Crisis Threatens Stakeholder Value Propositions

You’ve taken some time to learn about the unique relationships that stakeholders have with the organizations that offer them value. As you’ve seen, we refer to these connections as value propositions. In the context of high-stakes leadership, I can’t think of a better way to conceptualize these relationships. When a major disruption of some sort occurs in an organization, it’s these very value propositions that are threatened by the crisis. Therefore, a useful framework for crisis leaders to organize their thinking is to imagine the crisis from the perspective of different stakeholder groups. Perhaps during the previous activity, you were thinking about the stakeholders of your own organization.

In fact, in the next activity, I’m going to ask you to identify, the best that you can, the most important stakeholders for your company. We’re going to use this list of stakeholders later in this module when we think about the value propositions they have with your organization, and how these propositions are threatened during a crisis. I think you’ll really enjoy the exercise. It will inform not only how you start to think about engaging the stakeholders during a crisis, but also we will call into question your understanding of them during your routine or normal business operations. Most companies wish they understood their stake holders better.

This wish becomes regret in the midst of a crisis, something we will explore in great detail later on. As you think about your stakeholders, what comes to mind when you consider the value proposition each has with your company? What are your customers value in their relationship with your organization? How do they perceive the value, and what are they willing to exchange for it? What is the mechanism for enabling this exchange? Do they pay ahead of time and have to wait for the value, or do they pay when a good or service has been delivered? Why does that question matter?

Well, imagine those two different scenarios, pay ahead or cash on delivery, in the context of a crisis where your company can’t deliver the goods or services expected by your customers. What is the threat to the customer value proposition if they’ve already paid for a good or service and you can’t deliver it? How is this different from the second scenario? The detail underlying these differences is critically important to truly understanding the perceptions of your stakeholders during a crisis. They have expectations of you. Perhaps, they’ve even contributed their component of the value exchange, and now your organization may not be able to live up to its commitment to delivering your side of the value equation.

This creates a problem, perhaps a significant problem for your stakeholders. It’s interesting to think about a crisis this way, isn’t it? What do your employees value in their relationship with your organization? How about your investors? What value proposition does your company offer to your regulators? The communities that you serve, your suppliers, or your value chain partners? All of these groups are typically referred to as your primary stakeholders, and all of them will feel threatened when your enterprise is facing a critical situation. What about the list of secondary stakeholders that we described in the earlier reading? How might a crisis threatened their value proposition? Your competitors, the media, special interest, or action groups?

You may be shocked by the number of other parties that feel threatened by something that is creating such a major problem for your organization, and that is exactly the point here. You have many stakeholders, each of them think about their value proposition with your company in a different way. So when your company’s facing a crisis, each of these stakeholder’s unique value propositions is threatened. Your job as a high-stakes leader is to not only understand this, but to be able to do something about it. In the next activity, I’m going to ask you to spend some time thinking about your stakeholders and their value propositions with your organization, then you’ll be asked to document how a crisis might threaten these propositions.

It will be a great way to frame your early thinking about how and why you’ll have to engage each of these stakeholder groups before, during, and after a crisis. Good luck with the exercise, and don’t rush, take your time. You’ll find it very useful as a business leader and even more so, as a high-stakes leader.