Build Relationship Capital

Stakeholder Theory

As social beings, our energy levels, creativity, and productivity naturally soar when we engage in authentic relationships. In organizations, we can capitalize on that strength by forming triads with stakeholders (includes employees, customers, financing providers, suppliers, vendors, alliance partners, educational institutions, the community at large, etc.). By building relationships with people and organizations outside of our team (regardless of how you define your team), we can trigger an exponential growth in our capabilities and reach, accomplishing more and greater things even faster than ever before.

It’s essential to long-term success to work toward mutually beneficial arrangements for all stakeholders, even if it initially makes things seem more complicated and takes more time to work through. With time and practice we will learn to transition our perspective and it will become easier and faster to accomplish greater things, making it worth the effort. Including all stakeholders in our planning, decision making, execution, and evaluation saves time and money over the long term.

Our Connected World

Dave Gray, in The Connected Company, explains the importance of the networks that are forming around companies every day. Many of these networks include our stakeholders. He says, “To adapt, companies must operate not as machines but as learning organisms, purposefully interacting with their environment and continuously improving, based on experiments and feedback.”

As an accounting professional, one of my favorite parts of The Connected Company is about “bad profits.” Bad profits produce revenue for the organization “at the expense of happy customers and long-term sustainable growth.” Examples given include nuisance fees charged by airlines, car rental companies, retail banking, and mobile telecom providers.

I think it’s interesting how these “bad profits” have opened the doors for new competitors to enter into some of these markets. Most people have heard the story about the Blockbuster late fee that antagonized Reed Hastings so much that he started Netflix and now Blockbuster is out of the brick and mortar DVD rental business, only their streaming services have survived.

Dave Gray also talks about Network Power, which is the ability to detect changes in the environment (in real time) and respond in an effective manner (influence), as well as, the ability to influence the network as a whole (like standards setting). It’s easy to see how quickly networks can change, how complicated they will become as they continue to grow, and how visible we have become whether we want to or not. The internet and social media networks amplify corporate behavior, both good and bad.

Social Network Challenges

I mention Network Power because we can already see the power struggles emerging. There are people that try to manipulate ratings with fake reviews bashing the competition and buying twitter followers and Facebook friends to pump-up their standing.

A small business owner that I know participated in a Chase Bank Small Business competition late in 2013 that awarded cash prizes to the winners. One of the requirements was to get 250 of your Facebook followers to “Like” your entry (Chase Bank would capture the Facebook information for marketing purposes).

Within a day or two of submitting his entry, my small business owner friend received an email from a complete stranger offering to sell him 250 Facebook friend likes for $1 each.  Instead, he printed the email message and took it to his banker at Chase and asked how they were going to know who bought votes and who played fair. The answer was a beleaguered “I don’t know.”

Live and In-Person

All this leads to the importance of building relationship capital, person-to-person one stakeholder at a time (remember, every person matters).

The internet and social media may make it easy to rack up connections of one type or another but in the end, only the authentic ones count.

Don’t be fooled into thinking having a high social media head count is going to save your bacon if things go south…

Creating Win/Win Relationships

Stakeholders Working Together

Working together to fulfill mutually beneficial interests that focus on value creation rather than bad profits seems like a worthwhile endeavor to me.

When you listen to Professor Ed Freeman talk about Stakeholder Theory, he doesn’t just mention the relationships that are easy to build. He talks about how to take seemingly adversarial relationships and overcome the obstacles to form transformational relationships that produce positive results for all involved.

His point is that it takes more work because the solution isn’t superficial; it requires serious study and analysis to work through the issues and produce a meaningful (and mutually beneficial) result. In the end, they are always worth the effort and lead to further improvements over time.

Hard work isn’t disheartening when you know there is a firm commitment to resolution. It becomes a matter of working through the options until the right combination has been revealed. It may take patience and that’s okay as long as the solution is found.

Start Now

The things we need to get started are already available. There is no need to wait. It’s time to break free from “the way it’s always been done” and revisit the way we operate starting at the core.

Have you designed your organization to support and nurture a delicate evolving eco system or a facility full of machines? A quick check on engagement and performance might be your first indicator.

Together We Can Do More And Better Things

TeamWork Hands

In my mind, if you build better businesses, the kind that aspire to better things. It triggers a wide array of healthy behaviors that lead to happy productive people who develop value driven products and services through strong relationships with stakeholders, which in turn, extends corporate longevity, and, as a side benefit, stabilizes our economy.

I’ve come to think of it as Phase II of the “Age of Enlightenment.” We’ve come so far but we can do better!

Business Revolution

It’s time to start a business revolution. I believe:

  • It starts with building trust through open and honest communication.
  • Businesses can serve the greater good and make a profit.
  • People will do their best work when they feel valued and know their hard work makes our world a better place.
  • Employees that are well cared for give customers the same kind of attention.
  • There is a better way to organize our businesses to lower operating costs and enhance productivity.
  • Employees can and will do far more than they are given credit for.
  • Providing employees with growth opportunities increases loyalty.

Together we can make a change for the better…

If you share these beliefs too, please join me. There’s a lot of work to do!