August 13, 2018
There are four canonical "stakeholders" in business:
- Owners (shareholders)
Some businesses don't have all, but most do. This "4-stakeholder model" has given me a few good insights over the years:
- An executive's job is to balance the needs of these four groups—that's the "what". You can spend a life learning the "how", but I think balance is a good north star.
- The needs of the four are always in tension. Low prices vs. comfortable jobs vs. maximum profit. A common cause of business failure is things tilting too much toward one group (e.g. a union gets too much power and wrecks the company's cost structure).
- Different national cultures value the well-being of the stakeholders differently. The US traditionally was rather ownership-oriented but there's no guarantee that won't change. Whereas in some other countries (e.g. Japen) they try really hard to guarantee lifetime employment, seeing it as a necessary and natural thing to do.
This model underpins Saturday's Are There Enough.