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The hollowCorporaTionThe aCTivisT sTakeholder andThe silenT MajoriTy
Introduction      Hollow corporations and organisations; that is, the ones who ignore their wider influ-      encer commun...
People are buying my productsI’m safe!Vivader-Cohen claims that rather than existing as an inherent property of anorganisa...
The media loves me… I swear!        Newspapers, magazines and even television and radio stations are beginning to lose    ...
I’m trustworthy, I promise!A straw poll we conducted among business professionals for this paper found that only 17%of res...
online bloggers alone and if companies are actively mapping the wider arena and       developing rapport with all influenc...
But I can shout the loudestEvidently, there can be no debate that the stakeholder universe today is vast,growing, changing...
So how can we identify the stakeholders with the most influence relevant to a        particular topic?        The answer i...
Stakeholder mapping- the machineDigital mapping has revolutionised stakeholder research but your focus must bedirected awa...
The key to this entire process is to consider carefully the company’s values and       objectives, and who has a stake aga...
The other fact to consider is that while you will have the active stakeholder, like anopinionated customer for instance, t...
Conclusion     The stakeholder landscape is highly diverse and now transcends digital and traditional     streams along wi...
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The Hollow Corporation

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The Hollow Corporation

  1. 1. The hollowCorporaTionThe aCTivisT sTakeholder andThe silenT MajoriTy
  2. 2. Introduction Hollow corporations and organisations; that is, the ones who ignore their wider influ- encer communities are easy to spot - you find them in major trouble across media channels every day. Having few friends amongst their stakeholder communities they have few resources or supporters to turn to when they get into trouble. It was impossible to miss BP splashed across headlines in early 2010 following its oil spillage disaster in the Mexican Gulf. With a 17% drop in market value in just one day BP became the poster child for a business in crisis, and no-one was there to stand up for it. US food manufacturer Kraft’s takeover of much-loved British chocolate brand Cadbury motivated an interesting display of stakeholder backlash when Kraft’s comms strategy overlooked significant portions of the Cadbury stakeholder network, and as a result felt the brunt of community-spread outrage. But this story is definitely not new; it’s not even in some ways different. It is testament to the growing number of organisations falling prey to the repercussions of a communications strategy focussed on sales generation and brand exposure, rather than strengthening reputation within a wider community. This wider community extends far beyond the traditional view of shareholder, customer and media (SCM). Despite newspapers and businesses alike increasingly seeking to have influence online, they often miss some of the most important, and lucrative, portions of the stakeholder network. This can be fatal when trust in business overall continues to sink and organisations who are already on the back foot are left trying to gain status in an increasingly diversified stakeholder environment. The good news is that rather than succumbing to this fate, businesses do still have the ability and opportunity to map their stakeholder network and begin to develop reputational capital in audience groups wholly or partially separate to the traditional SCM trio but equal in importance, influence and visibility. This study looks at the range of participants functioning in your wider community, the extent of the buzz and support emanating from these groups, and the support you can achieve by influencing followers and turning around your critics. With globalisation and digitalisation just two of the factors impacting the diversity and complexity of the stakeholder environment, having an effective method for stakeholder mapping has become a keystone for effective communications.ONE
  3. 3. People are buying my productsI’m safe!Vivader-Cohen claims that rather than existing as an inherent property of anorganisation, reputation is a perceptual phenomenon emerging from observers’collective judgements about an organisation’s performance over time in areasobservers deem to be importantThere is a tendency among big business to believe that if your brand name is outthere and people are buying your products then your communications programmeis operating at its peak. In some ways this is correct, but it can prove a short-term,isolated approach that lacks sustainability and has little depth to utilise in a crisis.The rise of the internet, social media and the ease of geographical dispersion meanthat those interested in your product or service, and able to voice a point of view,has expanded almost overnight. From your traditional, geographically stable SCMgroup, you are now also accountable to an international selection of interest groups,governments, activists and the list goes on. With digital interactive media everyone isblessed with the ability to say exactly what they like when they like. A comms focusdirected solely at the SCM trio ignores the reality that reputation is contingency-basedand varies across different stakeholder groups depending on the extent to which eachgroup’s specific needs are listened to and met.Celine Puff, managing director at Hotwire’s offices in France comments that thisever-common oversight was recently epitomised by GAP. After underestimating thepower of its own image GAP fell victim to a lack of reciprocity with its stakeholderaudience(s) and was forced to retract the new logo amid negative backlash. In arecent statement GAP admitted that “All roads were leading them back to the bluebox, so they made the decision not to use the new logo on gap.com any further”.Celine comments that had GAP conducted small surveys among key friends/fans/bloggers, and encouraged the participation of their stakeholder network in therebranding process, it could have