Stakeholder engagement - rocky road ahead?
Jinfo Blog

By Tim Buckley Owen

Abstract

Companies have scarcely scratched the surface yet when it comes to using social media to engage with all their stakeholders, according to a recent book. But weaving your employees, customers and suppliers into your corporate strategy could carry risks of a kind that the Securities & Exchange Commission is just starting to consider.

Item

Companies have scarcely scratched the surface yet when it comes to using social media to engage with all their stakeholders, according to a recent book. But weaving your employees, customers and suppliers into your corporate strategy could carry risks of a kind that the Securities & Exchange Commission is just starting to consider.

Being a social organisation goes far beyond simply experimenting with Facebook and Twitter says the book, The Social Organization: How to Use Social Media to Tap the Collective Genius of Your Customers and Employees, by two Gartner executives Anthony J Bradley and Mark P McDonald. Few bosses know how to turn opportunities for greater collaboration into meaningful business results, the authors say, yet mass collaboration can be a source of enduring competitive advantage.

There’s little doubt about the potentially “mass” nature of such collaboration. New figures from Gartner, to be presented alongside the book at its Gartner Symposium/ITxpo in Orlando, forecast a more than 40% increase in social media revenue this year compared with last – largely formed of advertising spend, as social analytics produce ever more valuable marketing data by mapping users’ comments and the circles in which they make them.

Nielsen’s latest social media report suggests that over half of active adult social networkers follow a brand – and that would tend to confirm the opportunities that Bradley and McDonald highlight. But there may be some caveats.

Whatever its likely business benefits, mass engagement can also be a two-edged weapon, delivering damaging home truths as well as helpful feedback. The Economist Intelligence Unit warned of such risks over a year ago in a report appropriately entitled Dangerous Liaisons (LiveWire coverage here).

Reputation damage and the need to relinquish control over some proprietary information were among the hazards the EIU report highlighted – partly because, as one respondent observed, everything would get out in the end. Companies would need to manage such risks continuously, the report warned.

Not to mention the risks of plain sabotage and theft inherent in letting your so-called stakeholders in – and that should worry not just the firms themselves but their investors too. By coincidence, the United States Securities & Exchange Commission’s Corporation Finance Division has just issued a guidance note pointing out that, although no existing disclosure requirement explicitly refers to cybersecurity risks and cyber incidents, a number of requirements may impose an obligation on companies to disclose them.

Damage to cashflow, goodwill, intellectual property and inventory could all be outcomes of cyber attack, the SEC observes – yet any attempt to maintain the business relationship by offering customers incentives would itself be subject to regulation. The road to full stakeholder engagement may be in sight – but it will also be rocky.

« Blog