Stakeholder mapping – for threat or opportunity?

To map stakeholders, AccountAbility’s approach is to rank each stakeholder with a number of factors. This approach provides some scaffolding to enable a more objective assessment. Here is a summary of these factors from an earlier version of AccountAbility’s AA1000SES. 

  • Responsibility – the organisation has, or in the future may have, legal, financial and operational responsibilities in the form of regulations, …etc.
  • Dependency – stakeholders who are dependent on an organisationʼs activities and operations in economic or financial terms
  • Influence – stakeholders with influence or decision-making power (e.g. local authorities, shareholders, pressure groups).
  • Representation – stakeholders who through regulation, custom, or culture can legitimately claim to represent a constituency
  • Proximity – stakeholders that the organisation interacts with most, including internal stakeholders …etc
  • Policy and strategic intent – stakeholders addressed through the policies and value statements

Threat bias

Notice how the bias in these factors is towards threat rather than opportunity? Sustainability initiatives, such as stakeholder engagement have developed in the context of threat. Corporates adopted social responsibility initiatives in response to criticism of their social and environmental performance. These were rearguard and defensive actions. Programmes such as the Global Reporting Initiative (GRI) are an example. In this century, corporate are exploring sustainability initiatives as a source of innovation and competitive advantage. I described this shift in an earlier post – What is Sustainability 2.0?

If your organisation wants to express its sustainability initiatives as an opportunity, it would pay to change the factors used in stakeholder mapping to, at least, balance opportunity and threat.

This can be achieved in a number of ways:

  • creating a higher weighting for opportunity factors
  • reducing or combining threat factors
  • adding opportunity factors.

For example, you might combine threat factors such as responsibility and dependency, thus halving their influence in a final rating. Adding an opportunity factor, such as “potential for creating shared value” will further shift the balance. The “shared value” factor identifies those stakeholders the organisation can work with to create shared value. An example could be using a waste product from a stakeholder as a raw material, or supporting education initiatives to upskill the local population as a potential labour force.

Anthony Robbins identifies pleasure (opportunity) and pain (threat) as two motivating forces. Avoiding pain may be a stronger motivator than moving towards pleasure. Is this the case with sustainability and stakeholder engagement? If we are responding to perceived or potential threat we will probably develop a compliance mentality – and I don’t think compliance is that motivating. I would like to think that an aspirational approach based on pursuing engagement opportunities with stakeholders is more motivational. What do you think? 

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Sustainability, engagement and the end of empires, part 2

We are nearing the end of the age of empires (see part one of this post). As the old world is crumbling under its own dysfunction, the new shoots of a new civilisation are discernible. This is the context for the shift to sustainability.

Civilisation by engagement and community building

With the old world essentially a spent force, impotent to deal with the complex issues we now face, the required course correction is a radical reorganisation of human communities and patterns of civilisation. In addition to developing the new institutions to support a new world order, we face the far more profound challenge – that of disrupting ancient and ingrained assumptions and patterns of behaviour, and supplanting them with new ones. This is no simple task.

Current sustainability discourse calls for change, but it is frequently posited as incremental change (albeit challenging enough itself). The environmental and social challenges facing us are enormous. We will struggle to reverse, or slow down some of the alarming trends, such as climate change, species extinction and resource depletion. But In some ways, the task of supplanting old patterns of behaviour, anchored and expressed in age-old human behaviours, is even more challenging. But the good news is, when we can achieve this, new patterns of human interaction will make it much easier to build sustainable communities.

The changes we are facing require the displacing of these old patterns of human behaviour with often diametrically opposed new patterns. For example, most human communities have used slavery as an economic resource. The practice persists today in locations where the prevailing cultural norms of subcultures view humans as objects for exploitation. This practice is unsustainable where human dignity is a dominant value and poverty is banished.

