Stakeholders Management using Technology (Detail Study on Education & IT Industries)

Stakeholders Management using Technology (Detail Study on Education & IT Industries)

Prof. Muralidhar Deshpande

Assistant Professor

Xavier Institute Management & Entrepreneurship (XIME), Electronic City Phase 2, Bangalore 560100

AbstractStakeholder management is increasingly becoming an important tool to enhance the effectiveness of management practices and strategies and to bring about more ethical and socially relevant outcomes. There is no universally accepted definition of the concept of stakeholder. Most commonly accepted view is that a stakeholder is an individual or a group who can affect or is affected by the functioning of an organization. A major thrust of the argument presented in this paper is that the dominant shareholder value model has led to market failure in general and organizational inefficiency in particularand there is a need for a paradigm shift. The new paradigm has space for mutual value creation, freedom to operate, freedom to innovate and freedom to engage in competition. The major objective is to increase the overall welfare of a knowledge-based and networked society. Stakeholder Management creates positive relationships with stakeholders through the appropriate management of their expectations and agreed objectives and with help of emerging technologies like SMAC (Social, Mobile, Analytics and Cloud) usage. Stakeholder management within businesses, organizations, or projects prepares a strategy utilizing information (or intelligence) gathered during the above mentioned common processes.Only two sectors namely Information Technologyand Education are taken for a brief analysis in the present paper. Suggestions for further research are given in the end of the paper.

Key wordsStakeholders management, stakeholders value model, paradigm shift, mutual value creation, SMAC, Self Service Model

The dominant shareholder value model has been increasingly identified to be a major factor which led to events surrounding the financial crisis of 2007-09 with huge adverse global consequences. Prof. Joseph Stiglitz observed the financial sector has imposed huge externalities on the rest of the society. Americas financial industry polluted the world with toxic mortgages1 The dominance of financial sector which runs on shareholder value principle over the rest of the economy and society at large is questioned by many observers. For example,Prof Reich emphasises the defects of the system by observing,Something I call super-capitalism was born. In this transformation, we in our capacities as consumers and investors have done significantly better. In our capacities as citizens, seeking the common good, however we have lost.2It is increasingly realized that a new paradigm is necessary to improve the situation. The present paper argues that the IT enabled stakeholder management model will provide the new narrative of business of the future.

A brief account of the origin, growth and consequences of the dominant shareholder value model may serve as a backdrop for our discussions. Adam of Smith developed the economic paradigm of liberal capitalism based on the principles of

utilitarianism. His famous concept of Invisible Hand gave a quasi-religious sanction for the market economy. In his view self-interest of individual economic agents will promote market efficiency and enhance social welfare. The neo- classical economic theory of modern firm based on the principle of profit maximizing behavior elaborated the functioning of organizations. Theoretical and empirical studies provided the basis for the popularity and almost universal appeal of the dominant shareholder value model. Mainstream thinking in strategic management endorsed this view and it became an integrated aspect of the modern capitalism.

The alternate paradigm namely the stakeholders theory had its origin in the Great Depression of 1930s 3 Few management ideas have generated more debates in recent decades than the concept of stakeholder management which has become an important tool in transforming management practices and strategy. Researchers identify considerable interconnectedness between the aspects of stakeholder involvement, corporate social responsibility (CSR) and business ethics. Someobservers view that the term Stakeholder has become almost a cliché. However application of alternate paradigm in management practices and strategies is not happening in most organizations mainly because of the domination of the mainstream shareholder value model. In the present paper we confine the analysis to IT sectorsand Education only.

Stakeholder management creates positive relationships with stakeholders through the appropriate management of their expectations and agreed objectives and with the help of emerging technology like SMAC (Social, Mobile, Analytics and Cloud) usage. Stakeholder management within businesses, organizations, or projects prepares a strategy utilizing information (or intelligence) gathered during the following common processes.

STEP 01) Identification of stakeholders, classification and expectations:

The days are gone, when we used to neglect the stakeholders by having the attitude of who cared about or needed the stakeholders? Now they are part of regular business operations.

The following table depicts the stakeholders and their expectations, needs and concerns.

(Source:http://en.wikipedia.org/wiki/Stakeholder_(corporate))

As new stakeholders are identified, they may be able to suggest other stakeholders to add to the list.

The first classification of stakeholders has to be done as Internal and External. The classification helps us to determine how, what and when to communicate with each stakeholder. Stakeholders also serve as technical experts in what needs to be done and how it needs to be done.

