CR Leaders Corner: Witold Henisz

Witold (Vit) Henisz has spent the past decade developing a methodology that measures the impact of effective stakeholder engagement.  His ground-breaking work offers companies the prospect of determining the value of managing stakeholder opinion in achieving long-term success.  Vit’s research has been featured in numerous international management and business journals.  He’s also served as a consultant to the World Bank, the Inter-American Development Bank, the Conference Board and the Eurasia Group.  Currently, he’s a principal in the political risk management consultancy The Probity Group LLC.

1.  AccountAbility: Why did you become interested in stakeholder engagement?  

Witold Henisz:  A lot of academics studying political risk focus on which countries to avoid and how to define investments and determine the risk-adjusted rate of return. But this finance focus misses the strategic element of interacting with stakeholders. I found there was very little research on the link between strategy and stakeholder perception, so I began to talk to company managers and develop an actionable methodology.

What I saw in the mining and oil and gas sectors was a common conception about relationships with external stakeholders and a desire to win their hearts and minds.  Who’s out there, who’s powerful, who’s connected to whom.  There’s a real parallel between this and work that is going on in political economy and sociology.  I saw the potential to link the two in a way that would be relevant to multinational corporations, to NGOs, and to communities.  

And that’s been my research program -- to bring in data from both stakeholder databases, and also from the media -- to create structured information about stakeholder networks and stakeholder power, and then subject it to analytical modeling in a way that can provide insight as to who you should reach out to, what you should say, who’s the most important stakeholder.  

2. AA: What has prevented researchers and practitioners from understanding the value of stakeholder engagement?

WH:  There is a common tendency to try to design the best investment up front from an engineering or legal perspective and think that if you have the right design and plan then the operations will take care of themselves. But it’s the actions that happen over the life of the investment that determine its success or failure. The challenge is how you manage it day-to-day, especially in the face of unexpected shocks and demands from stakeholders, and how you respond, that determines whether you survive and profit over 10 or 20 or 30 years.  

3.  AA:  Can you explain the methodology?    

WH:  Sure, the methodology focuses on the identity of the stakeholders and their relative power.  Who has more sway over the final outcome than others?  Who’s strongly connected?  Who likes whom and who dislikes whom?  

We triangulate as much information as possible to answer these questions.  We might interview dozens of different people.  We’ll look at the media.  We’ll look at blogs.  We want to get a 360 view on who the actors are, what they want, who they’re connected to, and what they like.

That information goes into a hybrid coalition politics and social network model in which each actor is trying to win the hearts and minds of all the other actors, to come as close to what they want as possible.  Each actor makes a decision whether to join another coalition or not, based on whether doing so will help them get what they want.

For the rest of the interview about stakeholder engagement, CSR, and sustainability click here.