Matthew Kirk is the Group External Affairs Director for Vodafone. Matthew was appointed to his current position and joined the Executive Committee in 2009 after joining Vodafone in 2006. Prior to that, he was a member of the British Diplomatic Service for more than 20 years, and held a number of positions in the Foreign and Commonwealth Office (FCO) and Cabinet Office in London. Prior to joining Vodafone Matthew served as Ambassador to Finland. GlobeScan co-CEO Christophe Guibeleguiet recently interviewed Matthew to gain insight on the value Vodafone puts on stakeholder intelligence to help build recognized leadership in an uncertain world.
Published 22 October 2014
One of the key driving forces behind these changes is a huge increase in people’s opportunities to access information. Social media and the development of the digital society bring everything under scrutiny – anything is potentially a source of information and large companies are inevitably attracting a substantial share of that attention. This is fundamentally a good thing as it creates a closer link between people’s interest and corporate behavior. It also adds a new level of complexity. Companies have to adapt their own understanding of what their impact on society is – positive and negative - so that they can address the negative which, in today’s digital world, will arise as well as promoting the positive. You have to be able to engage stakeholders clearly and confidently on things on which you are challenged. You need to get your explanation of the way in which the company approaches an issue and get what the impact is across very clearly.
Leadership is fundamental to success. It is about having the courage to engage with both internal and external stakeholders. Addressing the sources of concerns, talking to communities and stakeholders is critical but it is equally important for your own employees to see that the company’s leadership is seen to be defending what the company is doing externally so that employees can follow the same script, explain to their friends why the company is doing what it is doing and that you are not defensively trying to hide something. If you can’t define a clear strategy and then articulate it to your own people, partners, customers and investors, you then have very little chance of success.
The CEO’s role has become more external. There is a negative side to it which is a greater personalization of the CEO, which can have an impact on the external image of the company.
However, overall the CEO as the personification of the corporate strategy and the corporate performance is a very positive trait. It does contribute to that image of leadership internally and externally. The ability of the CEO to navigate a stakeholder environment, whether it is government, regulators, the media, or the broader public, is now a critical part of top level leadership of any company. This is a fairly recent evolution. At the same time, the projection of corporate values is also becoming a very important aspect of corporate leadership.
In any common stock company you have the same corporate purpose which is to deliver value for your shareholders. It is however important to articulate how your strategy will deliver value to your shareholders over the long term. This is where there is an evolution. The purpose of the company in society is becoming more significant and the purpose of the company is becoming more of an enabler in delivering value to its shareholders.
The financial crisis has created in many societies more of a sense of challenge around the capitalist model. Until 2007 there was a very broad consensus that competition-based profit seeking fostered investment, innovation and good choice for consumers. The financial crisis has caused more people to call that into question and that poses a major challenge to any company that operates according to that model. This is one of the reasons why companies need visible leadership to be showing more sensitivity to the impact they have on society, more consciousness of what their contribution is and also the challenges that their operations give rise to. That consciousness needs to be translated into a corporate strategy and then communicated clearly internally and externally.
Out of that flows a number of long running issues that have become more acute as a result of the financial crisis. Issues like corporate taxation, remuneration and in some sectors, including telecom, you are seeing issues around human rights also emerging. Some of these are much more difficult issues for a corporate body to navigate. This requires more agility and more understanding of how external opinion is formed and what its impact can be.
There is a much greater expectation about transparency; companies need to explain more about who they are, what they do and why they are doing it. So the old tendency to say this is an awkward thing so let’s not talk about it will lead to a wrong behavior in the future. Proactive disclosure is now the expectation in the stakeholder community and companies that have not geared themselves up to do that will be challenged.
When the visibility of a company increases then more stakeholders feel that they can question why the company is behaving in a certain way. That is something that many companies are not used to dealing with. The era of the transactional model where you know that by providing good products and good services at good prices, the customer will come back, is over. Many of the stakeholders that we are increasingly dealing with now at Vodafone or in many other companies are complete single issue people or organisations. Some are never going to agree with you because of what you are or what you represent. Others are more open in their views. One of the lessons that corporate leaders need to learn is how to go beyond commercial partnerships and create partnerships with organisations whose motivation is just different, accepting that this will lead to further instability in the model but that instability is helpful to respond to some of the challenges they face.
It means understanding what are the organizations or individuals whose decisions may impact, positively or negatively, the company’s performance, what their motivations are, who are the people they would listen to, who are their trusted advisors, the people or organisations they would naturally turn to make things happen. Then it’s about using that intelligence for the company to respond and engage directly or indirectly with these stakeholders. It is relevant to Vodafone. We are doing quite a lot of work in this area. So you could call it stakeholder intelligence.
The primary role and objective of stakeholder intelligence is to smooth your path. It is not smoothing the path in the traditional PR sense, it is rather part of the strategic design of the company, and helps minimize the challenges that any company may face.