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Ideas for Leaders #691

Who’s Influencing Your Stakeholders?

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Key Concept

Third party influence can have a major impact on a company’s reputation. By replacing the traditional company-centric communication strategy, a new stakeholder-centric Channel Strategy Model helps companies understand stakeholder perspectives that are outside the companies’ sphere of experience — and opens up new avenues of indirect communication.

Idea Summary

Traditionally, according to Tony Dyson of Tessera Consulting and Kevin Money of Henley Business School, companies and organizations engage in what they call ‘silo communication.” Different parts of the organization communicate with different stakeholders. Thus, for example, the Investor Relations department communicates with the financial community, Government Relations communicates with Government, Media Relations communicates with the Media, Corporate Responsibility communicates with local communities, and so forth.

This communication structure has a number of problems. Stakeholder feedback isn’t shared throughout the organization. No monitoring is in place that could allow cross-functional assessment of results. Communication effectiveness is dependent on the skill of individual in each of the silos. Finally, this direct communication structure encourages scepticism from stakeholders who might question the motivation of the communication: indirect communication will often have a greater impact than communication that comes directly from the company.

The core issue behind all these problems is that silo communication is company-centric. Like the sun surrounded by planets, silo communication places the company at the centre of the universe with communications heading out like rays to the various stakeholders. As a result, companies are unaware of what stakeholders are saying among themselves. For example, a company may have a dialogue in isolation with government, but what other factors are impacting governments — and how might those factors influence the conversation with the company?
It’s true that large companies will conduct opinion research, for example, but such research cannot fully capture the conversations taking place among the networks of stakeholders. 

Research has shown that third-party influence can have a major impact on the reputation of a company. That third party influence occurs through those often-inaccessible conversations floating among the networks of stakeholders. These conversations cannot be ignored.

What, then, is the solution? According to Dyson and Money, the solution is to replace the inside-out, company-centric approach with an outside-in, stakeholder-centric approach. Specifically, this means placing a stakeholder — say the government, for example — at the centre of the universe, then placing all of the (in this case) government’s stakeholders, including the company, around the stakeholder. 

From this new perspective, the company can track and follow the lines of communication and influence that are flowing all around this stakeholder. As a result, the company will now be better plugged into dialogues that are outside its direct experience.

As one can imagine, of course, monitoring the network conversations of a company’s most important stakeholder can potentially lead to a vast overload of information. What’s important is to uncover which views in these conversations will have the most influence on the stakeholder’s view of the company’s reputation, and will that influence be positive or negative.

To help companies turn information overload into actionable data, Dyson and Money have developed a matrix based on the fact that influence is determined by two factors: whether there is trust in the influencer and whether the influencer’s advocacy on behalf of the company is negative or positive. 
Thus, if a stakeholder has high trust in the influencer and the influencer advocacy is negative, the result is a highly negative impact. If a stakeholder has high trust in the influencer and the influencer advocacy is positive, however, the result is a highly positive impact

Interestingly, if a stakeholder has no trust in the influencer and the influencer advocacy is negative, the result is actually a positive impact. And if a stakeholder has no trust in the influencer and the influencer advocacy is positive, the result is a negative impact

Business Application

The outside-in, stakeholder-centric Channel Strategy Model offers communication planners an opportunity to approach stakeholder communication with a much greater understanding of the issues surrounding their stakeholders. In addition, companies can plug into the influence networks swirling around stakeholders, finding ways to connect with and mobilize the resources and energies of other entities in advocating for the companies — in essence, recruiting stakeholders as agents in their communications campaigns.

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Authors

Institutions

Source

Idea conceived

  • July 2017

Idea posted

  • February 2018

DOI number

10.13007/691

Subject

Real Time Analytics