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Who has a stake in how your organization operates and the products and services it produces? In this lesson, you will apply the key stakeholder value concepts to your organization. You will first identify the key stakeholder groups and subgroups for each of the six stakeholder categories, along with the requirements they have for your organization. Then you will identify the listening and learning methods for each group and subgroup and develop empathy profiles for each stakeholder group. Finally, you will create a stakeholder systems diagram to better understand the stakeholders and their interrelationships.
This lesson is Application Part 2 of the Stakeholder Value Lab. For more on the Key Concepts, go to Part 1.
Stakeholders – Framework 2-3
Objective – Identify the key stakeholder groups and sub-groups for each of the six stakeholder categories.
Video 0:53
Customers
Who are the primary users and beneficiaries of your products and services? Examples include users of products and services, clients, members, patients, students, primary beneficiaries of products and services, and in many cases, the customer’s customer. In some instances, you may have a chain of customers. For example, a dog food manufacturer needs a distributor to handle their products, then a retail store that provides shelf space to sell their product to a dog owner who represents the end consumer, the dog. In this situation, you have four customers that you need to understand in order to successfully get your product to the dogs.
Workforce
Once you understand the customers and segments, the next step is to segment the workforce and understand the different types of workers in your organization. The idea here is to segment workers by their differing needs, wants, and desires. Consequently, create workforce groups based on their functions and based upon their differing needs. Examples include senior executives, managers, research and development, front-line customer service, production, administration, and support staff. Be specific for your organization. Only segment if there is a difference in their requirements.
Suppliers and Partners
What external people and organizations work with you or provide products and services to help you operate and create your products and services? Some suppliers and partners may be an integral part of the production, working side-by-side with your workforce, while others may drop off supplies or raw materials. The idea here is not to identify every unique supplier but rather the groups based on their overall needs vs. specific peculiarities. Some organizations have thousands of suppliers, and identifying each as a segment is not helpful. Examples of suppliers and partners include raw materials suppliers, component parts suppliers, professional services, collaborators, co-creators, co-executors, and other partners who are integral to the production.
Investors
Who provides the resources to fund the activities of the organization? Depending on the type of organization (commercial, non-profit, government) examples of investors include stockholders, private owners, lenders, donors, and taxpayers. Commercial companies may have stockholders represented by a board of directors, private equity investors, owners, and possibly lenders. If it is a non-profit, the investors might be donors who provide resources to operate the organization and deliver the primary beneficiaries’ services. The expected return on investment for non-profit donors is the most benefits to the users (e.g., hungry children fed) instead of profit. Taxpayers provide resources for government organizations to operate and accomplish their mission, and they expect the best service for the least amount of tax burden.
Society and Community
What communities and parts of society are influenced by or have a stake in your operations and products? Society might include the local communities near some of your facilities and society members who use your products or are impacted by your product and operations. Specific segments of society related to your activities, products, and services will be more actionable than large general groups. Start with the societal groups directly impacted by your organization. Then explore the groups indirectly influenced. You can always revise the list if you find that there are too many indirect groups.
Natural Environment
One way to segment the natural environment is how your organization impacts the different parts of the environment. What aspects of the natural environment are impacted by your operations and products, including air/atmosphere, water, land, plants/agriculture (e.g., crops, lumber), and wildlife? For example, how does your organization impact the air and the atmosphere? What is your organization’s carbon footprint? How does your organization affect plants and agriculture, and or use plants and agriculture to make your products and services? How does it affect the wildlife and or use of wildlife? Water and land usage are the types of things you could use as a starting point to understand the environmental dimensions and stakeholders. The natural environment is different from the other five stakeholder groups in that it is not a human being that can advocate for itself. It relies on other stakeholders to identify the requirements. There are many sources for the requirements, including scientific evidence and stakeholders who are impacted by the natural environment, such as customers, employees, investors, and so forth. In addition, advocacy groups are self-appointed representatives of the natural environment and are a good source of requirements.
Note – A single individual might be a member of several stakeholder groups. For example, one of your employees might also buy and use your products or services and might also invest in your company. At the same time, they might be members of the community that you operate in and be impacted by the natural environment. Avoid identifying specific individuals and focus on their role when they are wearing a specific stakeholder “hat.”