Once the stakeholders are identified, companies need to identify the following;

1. Interest

2. Power / Influence (Probably we should judge our self, rather than asking)

3. Information Technology Adoption / Knowledge

4. Expectations, Concerns, Needs

STEP 02) Prioritize;

Once the stakeholders are identified, the next step is to prioritize them into different boxes based on influence/power and interest parameters. The diagram below shows

Stakeholders Matrix: (Power Vs Interest):

Based on above matrix, the priority has to be addressed in the following order.

Top Most:

Priority 1) High Interest & High Influence/Power (Manage Closely) Provide them all possible help & enable them through information technology.

Medium:

Priority 2) Low Interest & High Influence/Power (Keep Satisfied)

Priority 3) High Interest & Low Influence/Power (Keep Informed)

Low:

Priority 4) Low Interest & Low Influence/Power (Just Monitor)

STEP 03) Engage & STEP 04) Feedback,

These are steps where really stakeholders will use information technology since information exchanges and data needs to be updated through their feedback.

Companies should develop the separate portal for stakeholders with authorized login and password. Through the portal stakeholders will access the information and update through feedback.

Many times the stakeholders company is bigger than the company itself; Stakeholders company is enabling other companies to access information.

Example: Government (State & Central) is biggest stakeholder than almost all organizations. So they are enabling companies to access the information and update the same.

By making use of SMAC (Social media, Mobility, Analytics, Cloud) technology, all the stakeholders should benefit out of it.

• Social media: All the stakeholders should enable them through Facebook, twitter, whats up etc.

• Mobility: The web portal should support mobile application, so that stakeholders can access though mobile.

• Analytics: Stakeholders Analytics to be developed through Business Analytics and Business Intelligence. Using statistical models and data mining, companies should be able to predict stakeholders needs.

• Cloud: All applications should host through cloud so that stakeholders require only internet to access the same.

Information Technology: Stakeholder theories in information technology systems support the involvement of end users as component of an effective information system. For example, an influential definition of stakeholder model in IT is given in this way the stakeholders are a group of people sharing a pool of values that define what the desirable features of an information system are and how they should be obtained. 4.The following table gives a brief account of expectations from stakeholders in IT industry given in the form of a table.

A school, college or university in the 21st century must be seen as an institution which creates value for customers, suppliers, employees, communities, owners and the society.

CONCLUSION:

The dominant modern theory of the firm emphasized value creation for the stakeholder and efficient decision making with main focus on maximizing profit. The stakeholder management model, on the other hand, takes into consideration the concerns of all the stakeholders. The traditional economic and strategies theories consider firm as mostly a purely economic institution and its agents as mostly driven by self-interest. The stakeholders management model considers a firm as a social institution with social responsibilities. It considers society as a contributor and not as a constraint. The concept of freedom to operate suggests professional and systematic interaction between firms and social and political stakeholders. The concept of freedom to innovate emphasizes the firms role as an innovator based on its interaction with stakeholders. The concept of freedom to compete means elimination of the focus on monoply profit and emphasis on mutuality, enhancement of quality of life and sustainability of the ecological world. There is a long way to achieve these ideas and the present paper is small step in this direction.

NOTES:

1. Stigilitz, Joseph (2010) Free Fall : America, Free Markets and the Sinking of the World Economy New York: W.W. Norton and Co

2. Reich R.B (2007) Super-capitalism : The Transformation of Business, Democracy and Everyday Life, New York : Albed A Kronf

3. The General Electric company defined four major stakeholders

   Shareholders, Employees, Customers and the general public in its report in 1941. Later a research conducted by the Stanford Research Institute in 1963 defined it as those groups without whose support the organization would cease to exist. See Freeman R E (1984), Strategic Management : A stakeholder Approach, Boston Pitman.

4. See Boddy, D and Buchanan D A (1986) Managing New Technology, Oxford, Basil and Blackwell.

5. See Hallak J (1998) Education and Globalization, Paris, UNESCO

REFERENCES:

1. Chandler A (1977) The visible hand: A managerial revolution in American Business Cambridge. M A Belkmap Press

2. Freeman R E (1984) : Strategic Management : A stakeholder Approach, Boston Pitman.

3. Jones T.M (1995) Instrumental stakeholder Theory: A Synthesis of Ethics and Economics Academy of management Review 20(2) 404-437

4. Yutkas K and Dillard, J F (1999) Ethical Development of Advanced Technology: A postmodern stakeholder perspective Journal of Business Ethics 19 (1), 35-49

5. http://en.wikipedia.org/wiki/Stakeholder_management

6. Alok Mishra, Deepti Mishra, (2013) Applications of Stakeholder Theory in Information Systems and Technology, Inzinerine Ekonomika-Engineering Economics, , 24(3), 254-266

7. Sybille Sachs and Ruhli Edwin.(2012)Stakeholders Matter A New Paradigm for Strategy in Society, New York Cambridge University Press