introduced a new logo while optimising stakeholderengagement and gaining acceptance.But what does this mean for now and the future? With a stakeholder network thathas quickly outgrown the original mould many companies operating on the traditionalmodel are at risk of carrying all their eggs in one very limited basket; i.e. their fair-weather friends’ baskets. There has long been a general consensus among businessthat if a product is selling then the company is on track and functioning as it shouldwith support from the optimal people. Wrong!From the 1990’s and picking up speed from 2000 onwards, company after companyhas been burned by the fair-weather friend who when faced with a partnership oragreement with a company with diminishing sales cuts its losses and heads for thehills leaving the company to fend for itself. This so-called friend can be a supplier,partner or media contact… basically anyone who benefits from your company beingon top form; but who can bail ship with little consequence when things get tough.With this in mind we begin to witness one failing company at a time, with the fairweather friend nowhere in sight and no other friends to draw support from an entityleft alone and struggling. TWO
  4. 4. The media loves me… I swear! Newspapers, magazines and even television and radio stations are beginning to lose their fan base. New media channels have taken audiences by storm, offering a low cost, 24 hour communication exchange where anyone, anywhere can have their say and join the conversation. Importantly, and often overlooked, this change in the media environment provides an excellent opportunity for businesses to head the pack and begin to position their organisations with other key influencers within the stakeholder network. This is not to say that everyone has thrown out their televisions and is jump- ing online but it demonstrates a significant portion of the audience who is no longer dedicating their time solely to these older mediums. Recent analysis of Facebook revealed that 30+ million profiles have their status messages updated at least once every day indicating an audience that is constantly online and commenting on their experiences; whether it’s with friends, work, brands or leisure. Over the past three decades especially, the blatant misrepresentation of facts and opinions in some traditional media channels has culminated in negative audience responses and an increase in the respect and credibility accredited to other lesser business-recognised influencers in the stakeholder network. Tom Kelly, director of communications, at the FSA, recently commented at the 2010 PRCA National Conference in Manchester on a new era of transparency in which the need to communicate regularly is more important than ever, but where choosing what to say only gets harder. Things have moved on from what is often recognised as the Blair-Clinton era of comms where message discipline (ensuring that your ‘party’ speaks with one voice) was the key to success. We are now in a time that charac- terises this previous era as an era of spin, with the backlash prompting a heightened desire for transparency and engagement from stakeholders. Where it appears that interactivity and increased stakeholder bargaining power is on the uptake among audiences worldwide, the majority of businesses have been on the back-foot, employing defensive strategies rather than developing strategies to attain the short and long-term benefits of an interactive environment with a broader and more dispersed influencer network. Andy West, managing director for Hotwire Inter- national, applauds GAP who despite their stakeholder blunders demonstrated a re- freshing and responsive corporate approach to stakeholder feedback by listening and changing direction quickly and with transparency. This, West claims, is a testament to the power of interactivity and encourages and ultimately shows the rewards of corpo- rate honesty and humility.THREE
  5. 5. I’m trustworthy, I promise!A straw poll we conducted among business professionals for this paper found that only 17%of respondents trusted business to protect the interests of shareholders and stakeholders.This statistic is not surprising and is testament to the fact that trust has come to play animportant role in a business’ reputation and longevity. More alarming is the reality thatonly 15% of 25-35 year olds and 18% of 34-54 year olds supported this conclusion. Thisrepresents a significant lack of trust among a group that will be in work and influentialpositions for the next 30-40 years. This statistic may seem gloomy, and resemble a highhurdle for business to challenge but it also marks a significant opportunity. Businesseshave the chance to convert a significant portion of working professionals from ‘distrust inbusinesses’ to a positive fan base.So we have business operating on an international scale, a decline in face to face commu-nication, social media forums and blogs dedicated to every interest group imaginable, andan information flow travelling at the speed of light. And it has become increasingly difficultto harvest and maintain meaningful relationships with people most important to your organi-sation’s success; largely because the group itself is so exhaustive, dense and difficult tonavigate.It seems hopeless…but there’s always a trick up the sleeveAn international study we announced earlier in 2010 found that as society has becomeincreasingly mobile, people’s interests and relationships are much more dispersed interms of geography. As a result, these interests are maintained through the use of digitalcommunications technologies such as mobile phones, social networks and profiles, blogsites and Internet groups.The survey revealed that only 18% of consumers surveyed choose to ignorerecommendations and information coming via their social networks and onlineacquaintances. This leaves a huge 82% of respondents that are committed to investigatingthe information, acting on it or passing it on to another acquaintance.This is a massive opportunity for the business world - social networking websites for oneare an attempt at establishing and maintaining social presence with others when physicalpresence becomes a problem. Social networking sites provide businesses with moreaccess than ever to personal information that can be used to identify stakeholders andbegin communication reach out.Managing director for Hotwire in Germany, Ute Richter finds the stakeholder network anarea for impressive growth in corporate communications. “Stakeholder mapping providesorganisations with the ability to both identify and develop worthwhile relationships withinfluencers that extends beyond the media. The press is facing increased competition from FOUR
