May 20, 2024 by Mike Manazir – (4-5 minutes)
Valeant was a Canadian firm known for aggressive acquisitions and subsequent cost-cutting. Rather than focus on research and development, Valeant purchased existing drugs and substantially raised their prices, banking heavily on aggressive sales strategies. Unfortunately, stakeholder management torpedoed their success.
Internal Stakeholders: Ignored and Overlooked
Valeant’s acquisition strategy left little room for integrating the acquired companies into a cohesive culture. The result was a fragmented company structure where internal stakeholders, including new employees from acquired companies, felt disconnected. This lack of internal cohesion undermined employee morale which is vital for sustaining long-term corporate health.
External Stakeholders: Exploited and Alienated
Valeant relied heavily on unsustainable price hikes for critical medications. This practice drew fire from the public and scrutiny from regulators. Additionally, Valeant’s relationships with external stakeholders like pharmacies were controversial, particularly its secretive ties with a pharmacy called Philidor, which led to allegations of insurance fraud.
The Fallout
Valeant’s stock price plummeted nearly 90% from its peak in 2015 after its pricing strategies were exposed and its dubious network with Philidor was revealed. The scandal resulted in legal battles, a complete overhaul of the executive team, and a rebranding of the company to Bausch Health Companies.
How to Do It Right
Interface Inc., a modular carpet manufacturer, offers a compelling example of excellent stakeholder management.
Founded in 1973, Interface Inc. underwent a transformation in the mid-1990s when its founder, Ray Anderson, shifted the company’s focus towards sustainability. This pivot was not only about reducing negative environmental impact but also about creating a positive influence on society.
Internal Stakeholders: Inspired and Involved
Internally, Interface fostered a culture where every employee is engaged in the mission of sustainability. The company encourages innovation from its staff, involving them directly in the process of reducing waste. This approach has been crucial in developing new sustainable production methods.
Employee training programs emphasize personal responsibility towards environmental goals and alignment with corporate values.
External Stakeholders: Collaboratively Engaged
Interface works closely with suppliers, customers, and environmental groups to advance its sustainability objectives. The company pioneered the Net-Works program, which collaborates with local communities in developing countries to collect discarded fishing nets that are then recycled into carpet tiles. This not only helps clean up ocean plastic, but also provides economic opportunities to the communities involved.
Groundbreaking Initiatives
One of Interface’s key initiatives is its Mission Zero promise, which aimed to eliminate any negative impact the company may have on the environment by 2020. They have made immense strides reducing greenhouse gas emissions, water use, and waste-to-landfill. Their next goal, Climate Take Back, aims to create a business model that reverses global warming.
The Outcome
These efforts have not only improved Interface’s environmental footprint but have also boosted its market share and customer loyalty. The company is often cited as a model in corporate sustainability and influencing practices in industries well beyond its own.
Keys to Managing Internal and External Stakeholders
1. Transparent Communication: Open and honest communication is vital. Ensure that stakeholders are regularly informed about developments, decisions, and challenges related to the organization.
2. Engagement and Involvement: Actively involve stakeholders in decision-making processes whenever possible. This can be achieved through regular meetings, consultations, and feedback sessions.
3. Understanding and Mapping Stakeholder Needs: Different stakeholders have different priorities and concerns. It’s essential to clearly understand these needs and expectations through direct dialogue and research.
4. Aligning Goals with Stakeholder Interests: Find common ground between organizational objectives and stakeholder interests. This alignment helps in creating synergies and mitigating conflicts.
5. Monitoring and Adapting: Stakeholder management is an ongoing process. Regularly assess how stakeholder needs are being met.
“When people are financially invested, they want a return.
When people are emotionally invested, they want to contribute.“
-Simon Sinek
Lead from your heart. Lead to Win.
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