Complete Your Worksheet
- Download – Download the editable worksheets for Lab #2.
- Complete – Identify the stakeholder segments for each of the six stakeholder groups in the worksheet by yourself or with your group. Some people prefer to use small sticky notes when doing this exercise so they can make changes as the framework develops and when they get feedback. If you’re working in a group, you may want to do this on a large whiteboard. You could map out this framework on the whiteboard and use large sticky notes so that all participants can see the map as it develops.
- Review – Present and explain the stakeholder groups and sub-groups that you identified to your colleagues, boss, and subordinates and get their feedback.
- Revise – Incorporate their feedback into your revised version.
Stakeholder Requirements – Framework 2-4
Objective – Identify the requirements for each stakeholder segment.
Video 6:51
Segment
Identify the requirements for each stakeholder segment identified in the six stakeholder groups (Framework 2-3) in the previous step. Use a separate row for each segment.
Note – You may need to make multiple copies of the worksheet to accommodate all your stakeholder segments.
Requirements
For each segment, answer the following questions. What does this stakeholder segment want? What influences their initial decision (purchase your product, accept a job offer, etc.)? What influences their decisions to repeat or stay? What influences their decision to refer your products, services, or organization to people they know? Start with what you already know about the stakeholder segments, including existing survey data. As you develop your methods to gather stakeholder requirements, continue to revisit and revise the requirements. Your knowledge of stakeholders’ needs, wants, desires, and the associated decision-making is never complete. Learning about your stakeholders is an ongoing process for as long as you are in business. Example include:
Customers – features and functions “menu,” durable and reliable products, attractive appearance, zero defects, fast delivery, accurate orders, responsive and friendly customer service, and product support.
Workforce – clear expectations, training and development, fair pay, benefits, safe working conditions, supportive culture, positive leadership, and mentoring.
Suppliers and Partners – clear expectations, timely payment of invoices, clear and effective communication channels, responsive to issues and challenges, friendly and cooperative working relationship.
Investors – expected return on investment, reasonable risks for the expected return, the most impact for donor contributions, the most impact for taxpayer contributions.
Society and Community – high-quality jobs with sufficient pay to avoid employees needing government assistance, economic flow through the community, product and operational safety, ethical business practices, limited disruption of life (limited noise, traffic, etc.), and the well-being of citizens.
Natural Environment – net-zero (or better) carbon footprint, sustainable energy sources, reduced energy usage and efficiency, minimum waste, and maximum recycling. Adding specific, measurable targets helps move from vague terms like “maximum” to tangible requirements.
Note – With all requirements, be as specific as possible. Work toward requirements that are measurable.
Complete Your Worksheet
- Download – Download the editable worksheets for Lab #2.
- Complete – Identify each key stakeholder segment’s requirements by yourself or your group.
- Review – Present and explain your stakeholder requirements that you identified to your colleagues, boss, and subordinates and get their feedback.
- Revise – Incorporate their feedback into your revised version.
Once you have identified the stakeholder groups and their requirements, you are ready to identify the listening and learning methods you need to understand the requirements further.
Listening and Learning Methods – Framework 2-6
Objective – Identify the listening methods for each stakeholder group and segment.
Understanding the listening and learning methods for each stakeholder segment includes the listening method (including instruments), the frequency the method is used, who uses the information, and for what purposes.
Video 11:20
Stakeholder
In the first column on each line of the worksheet, identify a stakeholder group or segment from the previous stakeholder frameworks.
Listening Method
For each row, identify the method that is used to listen and learn from the stakeholder group or segment. Examples include surveys, purchase patterns, repeat business, referral business, media and analysts, regulations and regulatory audits, focus groups, one-on-one interactions, complaints, social media, empathy maps, and activist group demands.
Note – You may need to make multiple copies of the worksheet to accommodate all the listening and learning methods.
Frequency
For each listening method, identify how often it is used (e.g., monthly). Examples include annual, monthly, weekly, daily, continuous, ad hoc, and based on a project schedule.
