A firm’s stakeholders have traditionally been seen as the passive beneficiaries of value creation. Specifically, a firm’s secondary stakeholders, which are not directly involved in a market relationship with the firm, are traditionally passive with regard to a firm’s operations.
These secondary stakeholders for example include NGO’s, governments, firms outside of the industry and communities. Yet, today, through advances in digital communication, many of these secondary stakeholders have become active and empowered co-creators of value. Consequently, firms have started to include multiple types of secondary stakeholders in their innovation process simultaneously. For example, DHL invites academics, politicians, citizens,and public authorities to help to tackle the challenge of decreasing urban traffic and embrace a greener economy. With the right capabilities in place, firms can become a nexus of value creation with multiple types of stakeholders actively co-creating new products and services with the firm.
One such capability is the ability to monitor, register, and disseminate information with regard to the activities, goals and interest of a wide range of stakeholders. Traditionally, firms invest in monitoring the activities of its primary stakeholders, such as its customers and suppliers. This is often referred to as market sensing. However, given the active and empowered nature of secondary stakeholders nowadays, opportunities for developing new products and services may present themselves through stakeholders that are seemingly unrelated to a firm’s core activities. In order to benefit from these opportunities, firms first need to be aware of what their secondary stakeholders are doing. Therefore, it needs to develop a stakeholder sensing capability.
This capability is built up out of several routines that, together, strengthen a firm’s ability to recognize unusual opportunities for innovation.
These routines include:
- Active scanning of the stakeholder environment: This implies installing specific routines and schedules to scan a firm’s stakeholders environment, rather than letting chance drive interactions with secondary stakeholders. For example, through having firm employees engage in NGO conferences, or conferences in industries which are seemingly unrelated to a firm’s current business.
- Disseminating of stakeholder information internally: The information an employee gathers about one external type of stakeholder might seem irrelevant for his or her function, yet it might be of crucial value to someone working in another department. For example, a local government in a developing country improving access to a region may seem irrelevant for somebody in the R&D department of a firm. Yet, somebody within the supply chain department might view this as an opportunity to develop new business models in that region.
- Incentivizing front-line employees to distribute stakeholder information: More than often, a firm’s front-line employee might learn about crucial stakeholder information during service encounters. Yet, this information is often tacit, and never reaches other persons within the firm. By incentivizing front-line employees to share information about their interactions with different stakeholders, new opportunities might arise for innovation. For example, a sales representative of a pharmaceutical firm might gather crucial information about physicians and regulatory issues that do not reach that firm’s R&D or marketing department. By incentivizing these employees to share this information, which is not part of their core function, opportunities for collaboration with these stakeholders may arise.
- Employee exchange programs with external stakeholders: Innovative business models often arise from tacit information which is hard to codify and transfer. By placing people in different contexts, a lot of this tacit knowledge can be transferred quite quickly. Therefore, firms that want to see how the knowledge and skills of a particular stakeholder may present opportunities for innovation, benefit from allowing employees to work for a specific period of time with one of their stakeholders. For example, it might be valuable for an energy-producing firm to spend time in an organization such as Greenpeace. By actively working within a type of stakeholder that seems unlikely to develop new products with this firm, opportunities for innovation can be discovered.
These four routines exemplify the types of procedures firms can install to develop a stakeholder sensing capability. Yet, this is only the first step. When firms identify one or multiple stakeholders with whom they can potentially co-create value, other capabilities need to be in place to manage this complex partnership.
This is a research field where I and several other researchers are working on intensively in order to strengthen firms’ capabilities for stakeholder co-creation.
Start a conversation below and let me know where you see opportunities to develop stakeholder sensing capabilities!
