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Your Company’s Most Important Stakeholders—No Ifs, Ands, or Buts

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Who are your company's most important stakeholders? Investors? Employees? Regulators? Suppliers? Oren Harari argues that customers are always the most important stakeholders. After all, without customers, what's the point of being in business?

Who are the most important stakeholders in your company? Investors? Customers? Employees? Regulators? Suppliers? Don’t say, "They’re all important." Of course they’re all important, but you know and I know that when critical leadership decisions are made, not everyone is equally important. To paraphrase the famous quote in George Orwell’s Animal Farm, "All stakeholders are equal, but some stakeholders are more equal than others."

This is not a theoretical issue—it has significant practical implications. Tell me which stakeholder the leaders of a company really and truly deem the most important, and I’ll be able to predict not only the kinds of decisions that they make for the firm, but also the probability that those decisions will generate sustained growth and competitive advantage.

Customers Are Your Most Important Stakeholders

Consider a little story. A couple of years ago I was chatting with a group of executives over drinks, and I made the innocuous observation that investors and employees are not the most important stakeholders of a company. Customers are, I said. By far. No ifs, ands, or buts.

I didn’t think that my comment was particularly controversial. After all, the late, great Peter Drucker had said for decades that the only reason for a company’s existence is to create and serve customers. And logically, without customers there’s no need for employees, investors, suppliers, regulators, or any other stakeholders. Nevertheless, the reaction to my comment was less than wildly enthusiastic.

Several executives in the room insisted that, while customers are of course important, market realities are such that investors and owners must be anointed as most important. On one level, that makes sense. The interests of shareholders should be a significant legal, strategic, and self-preservation concern to any executive. And since shareholders’ interests tend to revolve around returns on their investment (particularly earnings, market capitalization, and stock value), the company’s leaders should have those interests, too—in spades!

But good leaders—and, increasingly, smart investors—recognize that those metrics are scorecard consequences that are very strongly influenced by customers’ perceptions and responses to the company and its products. Yes, many variables influence a company’s stock value, but one simple underlying, foundational reality can’t be ignored: When customers react to a company and its offerings with enthusiasm and excitement, investors will follow. When customers leave in droves, investors will follow.

Why? Because when a company demonstrates that it’s doing something unique and extraordinary that really matters to a growing market of loyal customers, investors pay attention. When a company demonstrates that it’s doing something that customers find common, uninteresting, undifferentiated, irrelevant, commoditized, "me too," or "so what?" investors also pay attention—and not the kind of attention that the company’s leaders would like. That’s true regardless of the company’s size, scale, or scope. In short, customers ultimately drive the process of escalating or diminishing metrics that matter to investors.

 

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