn’t happen by accident: it needs to be planned and managed. Most of all, it needs belief and commitment from senior management.
Stakeholders are numerous, capricious and sometimes troublesome. Maintaining ‘the conversation’ isn’t easy. Yet there’s no option: managing stakeholder relationships means developing and protecting reputation – every organisation’s most valuable single asset.