Maybe we should see our stakeholders as potential long term assets rather than irritants to be endured? - Part 1

For many governing entities, stakeholder engagement has become more than just periodically consulting a group of stakeholders about a particular policy/issue/project. Governments and other public sector entities have adopted stakeholder engagement, to varying degrees, as a means of countering four factors in efforts aimed at increasing/improving their openness, communications and transparency:

•  resource limitations/constraints of governments and the notion of accessing/leveraging OPM (other people’s money); 
• the stubborn resistance of many economic, social and environmental problems to traditional government-driven interventions; 
• the increase in the number of citizens who were cynical and no longer trusted governing entities and institutions to look out for their interests and well-being; and
• the invention of social media platforms that enabled/empowered citizens to connect with kindred spirits, mobilize and mount opposition and protests aimed at the private and public sector entities they no longer trusted.

We are facing a stakeholder landscape that is increasingly resistant and often hostile to our efforts to make progress on various policy/issues/project:

• are no longer just passive consumers of the proposals, policies or programs of governing entities;
• are skeptical and mistrusting of governing entities and their experts/consultants;
• are Internet-savy and constantly mining the Internet for related information, data and studies that often challenge the information being presented or at least suggest uncertainty and caution;
• embrace information that supports their beliefs and reject information that contradicts them - “Confirmation Bias” ;
• oppose technical solutions that do not take things they value (aesthetics, heritage, culture, etc.) into consideration (NIMBYs, LULUs);
• are believers and re-posters of “fake news” or opposing websites that are seeking to discredit legitimate science;
• sometimes becoming belligerent, vulgar and often irrational in their challenges and attacks.

“We have met the enemy and he is us.” - Pogo comic strip - Walt Kelly

To some degree, we are the cause of some of this dissatisfaction and mistrust:

• we really don’t want to engage them - “leave us alone, we know best”. Although we don’t tell the stakeholders “we know best”, the way we communicate with them and how we answer their questions clearly indicates the underlying “father knows best” paradigm;
• too often engagement is an “after thought” - after we have figured out what we want to do. Most corporate, political and bureaucratic organizations will not allow a project to proceed until they have determined and approved a preferred solution. And let’s be honest, most organizations are command and control in spite of the management experts who preach the benefits of a horizontal, participatory and open style of decision-making;
• we usually use the D.A.D. model - Decide, Announce and then Defend - to “engage” our stakeholders. Unlike UK Shell’s D.D.D. model of Dialogue, Decide and then Deliver. If the negative stakeholder reaction is substantial and generates enough media and political attention/support, D.A.D. can become ‘DADA’ or “Decide-Announce-Defend-Abandon.” ;
• consulting foxes and the construction of chicken coops. One of the old arguments against consulting stakeholders was the concern that stakeholders had vested interests that were not necessarily in the public interest - i.e. why would you consult the foxes on the construction of chicken coops?. Traces of this concern are often found today in negative attitudes about NIMBYs and LULUs.
• we allow 30 or 60 days for stakeholders to comment when it took us much longer to draft the proposal We think we are doing them a favour, being open and transparent by giving them 30 or 60 days to study and comment on our proposed policy/issue/project that we spent 6 months (often more) studying;
• one-timer Public Information Centres (PICs) tell the stakeholders we really don’t care what think think. Three hours, the majority of which is consumed by the proponent’s consultant’s slide show drowning the audience in jargon and engineering drawings. And then if there is time left, the perfunctory Q&A session races from one questioner to another in a speed drill to get finished by the pre-announced finish time. If you were a stakeholder in the audience, what messages would this send to you?; 
• finally, we seldom show them what we did with their comments or where their advice, objections or suggestions resulted in changes to the original proposal - we simply publish our final version of the policy/issue/project. One of the axioms of communication is that it is not complete until there is feedback to the initial speaker.

What do stakeholders expect from us?

In March and April of 2013, the City initiated a public consultation process to find out how residents want the City to engage with them with a view to shaping the final Public Engagement Strategy according to the public’s expectations of meaningful engagement.

The most prominent theme indicated by participants was the strong desire to have the ability to influence the outcomes of a City project or policy matter that was of interest to them... this can be summarized as requiring three elements:

• 1. Having sufficient time and notice to become educated about a subject matter in order to participate in a meaningful way and to provide informed input;
• 2. Having the ability to participate early enough in the process, before a decision or concept is too far developed to be modified; and
• 3. Having their input considered with the same ‘weight’ as that accorded to other sectors, i.e., developers or other business interests. 

Several participants indicated that they do not believe they currently had the ability to influence the outcomes of a City of Ottawa-led public engagement activity, resulting in growing cynicism and a lack of trust in the municipal process. Many expressed a high level of dissatisfaction with past engagement activities because they had the impression that the City had pre-determined the outcomes and that public input, although solicited, was disregarded. 

Many participants also noted that an essential element of meaningful engagement was clear communication of the areas or topics where public input can influence the outcome. In this respect, there was a strong perception that the City was not a very effective communicator when it comes to public engagement, whether this meant the promotion of an engagement activity, or explaining its objectives, how the input will be used, and the parameters of the discussion. For example, if an activity is intended primarily to inform the public of a particular project, this intention should be clearly stated so as to not raise expectations that public input will be considered in an impactful way.” (Summary of public consultations, City of Ottawa Public Engagement Strategy, [email protected], 2013)

What if we adopted an asset management paradigm?