  6. 6. online bloggers alone and if companies are actively mapping the wider arena and developing rapport with all influencers both on and offline they are developing an abundance of reputational capital to draw from for future projects.” If one can imagine a social networking website such as Facebook as a kind of con- tinual conversation that helps to keep stakeholders together, it seems reasonable to suggest that it is vital for businesses to also be part of that conversation, just as they would like to be in offline environments. So digital is where it’s at? What is important about the digital landscape is that it not only provides the tools to make a preliminary assessment on the stakeholder network but it also provides an ongoing means to establish contact and maintain relationships. Given the dynamic nature of the economic environment, having an eye on what stakeholders want and understanding what they respond to through online mediums is now an important business tool. Observing the attitudes and feelings online and identifying key players in the field enables a business to engage with the audience both through proactive as well as reactive content. Social media hasn’t changed the fundamental principles of crisis and issues management, but the expansion of social media and the new era of mass engagement identified by Kelly means that brands must be active in the digital world. Trust is fundamental to business success, and should brands encounter issues, as most do along the way, your customers in the social media space will be looking for your response. If you are not there to listen and engage in the social media world, then trust in your brand will without doubt corrode even further. It is unrealistic to believe (as many companies do) that a company can always be proactive in disseminating messages that are beneficial in promoting the company in a positive light. Embracing both the proactive and reactive nature of online communications provides a very valuable exercise. Managing director for Hotwire in Australia, Jörn Sanda advises any brand, in the past or in the future, to confirm the right way of engaging by inviting your social media ‘fans‘ to become part of the process. LISTEN to the social media to know how people are reacting and provide content through it. DIALOGUE with your market is the greatest benefit of social media. First listen, and then give feedback. From this engagement the company develops an ability to network with key influencers in the online space. By networking and expanding their reach the company is able to identify key industries and roles in its stakeholder network that may have previously been ignored. The simplicity of a word search to see who is commenting on something relating to you has unbound consequence and provides a very real insight into who cares, and who cares enough to voice their own opinions.FIVE
  7. 7. But I can shout the loudestEvidently, there can be no debate that the stakeholder universe today is vast,growing, changing every day and no longer able to be reached by a press releasealone. Flemming Madsen of Onalytica explains that “understanding the stakeholderuniverse is a major challenge for many organisations, both in terms of how influentialtheir traditional stakeholders are but also who is influential outside of their traditionalstakeholder group. Having clear answers to these questions helps when making thebest decisions on who to engage and how to engage them”.Research suggests that when we determine who is most influential or relevant inrelation to a topic we tend to overrate those we are more familiar with or shout theloudest and underrate those that are less familiar. As a result, we begin to recognisea consequence in time, effort and the subsequent cost in engaging and gaining theattention of those who are loudest but then turn out to be less influential than webelieved them to be.What is often overlooked is the simple reality that to measure a stakeholder’spopularity on a particular issue all one has to do is to count the number of otherindividuals who reference that stakeholder in the appropriate context. In doing sowe regard all stakeholders as equally important; a “vote” carries the same weight nomatter who gives it.Flemming comments that this is not the case when it comes to influence. “Herethe weight of a stakeholder’s ‘vote’ on how influential another stakeholder is, isdetermined by the ’voting’ stakeholder’s own influence, whose influence in turn isdetermined by the influence of those who vote for him or her and so on, and so on…”So popularity is about how many listen to you whereas influence is moreabout who listens to you! SIX
  8. 8. So how can we identify the stakeholders with the most influence relevant to a particular topic? The answer is that you have to take the indirect influence into account. In the academic community there is no real debate about how to measure influence. For more than three decades academics have used ‘citation analysis‘ to measure the influence of academic journals, researchers and universities. But regardless of the method used to measure influence, for these measurements to be useful they must be tied to a context (or brand, company). This is achieved by extracting only relevant references. When calculating influence we make the basic assumption that a person references another person if the former thinks the latter is relevant to the context. Alex MacLaverty, managing director technology at Hotwire is a supporter of this approach. “All too often we see large brands like BP invest in quick-fix solutions like investing $3.6 million in Google Adwords in an attempt to protect its online reputation and strengthen its name. What this