The Five Stakeholders in a Regenerative Business

“Many people believe that problem solving is the source of innovation. However, problem solving is by definition focused on addressing what exists and attempting to make it better. True innovation comes from reaching for the potential in something: its possible manifestations that don’t yet exist. Bringing entirely new things into existence is what makes innovation so disruptive, and this is precisely what gets shut down when thinking is defined or circumscribed by problems.”
― Carol Sanford, The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes

I’ll admit that I am a bit of a crusader when it comes to the importance of understanding the people who we want to use or buy the products we make, both because it’s ethical and because it leads to more success for our businesses and organizations. It has surprised me to no end how many companies virtually ignore what their customers care about, beyond reactive forms of input such as sales or customer service. When all you know about your customers' motives is in reaction to what you are already doing, you are very likely to miss big opportunities to innovate and deliver value.

I think of great businesses as a collaboration between the people making a product and the people who pay for it. Money, when we think of things this way, is a tool of collaboration, not a way to extract more value than we provide. Profit is too often seen through the lens of 'charging more than the cost of production,' but we could look at it as 'the surplus of value we're creating that allows us to discover and develop further value-creating opportunities.’ When we think of customers as our collaborators, we can develop long and rewarding relationships.

Carol Sanford, author of The Regenerative Business and The Responsible Business, takes this idea even further. She too emphasizes the importance of understanding what customers care about (and that our products have no value unless they are valued by our customers). And then she lays out an even more expansive and holistic approach to considering our organization’s or business's stakeholders.

1. Customers

Customers or ‘the people who use our products and services’ (one does not need to be a for-profit company for this framing to be valuable) are people with bodies, lives, emotions, relationships, and identities. We can see them from beyond the limited vantage of how they engage with our product (so-called 'users' or personas). Each person has an essence, a wholeness. The more we recognise this, the better we can be at delivering our product or service in a way that has meaning to people in a deep way. When we understand how what we're doing matters, not just because it 'solves a problem,' but because it feels supportive or satisfying in many of the layers of identity our customers have, we have a huge advantage as a business or organization.

2. Workers

How people operate within our organizations is just as important as what they produce, and what they produce is a direct consequence of their experience as an employee. Too often, it seems like founders and leadership miss the opportunity to develop internal systems that allow working people (including leaders and managers) to bring all their wisdom, experience, insight, and creativity to bear. Instead, there's some idea that the job of management is to force, cajole, 'incentivise' or manipulate people into doing things in service of the 'goals' of the organization. This leads to a workforce that is tired, resentful, numb, and creatively suppressed. This is especially true when there's an underlying belief that ‘some people have the ideas’ and other people are simply there to execute the plans of smarter people, whether we call those people leaders, designers, or executives. Allowing people the support and encouragement to be whole humans with ideas and agency apparently feels too risky or like it will slow things down. But we can create systems of decision-making that are non-oppressive or coercive without turning a business into a chaotic mess and discover huge benefits in the process.

3. Communities

Communities comprise the people who our businesses affect even if they are not direct consumers of our products and services. These might be people living in the places where our business operates, people who live in places affected by parts of our supply chain, and people in relationship to our customers and workers. Too often, business leaders give no thought at all to these stakeholders, even though considering them might lead to great opportunities for innovation as well as forward-thinking strategies around mitigating or avoiding harms that may later become costly to address.

4. Earth

Rarely is the Earth considered as a stakeholder, and we can see the effects of that omission all around us. So often, businesses use natural or public resources and have impacts that are not Earth-friendly, but that is considered 'reasonable' in a system that rewards extraction and short-termism. These things are interdependent, though. How can ignoring the environmental effects of our business be considered good for customers, communities, or workers? It's as though people leading companies believe that somehow they are immune to the effects of their business on the earth, or they have been able to block out the cognitive dissonance of their own actions. Even as many leaders have human descendents who will be affected by these choices, it seems hard to let go of the identity of a ‘winner.’ When we consider the Earth as a stakeholder, we don't have to lose our competitive edge, though perhaps we'll be a little more skeptical about the nature of the kind of competition that is willing to win at all costs.

5. Investors

Investors are, in the current paradigm, often the primary or only stakeholder we're focusing on in business today. Whether these are VC investors in tech, or shareholders in public companies, businesses make many decisions with a grow-or-else approach in mind. We need a different relationship with investors, one that sees them, and allows them to see themselves, as whole humans as well. Simply extracting and allocating capital underlies the way businesses serve investors now, but what would happen if we created business structures that prevented that from happening? Could we find other ways to bring value to investors?

Change is possible

We can make business and organizations more holistic by shifting from a machine-thinking mindset into a living systems perspective. Living systems have interdependent effects. When we take on a problem in a narrow way, we're certainly going to ignore the many side effects we might produce, and we're also missing the more generative and interesting ways to generate value across our varied stakeholders.

We are people before we are workers, investors, leaders, or customers. We've been instructed by an extractive system to over-invest in certain identities, which help it to sell us things, whether they are products or ideas. But nearly everything that is bad for some people, even the most marginalized, is ultimately bad for all of us, even if people at the margins are affected first. This isn't a do-gooder mindset, which has its own limited perspective, but rather a way of thinking about business and organizations in a way that can lead to incredible and lasting success. We need to abandon this bizarre idea that business should be measured only by its success with one kind of stakeholder when those very stakeholders are also part of communities, are also customers and workers, are also humans living on Earth.