A recent article in the MIT Sloan Management Review looks at how we can analyze strategic change. The model by Tom Hunsaker and Jonathan Knowles (a coauthor of mine) looks at the nature of change needed by firms. The model helps us focus on strategic change and how this fits with stakeholders. Specifically, the authors go to the actions a firm should take in respect of various groups (including, but also going beyond investors) given the nature of the change needed.
Pushing The Boundaries
I have always worried about the term market. (I teach on this a decent amount when I discuss strategy). A lot of discussions of strategy start with your position in the market. This has practical value, so I’m not being completely negative about such an approach. Yet, it can be a major problem. As the authors note.
“A fundamental assumption underlying traditional approaches to strategy is that industry boundaries and economics remain broadly stable over time.”Hunsaker and Knowles, 2020
When this does not happen — and a lot of effective strategy is about ensuring that this assumption is not true — you have to wonder about the value of any strategy that starts with this assumption. The authors discuss ways to get beyond this basic assumption and think about changing boundaries.
Involving The Stakeholders
One of the things I most liked about the Hunsaker and Knowles’ model is the explicit involvement of a broad range of stakeholders. The idea that a firm is run for its stakeholders is often suggested in various literatures. Still it isn’t always obvious what to do next. (To be clear I think the idea of just working for shareholders while it appears simple is really a cop out. It sounds like a meaningful approach but is too simplistic to be practical, see here. Saying you only care about shareholders is questionable socially but also a way to try and avoid hard choices while appearing thoughtful).
When working on your change the authors show a number of key stakeholders to involve. For example, customers, employees, partners and communities. (This is in addition to the more traditional stakeholders — investors). For all of these groups you can look at what you change. You should consider the magnitude of change, whether there is a change of activity to get to the same goal, or a total change of direction.
Changing The Way We Think Of Strategic Change And Stakeholders
The authors have a nice, implementable model that adds something to the traditional models. Best of luck to them in changing the way we think of strategic change and stakeholders.
For work I coauthored on involving stakeholders in public policy see here.