Who are the stakeholders you build for?
I was recently having a conversation with someone who was interested in joining my team, and we were chatting about the value we create with the products that we build. The candidate asked how I thought about the audiences product teams should optimize for, and the first thing that came to mind for me was stakeholder capitalism. It’s an ideology that’s influenced the way that I think about maximizing value so I wanted to share more broadly how my team apples it to the work that we do.
What is stakeholder capitalism?
Stakeholder capitalism is an ideology according to which it is in the best interest of a company to serve all its key stakeholders toward a common purpose, rather than focusing solely on maximizing value for its shareholders. Beyond shareholders, a company’s key stakeholders might include its users, suppliers, employees, and the broader society in which the company operates.
Stakeholder capitalism was carried out by businesses for decades since it emerged in the 1930s, until companies in the U.S. largely replaced it with a theory that promoted maximizing shareholders’ value as their key focus. This latter theory was proposed by the economist Milton Friedman in the 1970s. And even though the early versions of stakeholder capitalism must be adjusted for today’s business world, it remains an insightful ideology.
Today stakeholder capitalism is experiencing a renaissance, as evidenced by Business Roundtable highlighting this concept and many more discussions on the topic taking place in the business sphere over the last couple of years. I found this article by McKinsey and this primer from Engagement Strategies Media helpful if you are interested in reading more about it. The key insight that stands out to me is that orienting a company to grow and create shareholder returns in a way that creates value for all its key stakeholders is actually a smarter way of doing business and is the best way to create sustainable growth.
Why it matters
At Meta, we have a number of stakeholders to take into account, from employees and suppliers to our users and the broader society we operate in. And within the community products team at Facebook, the people that use our products and community builders are our key stakeholders. Our long-term success relies both on our ability to successfully build community products and experiences that people find valuable and, importantly, also on our ability to serve community builders and enable positive impact on the broader society in which they operate.
It is therefore important that we look at how well we are doing with all these stakeholders and design our growth trajectory accordingly. Do people find meaningful value and connection in their Facebook communities? Are our products loved by community builders? How effective are our products in solving community builders’ needs and pain points? Do the communities they create add positive value?
To be successful, every company must solve for the needs of its users as a key stakeholder. A company’s products have to deliver on functional and/or emotional benefits for users to adopt and stick with them. For Facebook Groups, our users are people who turn to Facebook communities for learning, entertainment, support, and belonging. Outside of users, another important stakeholder whose needs we solve for are community builders. Facebook groups are created by community builders, the admins of these groups who invest their time and effort to nurture and grow their communities. We know that at the heart of every healthy community is a passionate and caring community builder so we are building tools and experiences that enable community builders to grow and manage thriving communities. We approach community builders as our partners and strive to make them successful.
And finally, the real world communities in which Facebook Groups exist are an important stakeholder as well. It is key for the long-term sustainability of Facebook Groups that they create a positive impact on society at large. Our goal here is to create new positive connections or strengthen existing connections in the communities in which our groups operate. Stories such as that of the Scarfs in the Park Facebook group that came together to bring a little warmth to Salt Lake City residents in need, or that of the Women on Wheels Facebook group that brings friends together in one place to share their love of cycling, or that of the West Sacramento Community Discussion Board Facebook group which connected a 12 year-old with autism with Bill Steffey who granted his birthday wish for a ride in a classic car — they all highlight the positive impact that the growth of Facebook Groups can have in the communities in which they operate. This is why it’s also incredibly important that we continue to invest in keeping these communities safe with proactive detection of community standards violations, building robust admin tools and bringing greater transparency and personal control for group members.
I believe that our orientation toward stakeholder capitalism enables us to grow sustainably. This isn’t just relevant for community-first organizations, though, but businesses more broadly. If this is the first time you came across this topic, I hope this note will prompt you to look into it and reflect on how stakeholder capitalism might apply to your business and perhaps inspire you to try new tactics.