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Public Affairs Insights from the Centre

29 Oct 2010

Value in stakeholder engagement

George Onisiforou

Last week, the Centre hosted a practitioner breakfast meeting with prominent professor Ed Freeman, from the University of Virginia’s Darden School of Business.

During the discussion that followed, Professor Freeman elaborated on his belief that stakeholder engagement should move away from tradeoffs between business and the community, and a focus on figuring out the least harmful public policy, towards understanding of how value is created.

He stated that the traditional view of business has been a tradeoff between environment/community and business. Tradeoffs of this sort have been entrenched deep within company business models. Yet today, different business models are required to make interests of community and business aligned.

A key feature of stakeholder engagement is how to create value without tradeoffs. Conflict under this viewpoint is good since different groups, especially consumer advocate groups, tell a business about something within their business model they have not considered. Wherever critics exist there is scope for improvement of a business model.

Professor Freeman stated that stakeholder engagement should move away from figuring out the least harmful public policy towards understanding how value is created. Companies are engaging civil society to change their business model and satisfy stakeholders; in some situations even changing suppliers to continually move with customer perceptions.

The art of Public Affairs is how to change something within a business model before the situation becomes political. Options for action are limited once an issue becomes political. There is also limited scope for political issues to be reframed into business model issues. Although this is not always possible, a practitioner should consider the case of it occurring.

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