At present, we are in a twilight zone, where many are working hard to implement sustainability interventions, but are doing so on the foundations of the old order. Many corporates struggle with schizophrenic personalities – the old “profit maximisation at any cost” personality, and the emergent “sustainability” personality. BP’s gulf oil spill personifies this. I have no doubt, the companies’ leaders are genuinely aspirational, but the hyper-competitive marketplace invokes “profit maximisation” behaviours. We are attempting to build a new world on shaky foundations.

Green shoots – community building

There are encouraging developments. Take community building for example. I am hopeful that we have reached the nadir of dislocated urban and suburban communities and we are beginning to connect more with our neighbours. In this Ted talk, Rachel Botsman talks about the growth of “collaborative consumption” – a phenomena driven partly by new peer-to-peer technologies.

And in my corner of the world, the city of Christchurch recently experienced two devastating earthquakes. Amidst the tragedies, it was heart-warming to see neighbours looking after neighbours. Two “armies” were mobilised – the student army, and the “farmy” army, the former, tertiary students, and the latter, Canterbury farmers. These armies cleared away the tonnes of liquefaction that covered streets and suburbs.

More green shoots – the global community

A hundred years ago most of our exposure was to homogenous others – those that were much like us. It was very easy to be embedded in and “us and them” world, when most other nationalities are strangers. Now we mix a lot more, we are broadening our empathy far beyond the homogenous cliques of the past. We are more likely to respond to the plight we see our fellow humans suffering. And science has taught us to that biologically, we are all much the same.

The attitudinal foundations

In the previous post, I outlined the underlying assumptions that supported the empire building ethos – “growth is good” – “extracting value” and “us and them”. Our new world requires an entirely different assumption: unity of action. Rachel Botsman advocated a shift from competition to collaboration.

We also have to overturn some deep-seated beliefs about human nature. For example, we can live peaceably together, and we can transcend self-interest.

Is it arrogant to think that we are living in the midst of epochal change? Could it be that we are indeed part of a transformation of human consciousness? I believe so, and in my next post, I will assemble some supporting evidence. What do you think?

Engagement stories: Kaipara tidal power

Crest Energy has won approval to install turbines in the entrance to the Kaipara Harbour in northern New Zealand. But when lengthy compliance and court processes position stakeholders as adversaries, there will inevitably be losers. How might we find a win-win?

Crest Energy plans to install up to 200 turbines in the mouth of the harbour, to generate up to 200 mw of electricity. The Kaipara harbour is the largest harbour in the southern hemisphere of 947 km2 with a 800 kilometre shoreline. About 8 billion cubic metres of water flow through the harbour entrance daily.

Looking from the dunes to the  wild and magnificent Kaipara Harbour entrance

The Minister of Conservation, Kate Wilkinson, announced on 17 March 2011, approval for Crest Energy’s turbines. Local stakeholders, including local Mäori, farmers and fishers responded by organising further meetings in protest. The Indigenous people of the area are Te Uri o Hau, a hapu (subtribe) of Ngati Whatua. Along with local farmers and fishers, Te Uri o Hau are concerned about the environmental impacts of the turbines.

Stakeholder engagement?

Projects such as this have multiple community stakeholders. The people of Northland and Auckland will benefit from a renewable energy supply, and New Zealand’s supply of electricity of renewables will be further enhanced from the current 74%. But the big unknown is the environmental impact of 200 turbines spinning in the depths of the harbour entrance. The Environmental Court supported Te Uri o Hau’s request for environmental monitoring – but the hapu is still concerned.

When engagement processes get to court, it can hardly be called engagement. Positions tend to become entrenched on both sides. Is there a third way? Is there will to explore a third way?

Riparian planting at Whaingaroa Harbour

The good people at Whaingaroa harbour near Raglan further down the west coast of New Zealand have planted over a million trees on the margins of the harbour and the rivers and streams that feed it. After a decade, the result has been a dramatic reduction in the amount of silt and animal waste entering the harbour. Seagrasses have returned to the intertidal zones and marine life, from tiny invertebrates to fish species, have a better environment and populations are rapidly increasing. Here is a link to a  video demonstrating the improvements.

A win-win?