Users
Identify those who use the information that is gathered and analyzed. Examples include the senior leaders, the marketing department, the research and development team, the leadership team, operations, human resources, etc.
Uses
Finally, what do they use the information for? Examples include strategy development and deployment; product design, development, and improvement; workforce development; supplier improvement; process improvement, and so on.
Each listening method requires resources, so you want to choose the methods that will give you the best information for the purpose, whether it’s product development or organization improvement. The best insights will result in benefits that are worth the time, money, and effort to collect and analyze the data.
Complete a new row for each stakeholder group and listening method combination.
Complete Your Worksheet
- Download – Download the editable worksheets for Lab #2.
- Complete – Identify the listening methods, frequency, users, and uses for each key stakeholder group and sub-group yourself or with your group. You might need to do some research within your organization to identify all the listening and learning methods. Often, a single individual in the organization is unfamiliar with all the stakeholder listening methods.
- Review – Present and explain the listening methods you identified to your colleagues, boss, and subordinates and get their feedback.
- Revise – Incorporate their feedback into your revised version.
Empathy Profile – Framework 2-8
Objective – Develop a consolidated Empathy Profile for a key stakeholder group.
Video 15:23
You first will need to define an experience, such as a specific event (e.g., meeting) or artifact (e.g., policy), to provide a tangible focus for the participant’s responses. The data will be more focused and specific if you frame the questions using an actual event or experience. Then they can describe what they saw and what they heard in a thick, rich narrative. Beginning with the left side of the framework, ask what the person saw and heard during their experience. This is their perception of the audible and visual inputs related to the experience. Then working to the right, what do they think about those inputs, and how do they make them feel? Then how does what they think and feel influence what they say and do? In addition, capture their biggest fears and frustrations and what they may need to achieve their goals and succeed in the bottom cells. Finally, ask an open-ended question about what you have not asked about that you should have asked, and let them talk. Sometimes you will gain many insights into their needs and wants with this open-ended question at the end.
See and Hear
1. What do you SEE when you experienced _________________ (identify a specific event or artifact such as a strategy, policies, leadership style, meeting, etc.). Develop a “thick, rich” description from their perspective.
2. What do you HEAR when you experienced _________________. Develop a “thick, rich” description from their perspective.
Note – Steps 1 and 2 are often done together vs. sequentially.
Think and Feel
3. Building on the previous descriptions in steps 1 and 2 describe what you THINK about what you SAW and HEARD.
4. How do you FEEL about what you SAW and HEARD?
Do and Say
5. Based on your THINKING and FEELINGS about what you SAW and HEARD, what do you DO?
6. Based on your THINKING and FEELINGS about what you SAW and HEARD, what do you SAY?
Challenges, Aspirations, and Goals
7. What are your biggest FEARS, FRUSTRATIONS, and CHALLENGES when you experience ______________?
8. What do you NEED in order to achieve your GOALS and succeed in the future?
9. What didn’t I ask about that I should have or you wish I had? Each time you interview someone, you will hear things that may not fit neatly into any one of these other boxes. Use this “wildcard” box in the lower right-hand corner to capture those insights.
Complete Your Worksheet
- Download – Download the editable worksheets for Lab #2.
- Complete – Identify representatives from a key stakeholder group to interview. Start with one group and one person to become familiar with the process. Then develop your skills over time as you build your understanding of each stakeholder group. When asking the Empathy Profile questions, pick a particular context to help “frame” their thinking and use that frame throughout the interview. For example, if you are working on a new expense reimbursement process, you can “set the stage” by asking them to think about the last time they filed an expense report. Identify a key stakeholder group representative to interview and complete the empathy profile by yourself or with your group. Start with a blank worksheet every time you talk to a new person. Once you have completed an empathy profile for several stakeholder group members, you can aggregate the multiple empathy profiles into a consolidated view.
- Review – Present and explain your empathy map to your colleagues, boss, and subordinates and get their feedback. Caution: Be careful about incorporating internal perspectives with stakeholder perspectives. Don’t corrupt the stakeholder perspective with the internal perspective; instead, use the internal people to help you interpret, understand, and ask additional questions.
