Why We Need a Systems Approach to Stakeholder Engagement

By Nicole Skibola

Every sustainable development consultant has found themselves in a conversation with a client desperate to preemptively or defensively placate civil society groups. I’ve been in countless conversations with clients and colleagues who roll their eyes at the mere mention of an NGO group and strategize as if they were preparing to negotiate a hostage crisis.

As a practitioner who has worked extensively with businesses -- but started off my career in human rights advocacy -- I understand the tension between stakeholders and businesses. Stakeholders can slow project completion, advocate for regulatory hurdles or demolish a business reputation in a matter of hours. It’s how they push change forward. I like to think of stakeholders as an integral part of a system of checks and balances, there to ensure that economic growth occurs in a sustainable way that benefits the largest segment of the population as possible. Whether or not you agree with the activities of NGOs, there is one thing for certain: They are here to stay. Stakeholder “engagement” traditionally follows the same core principles of organizational change management (OCM). OCM is a framework for managing the effect of new business processes, changes in organizational structure or cultural changes within an enterprise. In simple terms, OCM is the process of supporting employees to understand how changes in business processes will affect their roles, relationships, and organizational culture -- and to adjust accordingly. Here’s why a change management approach doesn’t always work with stakeholders: They are not as easily managed. Stakeholders are, by definition, working outside of the organizational confines. They aren’t afraid to lose their jobs or make you look bad and will even expose your efforts to bribe them into compliance. The real sticking point: Think of the opportunities for inclusive, sustainable growth that companies often miss out on because they talk at stakeholders rather than actively engage them around solutions. A real world example is useful. Our firm had a client engaged in sustainable power generation. The client came to us after they had engaged in superficial messaging to the surrounding community. Initial ethnographic research would have revealed that virtually all conflict could have been eliminated if the client had eliminated water usage from a nearby lake (sacred to the local indigenous community) and had settled land disputes associated with the project. Angry stakeholders reached out to Amnesty International, and a small militia group formed, threatening the security of the company’s operations. In the end, the development was postponed indefinitely, causing a loss in the billions. In addition to the client’s oversight of understanding fully the economic, cultural and social fabric of the community, the client feared that early transparency would have hampered their plans. Rather, they took a management approach, shooting out messages that sought to appease, rather than engage. Here’s another real world example: A client (public affairs executive at a multinational pharmaceutical company) had consistently engaged with civil society groups through shared advocacy efforts, continuously consulting powerful NGOs for all of his community relations affairs. The company had a product recall and could have suffered a catastrophic blow to the relationship. However, because the client had built so much relationship capital with the relevant NGOs, they actually offered to help him divert the crisis. Because guess what? NGOs want to help companies become better corporate citizens, and they often will cooperate with players who they deem authentic in their efforts. Despite the fact that many businesses consider this tale of urban legend quality, I’ve seen it happen on multiple occasions. Recent practitioners like Stephanie Draper from Forum for the Future have highlighted the importance of stakeholder engagement, rather than management. These newer schools of thought focus on collaborative problem solving that examines corporate impacts from a systems perspective. Relevant questions include: Where are the power dynamics in the systems? How do diverse stakeholders interact from a social, economic and policy perspective? Where are the leverage points for change within the business ecosystem? As a recent article from the Guardian Sustainable Business Blog pointed out, stakeholder engagement requires a new set of skills that many corporate professionals are not exposed to -- that is researching the links and impacts from the systems to community and project level, understanding the business case for stakeholder relationships, and even realizing the true drivers of most advocacy groups. That being said, I thought it would be useful to for readers to begin understanding what I think makes a successful stakeholder engagement strategy.

Know and respect your stakeholders

Stakeholders are not just communities who are directly impacted by corporate activities. They include families, local governments, and local and international advocacy groups. Map all of a project’s stakeholder’s -- big and small -- and understand their motivations. Motivations are a an important piece of mapping leverage points in a system. Don’t forget to respect stakeholders through respectful, meaningful communication. Yes, most of the time they will know when you are not being authentic.

Do your homework

Ethnographic research is time intensive and expensive. The basic premise of this research is that it is qualitative -- meaning it extends beyond data to understand the lives, and cultural and social fabric of a community. Revisit the first example above. Closer research would have revealed the supreme importance of the lake in the community, as well as the fact that land rights were at issue. Understanding all of the potential problems up front paves the way for coming to constructive solutions down the line.

Establish legitimacy

This may be self serving, but I consider one of my my powerful strengths as a consultant to be that I have worked in civil society. I understand the behaviors that cause communication breakdowns and misunderstanding. I believe that corporate actors and NGOs are essential actors in our society, but that both just need a little help speaking the same language. I consult my human rights friends regularly to get a sense of what issues are surfacing on the horizon.  In short, I am a bridge. Make sure that there is someone in your organization who has a similar skill set, even if that person is a consultant.

Keep an open mind

While I by no means am an expert in Lean Startup methodology, I can say that I deeply respect the premise: leave attachments and expectations behind until you validate your hypotheses. In CSR terms, this translates to approach your NGO and community partners with an open mind. You do not necessarily know better because you have worked in business. There is always the possibility for a solution that shifts the paradigm or addresses a conflict in a way that you would not have expected. Be prepared to iterate programs or strategies and bounce new hypotheses/ideas back and forth. Judge your final strategy/program/product by the data, not by moral or value-based beliefs in what the wrong or right answer is. * Stakeholder engagement isn’t easy. It’s an exercise in patience, compromise, and periodic failure. Most of all, it’s about knowing the system in which we our our business operates, understanding the drivers of all stakeholders in that system, and making decisions (or compromises) based on those underlying drivers. Systems theorist Donella Meadows sums it up quite beautifully. “We can't impose our will on a system. We can listen to what the system tells us, and discover how its properties and our values can work together to bring forth something much better than could ever be produced by our will alone.” Nicole Skibola is a principal with Centurion Consulting, a firm dedicated to identifying, addressing, and innovating strategic and operational opportunities around all facets of sustainable development.