Stakeholder Capitalism: Coming Soon to Your Organization
Imagine two panes of glass, each coated in a magical fluid and held one inch apart from each other. Pane 1’s magical fluid contains every thought, idea, process, and work ever reduced to physical (or digital) form. Pane 2’s fluid contains every living person, entity, product, and organization currently in existence.
Now imagine that we gently press the two glass panes together. As the fluid mixes, the two panes stick together and adhere to each other.
That is the reality of our world — everything is within reach all the time. It is one of the knock-on effects of living within the Exponential Age. The power of this proximity is both exhilarating and terrifying.
Doing Business in the Exponential Age
In the Exponential Age, everyone and everything is only one degree (or less) distant from everything else. People, ideas, business products, and relationships all flow quickly and freely without respect to ideology, political system, geography, or industry. New businesses are rapidly conceptualized, commercialized, and scaled, while old businesses disintegrate at a dizzying pace. Meanwhile, most small to medium-sized businesses (SMBs) do what they’ve always done — they soldier on.
Yet simply soldiering on as an SMB in the Exponential Age is not good enough. Pointing to new concepts, products, and practices while stroking your chin and saying things like “Interesting” or “It doesn’t affect us” is akin to a death sentence.
Consider Amazon’s operational model and its impact upon SMBs.
Amazon famously pioneered (and successfully patented) the 1-Click purchasing system. The system’s patent expired in 2017, but well before then the 1-Click system and its underlying principles had several effects.
It created:
- Trust. Online shopping was no longer scary.
- Frictionless experiences. Online shopping with Amazon became increasingly easy and uncomplicated.
- New patterns and habits. Consumers rapidly adjusted their buying habits based on their Amazon experience.
- Expectations of Speed. Just as consumer buying habits shifted, so too did consumer expectations of the speed at which their goods should (and could) arrive.
Consumers began to trust online shopping with Amazon. Amazon, in turn, reduced or eliminated friction points within the company’s shopping and buying processes. This led to new buyer habits.
a) Consumers began purchasing more products through Amazon, and
b) They changed when and how they conducted their shopping.
The rise in online shopping and the change in consumer buying habits then led Amazon to tackle its version of the “last mile” problem, and it famously increased its speed of delivery.
Every human on the planet is a consumer in some way. And in countries like the United States where Amazon is prevalent, a great many of those consumers are in business either as an employee, manager, leader, or owner. The experience of each of those individual humans as an Amazon consumer has spilled over into their role within the business world. The effects of Amazon that I noted above (trust, reduced friction, new habits, and speed) invariably have impacted the rest of the business world. They are all now givens. And today, if your organization does not provide a trusted and effortless 24/7 online experience to your stakeholders, you are already in terrible danger of irrelevance.
Once you recognize that we live in the Exponential Age and that everything is a first-degree connection away from everything else, it’s easy to understand how quickly ideas and expectations can gain traction. Just as Amazon has impacted all businesses everywhere, so too will the principles of stakeholder capitalism dramatically affect all SMBs.
This begs the question, “How can you position your organization to adapt to this sea of change?”
Two Tips for Preparing Your Company for the Rise of Stakeholder Capitalism
I recommend that you consider taking two actions to better equip your organization for the emergence of stakeholder capitalism.
1. Map and understand your stakeholders.
- Who are they?
- What do they mean to your organization, its people, products, and services?
- How far away are these stakeholders in time and space?
These are the types of questions that a solid stakeholder analysis will yield. Understanding your first-, second-, and third-degree stakeholders is critically important.
2. Identify, clarify, implement, and maintain core values for your organization.
The development, codification, and rollout of core values is an intensive process that often gets short-shrifted as part of strategic planning or other management processes. Don’t make this mistake! Solid and well-understood core values will be critical to your organization’s success during the rise of stakeholder capitalism. Additionally, you must understand how to speak about your core values to all your stakeholders (internal and external) up and down the chain.
The SMB Advantage
There’s good news for SMBs; They are better positioned than Fortune 1000 companies to understand and deliver value to all their stakeholders. SMB organizations hold unique positions in their communities, and there is generally less of an air gap between their leadership and stakeholders.
You’ll hear the term “stakeholder capitalism” derided by business pundits and dismissed by business owners and the “sages” at your country club. When you hear these dismissals, I encourage you to remember that the windowpane you’re looking through can offer you a wider view of the world and what’s approaching. The only question is: “Will you choose to open your eyes and acknowledge the reality of living in the Exponential Age, or will you retrench to a narrower view of what’s occurring all around you?”
Want to explore strategies for embracing the opportunities coming with stakeholder capitalism? Let’s talk!