- Revise – Using caution, incorporate their feedback into your revised version.
Stakeholder System – Diagram 2-9
Objective – Develop a Stakeholder System diagram specific to your stakeholders and their relationships.
Video 20:22
As your understanding of the stakeholders develops, so will your insights into the relationships among the stakeholders. The “relationship” in this context is the connections and the influence among stakeholders. What is the value that is being exchanged? Capture those insights and make them explicit with a stakeholder systems diagram. To develop your diagram, start with WHAT the organization does (operations, products, services) and WHO they do it for the customers. Understand how customers experience your products and services and the VALUE provided. Then identify the relationships between the suppliers and partners and the organization. Finally, incorporate the workforce’s relationships with customers, suppliers, and partners. These components form the value chain of the organization. Then, building on these value chain relationships, incorporate the investors’ resources and the value exchanged between the organization and the investors. Then incorporate the society, and community stakeholders and the value exchanged with the organization. Finally, integrate the natural environment.
Complete Your Worksheet
- Download – Download the editable worksheets for Lab #2.
- Complete – Identify the key stakeholder groups and draw arrows to show relationships between the stakeholders. Identify what is “flowing” between the stakeholders by labeling the arrows. You can do this by yourself or with your team. If working on this by yourself, then the worksheet might be adequate. However, if you create the diagram with a group, you may need a larger medium, such as a whiteboard and sticky notes.
- Review – Present and explain your stakeholder system to your colleagues, boss, and subordinates and get their feedback. When you explain the diagram to others, choose a starting point and follow a “thread” through the diagram, as in the video.
- Revise – Incorporate their feedback into your revised version.
Leader as Organization Designer
Leaders, as organization designers, set the example by treating stakeholders how they want the rest of the organization to treat stakeholders. Leaders show respect for ALL stakeholders regardless of the stakeholder’s influence on the organization. Being respectful in all interactions helps build positive, productive relationships. One way leaders build relationships is to involve stakeholders (or their input) to set the organization’s direction and evaluate progress. This process includes leaders personally communicating (two-way dialogue) with stakeholders to gather information and share the organization’s direction and improvement. Building relationships with stakeholders takes time. Leaders must be persistent in building relationships and creating value for multiple stakeholders regardless of the challenges. Leaders develop a deeper understanding of their needs and goals by spending time with stakeholders. These insights inform the leaders’ understanding of the system of stakeholders, which enables the identification of leverage points and, in turn, the creation of ever-improving value for multiple stakeholders vs. a zero-sum game of trade-offs. Finally, leaders continuously learn and develop new knowledge, perspectives, and approaches to meet and exceed stakeholder needs and desires.
Reflection Questions
Reflect and identify what you have learned about creating sustainable stakeholder value.
- Have you identified the organization’s customers, workforce, suppliers/partners, investors, society, and natural environment?
- Are you using systematic methods to identify and prioritize the needs of all your stakeholders?
- Do you fully understand the needs of each key stakeholder group? How well are you communicating those needs to all levels and functions of the organization?
- How satisfied are your investors (including donors for non-profits and taxpayers for government organizations) with the value your organization creates for their contribution?
- How satisfied are your customers (including students for education organizations and patients for healthcare organizations) with your products and services for the money they spend?
- How happy and motivated is your workforce (employees, contractors, and volunteers) to be part of our organization?
- How happy and motivated are your suppliers and partners to work with our organization?
- Are the members of the general public and society happy to have your operations, products, and services in their community?
- Are your products, services, and operations making a positive impact (or at least a neutral impact) on the natural environment?
Conclusion
Creating an organization that addresses the needs of all stakeholder groups without making trade-offs is the central organization design challenge. The focus on stakeholder needs and relationships helps provide a common alignment point for the strategy, systems, scorecard, culture, and leaders. It is the “jumping-off” point for organization designs that create sustainable value for multiple stakeholders. Defining your stakeholders’ needs, wants, and desires and understanding the system of stakeholders inform the development of a compelling directive in the next lab, which translates the stakeholder requirements into overall guidance for the organization.
The Book
Leadership and Organization Design for Sustainable Excellence
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