With Stakeholder activism on the rise, ‘pre-emptive strike’ research and precision strategy are critical

When a shareholder turns activist, corporate Boards go into overdrive trying to fend off potential actions. And when it comes to Reputation, Boards and CEOs get their PR machinery into overdrive. 

But shareholders no longer act alone. For embedded within the activist shareholder’s demands is the idea that corporate reputations are always susceptible to reputation (and potential financial) damage and consequent impacts whether in the capital markets, or among policy makers or communities. Any shareholder action draws in diverse sets of other stakeholders, whether customers, communities or even NGOs. Sometimes the action draws policymakers into focus. Complexity abounds.

How effective is a traditional corporate strategy in today’s age of instantaneous social media echo chambers? Is it at all possible for managements to create ‘pre-emptive strikes’ on potential issues that activist shareholders might raise? Or is it simply a matter of getting ‘bots’ to counter-attack in social media?

Attempting the last might be tempting but it’s completely disastrous for reputation… and unethical! The danger of being caught out almost immediately is not simply high, it’s now astronomically high. And the impact can be at the very least severely damaging.

Critically, in the emerging environment of instantaneous bubbles of emotional frenzy that social media can generate, it’s vital to understand the behavioural causes of the frenzy within the echo chamber.

Today’s social media constructs can make quick mockery of the traditional wheels of stakeholder management— great product quality, advertising and PR, strong customer and supplier relationships and employee satisfaction. Traditional mainstream media when drawn into a wider stakeholder ambit, becomes both inadequate to counter the spread of ‘information’ bursts but also compounds the echo chamber effect, drawing within it wider streams of potentially corporate reputation and financially damaging stakeholder action.

Traditional Porterian Value Chains are passé. They’re closed systems that look within company structures and fail to account for the impact of externalities. Companies are no longer responsible for merely their operations and the profits derived therein, but they’re now consciously seen as custodians of a wider arena, the protection of the Earth itself for future generations. The operations of suppliers and the customer usage of products are as much a feature of company reputation and, therefore, potential financial impact, as the actual carbon emissions or management of human rights issues from its own operations— the overall company footprint and the risks that might emerge therefrom. Risk mitigation then casts its net wider across stakeholders, and Reputation.

And that’s where the criticality of Stakeholder Research, the ability to understand the behavioural why and how aspects of stakeholder issues, the sensitivity of the impact of the company’s footprint on individual stakeholders, their urgency, impact-wise, to both the company and the stakeholder needs to be understood, assessed and properly addressed.

Reputation and stakeholder research designed with carefully crafted frameworks that map influence, interest and relevance to urgency, power and legitimacy now needs to be a critical part of the Corporate Strategic Planning process. The research process is vital to understanding not just who your key stakeholders are and how to prioritise them but to understanding where they come from and what real (or otherwise) stakes they have in your business. Outcomes must be assessed both from a financial / capital market impact and a reputation point of view.

Military wisdom has it that no plan survives the first encounter with the enemy. Yet without a clear strategy, a well-mapped game-plan that assesses scenarios and contingencies, drawn from intelligence, no military strategy could ever win a battle or the final war. It’s intelligence or research that becomes the key to the process of analysis of scenarios, contingencies and in the final sum the strategy itself. And understanding behaviour to pre-empt potentially damaging shareholder or, in the larger context, stakeholder action becomes critical to strategy.

Do ‘pre-emptive strikes’ in messaging to stakeholders’ work? They do, only if the ‘Pre-emptive strikes’ are not Greenwash. No one in their right mind would advocate Greenwash as a strategy. For the spin of Greenwash is not just unethical; in today’s environment it doesn’t work. It’s a recipe from reputation and consequent disaster. Only facts and the demonstrable honesty of intentions matter. 

Their understanding by the recipient stakeholders depends not just on strategy but the language of strategic communication; the precision with which the language is crafted depending upon both the overall and individual context for stakeholders. Understanding and precision drive the ‘pre-emptive strike’ and only research can draw out the precision required for the right strategy in today’s echo chamber communication age. It’s about the depth of research and the clarity of its analysis that drive shareholder and stakeholder management strategy today. The unequivocal precursor to precision strategy and strategic communication that leads to firm-footed reputation building and thereby sound risk mitigation!