Companies are embracing a new breed of stakeholders and are gaining significant commercial benefits as a result, according to a new report released this week,"Dangerous Liaisons: How Businesses are Learning to Work with Their New Stakeholders," published by the Economist Intelligence Unit and sponsored by Verizon.
In a global survey of senior executives, almost four-fifths (78%) of respondents say that interaction with special interest groups, non-governmental organisations (NGOs) or citizen groups is considered important to their business. Online communities are also seen by business as key stakeholders—a plurality of surveyed executives (33%) say that these will be their most important category of "non-traditional stakeholder" in five years—and companies are increasingly conducting their relations with all the aforementioned groups online.
Yet despite the anticipated commercial advantages, companies continue to view interaction with these groups as the remit of public relations or marketing departments, and fail to incorporate new stakeholders into their strategic thinking at board level. Although reputation and brand enhancement are seen by surveyed executives as the main positive outcomes of such interaction, there are other vital areas of business that could also benefit, such as accessing new ideas and improving customer relationships, regulatory compliance, market entry strategies and recruitment. However, a lack of senior-level oversight means that many companies may be missing potential commercial benefits, especially as online groups increasingly hold sway over the way a company is perceived.
"Executives may need a leap of faith to join up with their critics," says report editor Paul Lewis, "but if terms and conditions are worked out early on and parties communicate often and in good faith, then business can re-affirm its role as one of the great agents of social and economic improvement."
A key finding of the report is that risk will remain inherent in new stakeholder relationships. Some 43%, the largest group of survey respondents, see reputation damage as their main risk in dealing with online communities, and 38% say the same in regard to NGOs and civic groups. Therefore, companies must learn how to tread a line between partnership and confrontation and
continuously manage the risk of reputation damage or loss of intellectual property.
The report also found that firms will have to relinquish some control of information. One of the toughest challenges for companies in the Internet era is how to engage in the free flow of online debate while ensuring that confidential or inaccurate information is not released. "Everything will get out there in the end", warns one expert interviewed for the report. But learning to manage the information flow will be vital given that the largest group of survey respondents (42%) agree that online social networks are becoming the most effective means of communicating with new stakeholder groups.
Another revelation of the study is that intellectual property issues will remain vexing. A similar dilemma exists over how far to protect intellectual property, especially when new ideas derive directly from the collaboration with new stakeholders. While companies want exclusive benefit from innovations, the aim of their partners is often to publicise these as much as possible without concern for the business impact.