What’s the connection? I’m guessing that any negative environmental impact of the turbines would be dwarfed by the positive impact of environmental improvements resulting from a riparian planting project on the Kaipara. Of course, the massive Kaipara dwarfs the Whaingaroa harbour – but over time, replanting is achievable. Crest Energy has a great opportunity to divert a small percentage of power revenue to support replanting projects, and create a positive association between the company’s renewable energy production and harbour restoration.

It will be interesting to see if the various stakeholder aspirations can be achieved to create a win-win.

More links

Inspiring sustainability books

With the Christmas holiday break approaching, here are a few books that, for me, show clear signposts of the way forward to a more sustainable world. These books inform in two domains – the first is sustainability, and the second is in the human dynamics of organisations. Common to these books is a process of unleashing human potential and, in the principals that can be gleaned in their pages, is a blueprint for producing sustainable organisations that honour their stakeholders.

Building Social Business: The New Kind of Capitalism that Serves Humanity’s Most pressing Needs. by Muhammad Yunus (2010)

Muhammad Yunus embodies sharp intellect, pragmatic entrepreneurialism, and heartfelt empathy in pursuing his mission of eliminating poverty. Based on the successes of his Grameen group of companies, in this book, Muhammad Yunus describes the emergence of social business as a new business model. He is forging partnerships with corporates such as Nike, BASF, Intel and Danone to deliver social good to the poor.

These companies, in partnership with Grameen, create an entity that pursues a social agenda and returns any profits to expand activities. Typically the new entity requires seed funding from the corporate parent, but budgets to repay this over time.

As an example, Grameen Danone supplies inexpensive yoghurt, fortified with vitamins and minerals to the poor in Bangladesh. In addition to the good generated by the product, further benefits help to build communities through the company’s local activities and distributorships. And while Muhammad Yunus’s primary view is on the social dimension of sustainability, environmental concerns are also addressed. When he asked Danone to develop biodegradable packaging, they developed a corn-starch yoghurt package. He then asked them to produce an edible container!

The Power of Unreasonable People by John Elkington (2008)

The inspiration for the title of this book comes from George Bernard Shaw “The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

John’s book focuses on social and environmental entrepreneurs who are changing our world for good. The sheer range and global spread of the leaders and organisations featured in this book provide a overview of global trends in sustainability.

The entrepreneurs that John Elkington highlights are true iconoclasts and have moved beyond the constraints of the legacy systems that keep us in the past.  He identifies the qualities these entrepreneurs share in common:

  • they want to change the system
  • they are insanely ambitious
  • they are propelled by emotions
  • they think they know the future
  • they seek profit in unprofitable pursuits
  • they ignore evidence and try to measure the unmeasurable

Whangari Maathi is such a person. She embarked on a mission to reforest Africa. Early in the project she asked a nursery if they could supply a million trees. They confirmed they could but did not expect the deal to proceed. When she came back to confirm it, the trees were not available. The Green Belt Movement she founded has now planted over 30 million – do you think they will achieve the 1 billion trees they have now set their sights on?  I do.

Another interesting aspect of the book is the crucible experience that Walmart’s CEO, Lee Scott experienced when of seeing the devastation of Hurricane Katrina. Lee Scott has gone on to launch Walmart on a path towards sustainability, achieving some impressive results.

Supercorp: How Vanguard Companies Create Innovation, Profits, Growth, and Social Good by Rosabeth Moss Kanter (2009)

With piercing clarity, Rosabeth Moss Kanter reports on her research into the supercorps that are pursuing profitability. In her words:

For years, lip service has been paid by many corporate leaders to achieving high performance and being a good corporate citizen. What I have discovered in my research, however, is that the two issues, business performance and societal contributions, are, in fact, intimately connected. Service to society, guided by well-articulated values, is not just “nice to do” but an integral part of the business models for companies that I call the vanguard. They use their unique strengths to provide innovative new solutions to societal challenges such as early childhood education, water safety and sanitation, employment for people with disabilities, small business development, energy conservation, and disaster relief. Societal initiatives undertaken largely without direct profit motives are part of the culture that builds high performance and thus results, ironically, in profits. (page 1 – 2)

She demonstrates how companies such as Proctor and Gamble, Japan’s Omron and Korea’s Shinhan bank are modelling these practices. The author highlights how these companies use the tools of mission, vision and values to drive change – tools that were largely stillborn through ineffective use in the latter decades of the twentieth century. And for those looking for practical steps to foster a culture of innovation, this is the book.

