Friday, May 1, 2015

Conscious Leaders Care about Every Stakeholder

In the IT world, you “get” early on that everything in a system is interconnected. A network is made up of many component parts, all of which must be operating, for the system to function optimally. If you neglect any one component for too long, say a server, the system will crash.

In a similar way, a business is a system made up of employees, customers, vendors, the community, etc. If anyone of these stakeholders in the system is neglected, the system breaks down.

Despite the old model of business that assumes there is only one stakeholder, that is the shareholders, conscious businesses recognize the reality of the existence of many stakeholders, all of whom have needs, desires, and aspirations. The conscious business balances the needs of all stakeholders so that everyone wins. Easy? No. Possible? Look at Whole Foods Market, COSTCO, and Southwest Airlines to name a few. They get the human side of business and they recognize the interdependent reality of multiple stakeholders. And they continue to thrive in an otherwise depressing economic environment.

To do a deep dive on this topic, we recommend Dr. Ed Freeman’s book, Stakeholder Theory: The State of the Art