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Who Are Your Stakeholders?

While most of my work focuses on research and evaluation, occasionally I get roped into strategic planning work, which is always fascinating. Some aspects of planning work look a lot like research, although the methods tend not to be as robust. Of particular interest to me is the process of stakeholder consultations — typically a series of individual or group interviews — a part of nearly every planning process. By some fluke of scheduling, this summer I’ve found myself neck deep in “stakeholder audits” for three organizations, all of which has provoked me to reach for a higher understanding of stakeholder dynamics.

Identifying stakeholders is the first step in this process, and a strangely awkward conversation for some organizations. What groups of individuals and organizations have a stake in our long-term success? What is their stake in us? What is our stake in them? To what degree are we accountable to them? At the heart of the stakeholder relationship is an implied two-way exchange of value, although the mutuality of benefit is often unclear. In the absence of clarity, dissimilar stakeholders are lumped together, entire categories of stakeholders are omitted, and other erroneous assumptions tend to take hold.

Clear thinking on stakeholders takes a lot of soul searching, and doesn’t happen overnight. In facilitating these conversations I’ve found it useful to make some nuanced distinctions as to the types of stakeholders an arts organization has, and the extent of accountability to each.

 

Public stakeholders are groups or “classes” of people and organizations that the organization currently serves or aims to better serve through its programs.

Arts organizations design programs and seek philanthropic support in order to serve these stakeholders. Much as a soup kitchen operates to feed the hungry, or a cancer research institute defines stakeholders in terms of their need for, or provision of, cancer treatment, arts organizations should define public stakeholders in terms of their needs and connections to the art (i.e., in terms of preferences, tastes, experience level, modality of engagement, etc.).

Typically, public stakeholders fall into two buckets: 1) direct program beneficiaries — “appreciators and participants” — such as ticket buyers and students served through education programs; and 2) individuals and groups of people who benefit indirectly from the organization’s programs (e.g., teachers, parents and families of student participants), and therefore have a long-term stake in the organization’s success.

Consultation with “appreciators and participants” generally takes the form of market research, since they are not organized constituencies with designated representatives. This is where the logic of stakeholders tends to break down. By default, some organizations define their public stakeholders as “anyone who buys a ticket to whatever we produce.” Good strategy, however, requires more intentionality. Are we committed to serving newcomers to the art form? Those with adventurous tastes? Those who prefer to engage digitally?

For example, a theatre company identifies “high school drama teachers” as a public stakeholder group. In this case, the mutuality of benefit is clear. The theatre benefits from the steady stream of theatre enthusiasts who graduate every year and eventually become ticket buyers, and the teachers benefit from having professional artists in the community (who visit their school), and from the exposure their students get to high quality theatre. In fact, the process of considering “high school drama teachers” as stakeholders led this theatre company to realize that it wants to re-shape its relationship with this stakeholder group.

Identifying public stakeholders is a high stakes game, because the organization is accountable to them for the quality and relevance of its programs.

Arts groups tend to talk about “stakeholders” in terms of a demographic characteristic, disadvantage or disability — groups of people they’d like to better serve, whether motivated by a sense of moral obligation or a grant, or both. In many cases, these groups of people are not really stakeholders, at least not yet, because the relationship is not yet reciprocal. I prefer to call them intentional communities — groups of people an organization intentionally chooses to serve. The need is vast, and thus the biggest challenge is agreeing on a set of criteria for prioritizing these communities. When arts organizations develop the cultural competence to authentically and respectfully engage with intentional communities in a two-way exchange of value, then intentional communities can blossom into vital stakeholder relationships. But they are not stakeholders merely because they’ve been singled out as a priority in a strategic plan.

 

Institutional stakeholders are organizations, businesses, agencies and institutions that benefit from having the arts organization remain strong and healthy.

I like to think of institutional stakeholders as works of art — you can acquire them, and you can also deaccession them when the relationship ceases to be mutually beneficial. Institutional stakeholders might be social service agencies that share an interest in youth development, media outlets that cover the arts, local businesses and shops surrounding a museum, or corporations that recruit talented workers to the area.

Some institutional stakeholders serve as gatekeepers for public stakeholders that the organization values. For example, higher education institutions are gatekeepers of arts faculty and pre-professional artists. Similarly, school districts are gatekeepers for middle school and high school arts teachers. The organization must engage institutional stakeholders that act as gatekeepers to other stakeholders of consequence to the organization.

In setting strategy, an arts organization should consider how it does — or might — create value for its chosen institutional stakeholders and their constituents. Sometimes, when there is a strong mutual interest, the organization will collaborate with an institutional stakeholder to create a new program or festival, for example. Over time, the strength and number of these stakeholder relationships will fluctuate. Accountability is negotiated between the partners, and either party can leave the relationship at any time.