Sustainability 2.0: Networking Enterprises and Citizens to Face World Challenges (2008) by Ernesto van Peborgh and the Odiseo Team

This book is available online as a pdf. It presents the Internet and specifically, Internet 2.0 as a causal factor in transforming social and economic institutions. The book features three appendices of business case studies looking at pioneer companies, companies that changed to aspire to sustainability, and more recently formed sustainable companies.

The Fortune at the Bottom of the Pyramid by CK Prahalad (2004)

I’m yet to read this book, but I have it on order, and I have been inspired by CK Prahalad’s work. He passed on this year, but he was the Thinkers 50 top thinker for 2009 (this site has some great video interviews of him)

The bottom of the pyramid refers to those four billion plus who live on less than two dollars a day. In the West we might conceptualise sustainability through the lens of climate change and the environment, but CK Prahalad challenges this view. He warns that if these billions get included in a wealthier economy, under current consumption patterns we would need at least two planets to sustain them. So we have a stark choice – exclude them from the global economy, or refashion our commercial and social activity for sustainability. Fortunately, as well posing this problem, he has some inspiring and pragmatic solutions.

If you take time to read two or more of these books, and reflect on their import, I believe it will change your 2011 for the better!

Reporting or engaging?

If resources in your business were tight, and you had to choose between reporting and engaging, which would it be? Here is why I would choose engaging.

Reporting is a quality assurance process with its roots in twentieth century industrial processes. I regard the current day sustainability movement to have started in the early sixties, when Rachel Carson and others raised concern about the negative impacts of commercial activity. Initially the companies that found themselves the target of criticism ignored it, but over time they, initially reluctantly, realised they had to take action.

Shell is an excellent example of this. In the mid-nineties, Greenpeace and others protested about the disposal of the Brent Spar and Shell’s alleged complicity with the Nigerian Government’s execution of activists. Initially the company attempted to repel criticism, but over time internal discourse changed to include sustainability. Shell was an early adopter of the Global Reporting Initiative (GRI) and soon regularly ranked in the top ten of global reporters. BP also performed consistently highly in GRI reporting and appeared genuinely committed to its rebranding “Beyond Petroleum”. But recent events in the Gulf of Mexico illustrate how reporting processes do not necessarily ensure a good outcome. In this case, better engagement with suppliers appears to be desirable.

Reporting is essentially a compliance process. The great thing about compliance processes is that they provide assurance that the plane we are about to fly on is well maintained, or a product we buy is fit for purpose. The downside is, that if they become the default organisational strategy, they can generate a compliant and uninspired workforce. The compliant workforce knows what it can and can’t do and tends to operate within these parameters.

These days, for most commercial activity, compliance is unavoidable. One or more industry bodies or standards organisations and multiple local, state, national or federal government departments require our compliance. And we are often complied to report. Why impose further voluntary compliances on your workforce? Might it not be useful to foster other methods? This is where stakeholder engagement processes are useful.

Engaging in the 21st Century

While reporting is a twentieth century practice, stakeholder engagement is of this century. Complying (through reporting) and engaging are diametrically opposed. The former follows prescribed practice while the latter seeks opportunity. Engagement is essentially a communication process and our twentieth century organisations didn’t do that very well. Now we understand communication processes better, and our workplaces feature more diversity (in age, gender, culture and ethnicity) of necessity, we have to learn to engage better. Engagement can thus pursue sustainability aspirations, but also improve communication internally and externally – the stakeholder engagement win-win.

