The Myth of Stakeholders

It’s not stakeholders don’t exist. The myth is there’s one universal type of stakeholder. 

If there was only one type, then the conversation about shareholder-stakeholder alignment would be easy. 

But it takes a village. And anybody who thinks everybody in the village is exactly the same… I have a rational-agent economic model to sell you.

We need to talk about stakeholders. 

I’m thinking about writing a broader essay on this idea, but I see at least four types. They emerge out of how they prioritize themselves and the broader group within the context of a group. Here’s how I’m currently thinking of it (graphic below, but if you can’t see it):

Low to High, “Personal Cause Prioritization”

Low to High, “Group Cause Prioritization”

This gives us 4 individual types of stakeholders to talk about:

1. Stake-Drivers: the combination of high personal cause prioritization with high group cause priortization translates to team players with ambitions to advance mutual causes. These represent the ideal stakeholders. 

2. Stake-Riders: low personal cause prioritization with high group cause prioritization represents active participants, with low ambition to do more than appreciate they have a place they have to be a thing they’re supposed to do. 

3. State-Holders: low personal cause prioritization and low group cause prioritization results in the most passive members within the group. The group tends to care for them and they come to represent an important relative sect for political examples, such as defining who is helping them, ignoring them, exploiting them, etc. alongside alignment questions. 

4. Steak-Eaters: high personal cause prioritization with low group cause prioritization produces trouble for the group. Without taking the risk of shareholders, steak-eaters may act like shareholders and forsake the group for personal gain. While they may defect to become shareholders, they only have upside without taking on downside risk within the group. 

If we want to find true alignment between shareholders and stakeholders,we’ll need a plan for each. We’ll need to focus on maximizing the input from our Stake-Drivers, minimizing the damage caused by the Steak-Eaters, and have a strategy for handling our Stake-Riders and State-Holders respectfully. 

A quick metaphor to help think about it using The Simpsons. 

Homer and Marge are shareholders. They directly bare the risk of the success or failure of their family, as measured by the success or failure of their lives and their children’s lives in broader society. 

Lisa is a Stake-Driver. She’s personally motivated and ready to fight for the group’s causes. 

Maggie is a Stake-Rider. She has loyalty to her family, but strong dependency on the ecosystem itself. 

Santa’s Little Helper (the family dog) is a State-Holder. He doesn’t really know what’s going on, and even though he won’t run away, his joy comes from rest of the family being happy he’s present. 

Bart is a Steak-Eater. Despite awareness of the group’s causes, he often prioritizes himself by disregarding the rules of his shareholder parents. He tortures his Stake-Driving sister, and shows an observably reasonable amount of respect (at least partially due to no political upside) with Maggie the Stake-Riding baby sister and Santa’s Little Helper the State-Holding dog.

If Homer and Marge want to achieve shareholder-stakeholder alignment for sake of the family, their attention must focus on corralling Bart and championing Lisa. It’s no easy task. And this is just talking shareholder-stakeholder alignment for one fictitious family. 

Does this model work for you? Where else would you apply it? Where else could you apply it? Is there a second or third level Simpsons character you can’t place? Is it OK that people can “move around” between classifications? I want to know!