 

Investor stakeholders are individuals and organizations who provide financial support to the organization to further its mission, including individual donors, corporate supporters, philanthropic foundations, and government funders.

Generally, the organization shouldn’t design programs to suit investors’ needs, yet should listen closely to their interests and priorities. Investors may provide unrestricted operating support, or may support specific programs that align with their interests. The organization is accountable to them for good stewardship of their funds.

In reality, many arts groups facing structural deficits turn to the foundation marketplace to chase project grants that may or may not align well with mission. Project grants are absorbed into operating cash as fast as they can be deposited, with overburdened staff left to implement the funded project. In this foxtrot of mutual deception funders believe they are investing change capital while grantees receive the funds as working cash. Suffice it to say that relationships between arts organizations and their investor stakeholders can be complicated. Gaining clarity on how much an organization is willing to be influenced by investors is critical to avoiding disingenuous or co-dependent relationships with these valuable stakeholders.

 

Artform stakeholders are needed to produce the art, and are therefore essential to the organization’s success. Some are internal (e.g., company actors, musicians, dancers, artistic directors, administrative staff — those whose livelihoods depend on the organization’s success), and others are external (e.g., composers, playwrights, peer institutions, venue landlords).

For the most part, artform stakeholders work to fulfill the organization’s commitments to public and institutional stakeholders. At the same time, and to different degrees for different organizations, artistic programs are shaped around the interests, availabilities and capabilities of artform stakeholders, as when an orchestra plays a piece that the players really want to play. In a founder-led dance company, for example, the founder can function as the primary artform stakeholder, with public stakeholders taking a back seat. This can work really well, or not at all — in cases where artform stakeholders are apathetic to the needs of public stakeholders. What matters is the degree of clarity and consensus. As arts organizations grow larger and begin to rely on a diversity of funding sources, accountability tends to shift to a broader array of stakeholders.

 

Board members can be investor stakeholders (especially when a minimum gift is required) or artform stakeholders, or both. There is a powerful argument circulating the field that more artform stakeholders are needed on boards. This serves two purposes; it enables investor board members to understand the artistic imperatives in decisions, but also helps artform stakeholders to recognize the needs of public stakeholders.

Although board members act on behalf of the public interest, their personal preferences and tastes in art are not always representative of the needs and interests of public stakeholders. This is also true of staff and even artistic leadership. While their passion for the art is a driving factor in their commitment to the organization, clarity and consensus around stakeholders is a hedge against emotional decision-making and helps to guide the organization through difficult decisions about how to allocate resources.

While certain kinds of stakeholders are common within certain kinds of organizations, the process of defining stakeholders must be ground-up. Every organization will have a different portfolio of stakeholders, and the dialogue that results in an agreed-upon list of stakeholders is absolutely essential to the long-term strategic health of the organization. What’s at stake in the conversation is not just ‘who to interview’ for the strategic plan, but ‘to whom are we accountable, and for what?’ And that is the smell of burning rubber.

Too many arts groups define stakeholders in one-way, self-serving terms. If an organization claims to be accountable to public stakeholders but lacks a means of holding itself accountable, the claim is empty. If an organization claims to serve its public stakeholders but allows investors to drive programming experiments, the result can be a net drain of financial resources, brand confusion and low morale amongst staff charged with implementing an endless stream of one-off programming experiments that lack a strategic imperative. What makes the dialogue so rich and complex are the myriad assumptions about accountability on both sides of the stakeholder relationship — some true, some false, and some exquisitely delusional.

The sturm und drang of prioritizing stakeholders leads to an equally dramatic outcome when arts groups actually listen to them. It never ceases to amaze me how much value arts and cultural organizations get from the simple act of sitting down and talking with stakeholders using a good protocol. Asking stakeholders “what value do you get from us” and “what value are you not getting from us that you’d like to get from us,” almost always leads to some sort of revelation. This is qualitative research, pure and simple, typically using structured topical interviews and modified focus group discussions. I have found that training members of the organization’s board and staff to conduct these interviews is far more effective than conducting them myself, although there are situations in which an impartial facilitator is needed to elicit sensitive or candid input. This “action research” approach to stakeholder consultations, if done well, can result in transformative shifts in thinking, but only if the right stakeholders are being interviewed by the right people.

In designing any study, the researcher must question the suitability of the methods for the questions being investigated. If planning work — especially stakeholder consultations — was approached more like research, with stronger design, methodology and synthesis, and probably a longer timeline, I wonder if we would wind up with stronger planning outcomes.

 

I’m indebted to Joe Kluger for his significant contributions to this piece.

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