Economic Development News & Insight


Overcoming the tyranny of stakeholders

/ January 29, 2015

Overcoming the tyranny of stakeholders

An academic leader recently connected with us, frustrated. After two years of trying to implement large-scale system change within her university, her team had little to show for it. A relatively small initiative involving 30 students was underway, but little else.

When I asked her to describe this process, her strategy, she eloquently explained how higher education must transform. How technology was  “flipping” the classroom.  How faculty needed to change the way they taught.

 But what if the prevailing wisdom is, if not wrong, not helpful?

She went on to explain that she had assembled a team of all her “stakeholders”. By that she meant her administrative leadership, all the people that showed up in the boxes on the organization chart. To this group, she expressed the urgency of change. She felt that the leadership team shared her sense of urgency and that they had “bought in”.

Encountering the Tyranny of Stakeholders

Yet, little had changed. The leader’s ambitions had fallen victim to the “stakeholders”.

It’s understandable. Our academic leader was well versed in change theory, and the prevailing wisdom says, engage your stakeholders.

But what if the prevailing wisdom is, if not wrong, not helpful?

By definition, any system change involves altering the status quo. This disruption, however small, shifts the relationships within the existing system.

Here’s the key insight: Some stakeholders benefit from the existing arrangements.  No matter how dysfunctional the system (or organization),  it is relatively stable, because some stakeholders profit from it.

When stakeholders are threatened, they look for ways to frustrate the change. Convening all the stakeholders around the table represents hierarchical thinking that can often lead to gridlock. Here’s why.

Shifting to a Network Mindset

We can understand our academic leader’s problem, if we shift our thinking to different model, one that emphasizes networks and innovation. Some years ago, Everett Rogers described how an innovation moves through a network.

The concept of innovation diffusion explains that as an innovation takes hold, it moves through market segments with different characteristics: innovators, early adopters, early majority, late majority, and laggards. (Marketers later adopted this idea as the product life cycle which phases of development, growth, maturity and decline, but let’s keep our focus on the idea of innovation diffusion.)

Rogers Diffusion

When our academic leader invited all the stakeholders in the room, she also invited the laggards. These people have a heavy stake in the current system; they do not want change. (It’s why we call them laggards, after all.) In her situation, the laggards are the tenured professors content with their situation and distrustful of change.

Not surprisingly, the laggards spend their time quietly (or not so quietly) pulling apart any innovation that will disrupt the current arrangements.

So what’s the alternative?

Our academic leader needs to shift her thinking to networks, instead of hierarchies. The major challenge in moving forward involves assembling a core team and then using the networks of that core team to attract “willing pragmatists”. These are people who are open to innovation, a new way of doing things, but they are intensely pragmatic. They need to be shown that the innovation can work, that it can create new value, and that there is a practical way to get there from here.

Engaging the pragmatists is not easy. Some years ago, Geoffrey Moore wrote a marvelous book called Crossing the Chasm. He pointed out that there’s a chasm that exists between the innovators in the pragmatists. Crossing this chasm is no simple matter. (That’s why continuous experimentation and pilot projects — what Ed Hess at the Darden Business School calls “learning launches” matter.)

And yet, when we look at how our academic leader has spent her time in the past two years, she has not been focused on figuring out how to cross the chasm.  Instead, she spent her time fighting internal battles with the laggards. In other words, she’s done exactly what the laggards had hoped. She has wasted her energy, and the system remains unchanged.

Doing Differently

Here are five things she could of done differently.

1.  Assemble a core team

No large-scale system change can be done with an individual leader. It takes a core team.

2.  Build a collaboration platform consisting of a physical space, a set of civility rules, regular gatherings, and a way to connect in the cloud

New networks form in safe spaces.  we will transform our existing organizations by building these platforms that nurture new networks.

3.  Frame the conversation, open the doors, and enforce the rules

Collaboration emerges from deeper, focused conversation.  Maintaining clear rules of civility protects the space from those who would disrupt it.

4.  Learn about who is doing the cool stuff

In every organization  or community there are cool people doing cool stuff. They are innovating and trying new things. Often, they operate on the edge

5.  Experiment and figure out how to scale the cool stuff

The challenge of system change involves continuous experimentation: testing hypotheses, finding success, and then replicating and scaling that success into innovations that are sustainable.

From vertical to horizontal

Change from a network perspective is not “bottom up”, because there are no tops or bottoms to networks. This shift in thinking moves us from thinking about vertical arrangements and power relationships to horizontal connections.

In truth, hierarchies will never disappear, nor should they. But when we are looking for large scale transformations — big jumps in productivity and performance — we need to shift our thinking from hierarchies to networks.

Strategic Doing addresses these challenges. While strategic planning was designed to address the challenges of managing hierarchies, Strategic Doing is designed for collaboration and networks. It’s an agile discipline of learning by doing.

A growing network of universities in the US, Australia, and the UK are engaged in building out this new discipline of strategy for open, loosely connected networks.

This Spring we are conducting training in Wisconsin (with University of Wisconsin-Parkside) , Kansas (with Kansas State University), Alabama (with the University of North Alabama) and Michigan (with Michigan State). We are also conducting a training here at Purdue.

You can join us. Just contact Peggy Hosea at Purdue to start the conversation.


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