Zappos is a great example of excellent engagement. In CEO, Tony Hsieh’s great read Delivering Happiness, he outlines “happiness frameworks”. Tony highlights happiness as one of the foundations for Zappos stellar success. His first happiness framework includes four factors, perceived control, perceived progress, connectedness and vision/meaning. These factors foster happiness and create a motivational culture. Lets look at how these might stack up with reporting and engagement.

Of course this is a very stark contrast, and in reality the gap will not be so great, and some companies (such as Canada’s Vancity) do a great job of both reporting and engaging.

It takes some courage to prioritise engagement over reporting. A business’s capacity to engage is enhanced by effective internal engagement – where every staff member is an ambassador for the business. So it takes courage and commitment to first accurately assess the quality of internal engagement, and then to relentlessly pursue better engagement. But the payoff, socially, environmentally and financially is huge. Failure to engage will accelerate mass business extinctions.

What is sustainability 2.0?

Sustainability 2.0 is not an established concept. It has popped up from time to time over the last few years. But from the glimpses I have seen, it represents a profound change in the way we think about sustainability.

Two of the more authoritative pointers that form the concept, are the book Sustainability 2.0 by Ernesto van Peborgh and the late, great, C.K. Prahalad’s September 2009 Harvard Business Review article. Van Peborgh’s book links sustainability 2.0 to the radical societal changes driven by Internet 2.0 and 3.0 – the participative web.  The book’s case studies of companies pursuing sustainability, categorise them as pioneer companies, companies that change and sustainable companies. Companies that change, appear to typify Sustainability 1.0 – companies originally motivated to adopt sustainability as a response to some public relations crisis caused by unsustainable practices.

In the HBR article Why Sustainability Is Now The Key Driver of Innovation, C.K. Prahalad and his co-authors clearly articulate the change to what we might call sustainability 2.0. Companies move from risk aversion to aspiration. The authors claim “in the future, only companies that make sustainability a goal will achieve competitive advantage”. Thus, sustainability becomes a catalyst for rethinking business models, products, technologies and processes.

We are very near the beginning of this bell curve. Companies that position sustainability central to strategy are still rare. Prahalad asserts that most European and American executives believe that moves towards sustainability will erode competitiveness. “That’s why most executives treat the need to become sustainable as a corporate social responsibility, divorced from business objectives”.

The new frontier is wide open. Prahalad calls sustainability the “motherlode of innovation”. It may well be the dominant driver for business development and opportunity over the next few decades. Some big players are taking full advantage and also driving sustainability through to their suppliers. Walmart announced sustainability 2.0 in 2008. That year Walmart directed more than 1000 Chinese suppliers to achieve sustainability targets.

Prahalad and his co-authors outline five stages of sustainability that each offer opportunities to innovate. The article provides inspiring examples of how companies are exploiting these opportunities and finding new market niches in a recession. The stage 5 concept of next-practice, where businesses create new practices that transcend and displace current practice, infer a paradigm shift. The smart grid, where diverse electricity inputs and outputs move around a locality to maximise efficiency and minimise energy imports is cited as an example. At present we are so conditioned to remote distributed networks, that we take them for granted.

New movements require new language and new tools. Corporate social responsibility infers guilt and reparation whereas corporate sustainability is more future-focussed. Sustainability reporting is a tool designed for justification and to assuage guilt. Energy invested in sustainability initiatives is better spent pursuing innovation than pursuing a ranking on a reporting league table.

Of the sustainability tools on hand, stakeholder engagement appears more relevant to sustainability 2.0 than sustainability reporting. Stakeholder engagement is more future-focussed as it seeks to find the pathway forward in dialogue with stakeholders. Stakeholder conversations are where innovative ideas are likely to arise.

In conclusion, this blog is a tribute to C.K. Prahalad’s acute vision and humanity. In the article referred to here, and in his other recent work such as The Fortune At The Bottom Of The Pyramid, he has helped to open vistas where businesses can prosper, and importantly, we can collectively create a prosperous, just and sustainable world.

Peter Bruce 16 August 2010