approach fails to grasp is that reputation is no longer about disseminating your message. It is about ensuring that other influencers are disseminating your message to even more key influencers. This comes through interaction and mutual respect alone. To find the influencer with the most authority is a gold mine for stakeholder management.” Making decisions based on the best of both worlds – expertise and science Given that those who are popular are usually more difficult (and as a result more costly) to influence it is very important for marketing and communications teams to understand who is more influential than their popularity leads us (and everyone else) to think. If you want to know the real impact of engaging with them (or having them present a particular view or story) you need to measure their topical influence. Once you have their topical influence you can compare the relative impact of a potential engagement. Factor in the cost of engaging with them and you can make your choice based on expertise and science.SEVEN
  9. 9. Stakeholder mapping- the machineDigital mapping has revolutionised stakeholder research but your focus must bedirected away from the external environment where value is exchanged, to theinside of the organisation where value is generated. By identifying the kind of valueyou want to generate, i.e. whether it’s economic, cultural, or financial and matchingit to how your business functions you can begin to determine the segments of thestakeholder map that warrant actions, ranging from proactive involvement through tosimple monitoring.To map stakeholder networks Hotwire uses its Stakeholder Quadrant. The quadrantenables a systematic review process that identifies and assesses the importanceof key people, groups of people, or institutions that may significantly influence thesuccess of your activity or project based on their visibility or importance. • Manage: These are stakeholders who are highly visible and highly important. Their happiness is key to the organisation. • Acknowledge: These are stakeholders who are highly visible but less important. The organisation should care about them on a regular basis. • Monitor: Stakeholders who fall within the lower left quartile are not important and not very visible. Monitoring their activities is however important should an individual or group ‘break out’ and potentially become a problem or asset for the organisation. • Involve: Stakeholders that are of high importance but are not very visible should be actively engaged with by the organisation. As they are not very visible you don’t know what they are up to, which could become a problem! High I m INVOLVE MANAGE p o r t a n c MONITOR ACKNOWLEDGE e Low Visibility High EIGHT
  10. 10. The key to this entire process is to consider carefully the company’s values and objectives, and who has a stake against each value or objective. Once we have an insight into their location on the stakeholder quadrant we can focus on how to effectively channel company resources to leverage this relationship. Obviously it makes no business sense to try to interact with every stakeholder to the same degree. This is why the four categories of interaction become so important as they ensure that you are directing efforts and costs at the most beneficial segments of the market. High Raw material Shareholder supplier Media blogger I Employees Investor Trade unions m Coinvolgere p Involve Manage o r City advisor Industry analyst t Senior manager Industry association a Future employees Employees’ families n Whoelsalers Financial analyst c Monitor Acknowledge e Industry regulator Past employees Option holder Manufacturer Packaging supplier Company location Industry community Competitor association Employee communities Landlord Professional association Low High VisibilityNINE
  11. 11. The other fact to consider is that while you will have the active stakeholder, like anopinionated customer for instance, there will be a silent majority. Don’t focus solelyon the active minority; you also need to know how to reach the silent majority. Theywon’t stay silent forever and this is something that company after company is learningthe hard way! The importance of which can be seen mapped on the stakeholderquadrant - several stakeholders appear oddly out of place in the importance ranks asopposed to the visibility; but fortunately or unfortunately that is the complex nature ofthe stakeholder environment and a key reason why this method of mapping is such avital tool for business today. TEN
  12. 12. Conclusion The stakeholder landscape is highly diverse and now transcends digital and traditional streams along with geographic locations and interests groups. It is easy to understand why the likes of BP and Kraft are splashed across the front pages as a result of poor stakeholder management. The business world has transformed dramatically over the past 20 years, aided largely by the growth of the digital world giving consumers and interested parties a platform to raise and vent their thoughts across the globe. Every man and his dog now has a say in your business and its actions; and more scarily operating in a landscape where their thoughts can impact on your business success it becomes paramount to be outreaching to all relevant influencers. Although this seems challenging it represents an excellent opportunity for those businesses willing to grab the bull by the horns and invest in stakeholder management. With a rough 83.5% of the stakeholder network open to conversion, now is the optimal time for businesses to map their network and outreach as appropriate. Aided by social media, blog sites and special interest hubs, companies can now access detailed information on their stakeholders globally. Add to this the increased probability that your current fair-weather friends are on the lookout for the next best thing and we reach a juncture where businesses can’t afford not to engage in stakeholder relations. With globalisation, the digital world and many more developments impacting the diversity and complexity of the stakeholder environment, stakeholder mapping has become a keystone for effective communications.ELEVEN

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