Using Stakeholder Theory to Understand Impact and Strategy

impact social enterprise stakeholders

The concept of stakeholders has become common across sectors as a contrast to the traditional, profit-driven “shareholder” view of organizations. Considering your stakeholders allows you to think more broadly and critically about impact and social responsibility.

More specifically, you can’t measure the outcomes of your work without understanding who that work affects. Accounting for impact requires identifying stakeholders.

You can start to pinpoint your organization’s stakeholders with a simple mapping exercise. First, draw a hub-and-spoke diagram with your organization at the center. Then think about the people and systems closest to the center, the ones most directly affected by what your organization does. Those probably include customers and/or beneficiaries of your programs, as well as employees and partners. Think about your organization’s mission: Who are the people you serve?

Now take a step further out from the center. How does your work impact the local communities where you operate, and which people and systems are directly affected? How does your work impact the environment, both locally (through your direct physical footprint) and globally (through choices such as your use of fossil fuels and where you source materials)? Be as specific as you can, and remember to consider unintended and indirect consequences of your operations.

Whether or not you’ve drawn out your hub-and-spoke map, you likely have thought about many of these stakeholders and how your organization affects them. The next step is deciding how your awareness of stakeholders will inform your business model — in other words, going from “Who are they?” to “How does this affect our strategy?”

For this next step beyond the hub-and-spoke map, you can create what is known as a materiality matrix. This matrix can help you determine how your stakeholders’ needs and wants intersect with your business goals and activities. On the matrix, you will map out issues and challenges that are relevant to you as well as your stakeholders. One axis of the matrix represents the importance to your organization. The other axis represents importance to your stakeholders. You can map out economic, social, and environmental issues on these axes, and identify areas that are of greatest importance to both you and your stakeholders.

Now imagine a regression line drawn through the issues you’ve mapped — where do the stakeholder and organizational goals line up? Are your priorities aligned with your stakeholders? Do you need to change your strategy, or can you safely set aside some of your stakeholders’ priorities as being outside the scope of your organization? Part of the goal of social enterprise is to align these priorities — to create shared value for a business as well as the environment and the communities where it operates.

Of course, you’ll want to test your assumptions about stakeholders through research: talking directly with people affected by your work; finding government and other data about stakeholder groups; and looking for previous studies that are relevant to your programs.

How do you think about your stakeholders? If you’ve used a hub-and-spoke stakeholder map and/or a materiality matrix to think about stakeholders, did anything surprise you or change your strategic approach?

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