On Collaborative Stakeholder Relationships

In Firms of Endearment we extolled the virtues of the stakeholder relationship management (SRM) business model that guides the companies we identified as “firms of endearment (FoE.”

After reading Jody Gittell’s The Southwest Airlines Way I have come to believe that we should abandon the term “stakeholder relationship management.” In its place I offer “collaborative stakeholder relationships” (CSR).

Southwest doesn’t manage its relationships with stakeholders. It collaborates with them. From unions to staffers who clean planes, Southwest's management fosters a collaborative relationship with its stakeholders.

The word “manage” suggests pretensions of control. Southwestern Airlines will have none of that. Instead, as the subtitles of Gittlell's says, Southwest uses "the power of relationships to achieve high performance." Relationships tend wither and grow weak when one party tries to "manage" the relationship.

I’ve always had problems with the term “management” in another context. In the mid-1990s, the term "customer relationship management” came into vogue and became the core concept of a new information industry based on storing, analyzing, retrieving and using customer information to increase "share of wallet." CRM gurus Don Peppers and Martha Rogers enthusiastically championed CRM as the most important event in marketing since P.T. Barnum invented advertising.

But CRM was not about managing customer relationships. It was about managing customer data in order to more effectively exploit customers. The very term "share of wallet," coined by Peppers and Rogers, betrays the intention to exploit rather than to serve.

In contrast, FoEs strive for share of heart. They fervently believe that if they interact honorably with customers, customers will reward them with loyalty, which in fact is likely – though not necessarily – to increase share of wallet.

I’ve often written that proponents of CRM would project greater authenticity if they changed the term to “customer data management (CDM), for in all truth that is what CRM is all about.

I’ve thought the term customer relationship management verges on arrogance. No company is going to manage my relationship with it. Whether I have a relationship with a company is entirely up to me. FoEs realize that it is the same with stakeholders.

An economist that was introduced to an MIT MBA class as an expert in aviation explained Southwest’s extraordinary financial success to its having no unions to contend with. In fact, Southwest is one of the most heavily unionized airlines. But unlike the other big airlines, Southwest views unions as partners, intentionally collaborating with them for mutual benefit.

And so it is with all the companies we identified as firms of endearment – they all view stakeholders not as objects of managed relationships but as collaborative relationships. Henceforth I shall speak not of teh stakeholder relationship management business model, but of the collaborative stakeholder relationships business model. I would appreciate readers views on this change in business nomenclature.

DBW

This post also appeared at David Wolfe's Ageless marketing blog.

Comments

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[Atare E. Agbamu]

David --

I don't see anything wrong with the word "management" in SRM. FoEs exist by design. The awakened designers are the managers. The harmonious alignment of stakeholders' interests you and your co-authors wrote about in FoE is management at its best.