Assets, in the municipal context, are generally defined as physical infrastructure as opposed to financial assets:

• roads and bridges;
• water treatment plants & distribution;
• wastewater systems;
• landfills;
• buildings and equipment, etc..

Management of these assets involves determining when repair and maintenance activities and even overall rehabilitation should be undertaken to maintain the performance of the infrastructure and extend its service life. 

“Infrastructure asset management is the integrated, multidisciplinary set of strategies in sustaining public infrastructure assets such as water treatment facilities, sewer lines, roads, utility grids, bridges, and railways. Generally, the process focuses on the later stages of a facility’s life cycle specifically maintenance, rehabilitation, and replacement. Asset management specifically uses software tools to organize and implement these strategies with the fundamental goal to preserve and extend the service life of long-term infrastructure assets which are vital underlying components in maintaining the quality of life in society and efficiency in the economy.“ (Wikipedia)

What would treating stakeholders as long term assets involve?

In a very simplified description, the elements of infrastructure asset management can be described as the following:

What is the current state of my assets? What do I own? What condition is it in?

• 1. Develop an asset registry
• 2. Asses the condition
• 3. Determine residual life
• 4. Determine life cycle and replacement costs

What is my required level of service What is the demand for my services by my stakeholders? What do regulators require?

• 5. Set target levels of service (in context of growth and demand for services)

Which assets are critical to sustained performance? How does it fail? How can it fail? What is the likelihood of failure? What are the consequences of failure?

• 6. Determine business risk -probability of failure? Consequences of failure?

What are my best operations and maintenance and capital investment strategies? What alternative management options exist? Which are the most feasible for my organization?

• 7. Optimize operations and maintenance investment -efficiency increases, cost avoidance eliminated or reduced
• 8. Optimize capital investment - reduced life cycle costs, better value-per-dollar spending

What is my best long-term funding strategy?

• 9. Determine funding strategy

Seeing stakeholders as assets requires 4 different perspectives

If we transposed these questions and their elements to stakeholder engagement, we would have something like the following:

• Condition of my stakeholders - Who are my primary stakeholders and what is the current state of my stakeholders? What condition are they in?
• Expectations - What is expected of/from my stakeholders by my organization? What is expected by my stakeholders themselves?
• Risks - Which stakeholders are critical to the success of my organization? What could go wrong and what would be the consequences?
• Best Bets - What are my best strategies/plans for maintaining, repairing and/or improving my organization’s long term relationships with our stakeholders?

I will follow-up this article with another article describing the detailed steps one would take in implementing these 4 different perspectives.

Value-added of the assets paradigm

It has unique value in building “social capital”

The term social capital ( as opposed to financial capital) is generally defined as the levels of trust between people and organizations that enable collaboration and collective action.

“ Social capital consists of the stock of active connections among people: the trust, mutual understanding, and shared values and behaviours that bind the members of human networks and communities and make cooperative action possible” ( “In Good Company: How Social Capital Makes Organizations Work”, Don Cohen and Laurence Prusak, Harvard Business School Press, 2000)

It has the potential to foster cooperation and trust with stakeholders to get them to apply/use their resources on your behalf

“Benefits may also result as an effect of co-operation as such, including the mutual respect, understandings, learning, and trust among the groups that may result from the cooperation. Cooperation as such may also lead to the empowerment of participants as well as a sense of ‘broad ownership’ of a process among them, and such empowerment and ownership may, in turn, facilitate implementation of rules and policies.”(Challenges for stakeholder participation and communication within regional environmental governance, ICES Annual Science Conference 2011)

When government’s can’t go it alone

Governing entities can’t solve some problems by themselves. Climate change mitigation, adaptation and resilence is an obvious example. Stakeholders involved in the climate change movement are applying their own resources in joint enterprises to deal with the consequences.

“Various actors (policy-makers, social scientists, etc.) seem to agree that for societies to be able to manage and govern global risks there is a need for transnational communication and decisions and multi-stakeholder participation, as well as for the increased involvement of citizens – sometimes described as ‘good governance’” (Challenges for stakeholder participation and communication within regional environmental governance, ICES Annual Science Conference 2011)

“Give government back its brain”

Resource constraints have resulted in the decline of internal technical and scientific resources needed in an evidence-based culture of decision-making. Governing entities are having to rely increasingly on the data, research and expertise of stakeholders.

“But even better would be to “give government back its brain”. Since 1980, cost-cutting has shrunk congressional staffs and government information agencies like the Congressional Research Service. As a result, legislators have come to rely ever more heavily on research and analysis produced by interest groups. America’s government should invest in a well-paid, qualified civil-research bureaucracy, which could provide a neutral benchmark against which industry claims could be judged. ( The Economist, How America’s economy is rigged by special interests, Nov, 2017)

There is no legal or regulatory argument or rationale for adopting the proposition that one should treat stakeholders as long term assets. Rather, it is simply a strategic assessment of the benefits versus the costs.

Created by Robb Ogilvie, Managing Partner, Ogilvie, Ogilvie & Company