Why You Need To Be More Open With Your External Stakeholders
Companies everywhere would like to reduce costs, step up the quality of their products and come up with the next best idea to improve their processes and products before their competitors do. But that’s not a journey they can take alone. Instead, it’s one that makes them increasingly reliant on their external stakeholders, particularly their suppliers.
Survival In The Fast Lane
In order to survive today’s fast-paced market, businesses need to cultivate long-term and close partnerships with their suppliers, clients and the society at large. Only then can they continuously learn, improve and prosper along with their partners. But traditionally, companies have always maintained an arms-length distance with their external stakeholders, because of a lack of trust.
Vulnerable situations that make companies rely on an external stakeholder are the stuff of corporate nightmares and most companies would like to steer clear of such situations. However, the world of business is full of turbulent situations like mergers, outsourcing, new business models and globalization, that make it necessary for people to take a leap of faith. When companies focus on building a climate of trust with their external stakeholders, it can lead to some extraordinary results that create a win-win situation for all parties involved.
But how can you build trust, especially in a relationship that’s often prone to distrust? The ingredients are pretty simple: A long-term relationship, some transparency, a bit of negotiation and lots of empathy.
Counterintuitive, But Beneficial
With trust in place, it becomes easier for both parties involved to take risks together. For example, when a company invests in creating transparency with their external stakeholders, the latter is less likely to feel jittery when the company makes a big announcement — like a corporate merger. This is because they’re aware of what’s going on behind the scenes — both in terms of people and metrics.
Being transparent about sensitive data might seem counterintuitive, but it packs some unprecedented benefits — like better understanding and empathy towards a company’s insistence on lower raw material rates, for instance. There is better appreciation for the conditions upon which either party operates and that automatically tempers demands and expectations. Of course, it’s all easier said than done and it requires a lot of trust, patience and improved communication.
Focus On The Long-Term
Trust always begets more trust and that’s fundamental to any transparency initiative that extends beyond the four walls of a company. But such transparency needs to be preceded by thoughtful actions that keep the long-term in mind. Instead of focussing on short-term financial performance, companies need to focus on building a long-term relationship with their external stakeholders that ensures the well-being of their clients, the feasibility of their suppliers and the sustainability of the resources and communities they work with. When they do that, they create a system of shared value that helps them thrive along with their partners — both in times of crisis and prosperity.
Originally published at semcostyle.org. In collaboration with Aruna Iyer.
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