The Stakeholder Community Network Model

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Introduction - What is the Stakeholder Community Network Model?

About The Author & The Article

Jonathan Bishop, Group Chairman, Bishop Phillips Consulting. [1]

Copyright 1995-2019 - Moral Rights Retained.

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Special Note: We have received a number of enquiries as to whether there is more detail available on this and other topics. The answer is yes - a lot more. We are endeavouring to convert the balance of the Process Re engineering Method into wiki format as quickly as possible and we promise to have the rest of the manual loaded to the wiki soon. The conversion effort requires changes to the text format, style and the detail provided, as the original text was written as a manual for staff and clients, and makes some assumptions about pre-existing knowledge. We are also updating the content at the same time.

Author's Note: The stakeholder community network concept was originally mapped out in the mid to late 1990's and reflected my own search for a paradigm for both online and virtual corporations. It effectively pre-dates the rise of cloud computing and social network sites as a component of business (for which it almost seems to have been designed) by some five to eight years. It did, however, benefit from existence of the fore-runners of these concepts. It was developed in the context of the observed behaviours of successful online ventures such as DELL and CISCO, the Victorian whole of government reform agenda, the tail end of the TQM experiment, shift from paper to online work flow both intra and inter business, rise of risk management, progressive adoption of balanced score cards, appearance of network trading organisations (groups of independent complementary businesses that traded together as a unit cross-feeding work and niching away from each other through specialisation - they flourished briefly locally in the mid-1990's), and the rise of on-line portals, peer managed corporate forums, application service providers, enterprise scale ERP and CRM systems, and web based B2B systems and the emergence of cataloguing standards. I have used it heavily over the years. It has been modified over time, to accommodate learnings from organisations that survived economic, technological social and political reversals and fertilised throughout by proven tactical and management philosophies, the stakeholder community network model would now seem to have come of age.

What and Why

What is the Community Network Theory of Organisations?

Organisational Community Network Theory

Organisational Community Network Theory premises that an organisation is a network of one or more communities existing in a network of other communities. The network links communities along lines of exchange such as communication, dependence, and obligation. Communities are collections autonomous agents and/or other communities that interact and share a sense of group identity, or share at least one purpose in common.

Agents are essentially people, but the category could easily accommodate AI devices as these develop appropriate capabilities.

Characteristics of a Community in Organisational Design

Communities provide a natural, spontaneously-forming, self-organising, and evolving human organisational structure that forms because something is shared by the participants. Through the things the participants share in common, the community unit provides a framework for standardisation, streamlining, automating, and specialising in delivery of services and products to meet the shared purposes and operational needs of the individual community, and groups of communities.

Communities form initially because there is one or more needs in common among the participants (possibly only the need to identify and classify each other!). They are not inherently permanent structures, however there are some communities, that because of their survival through multiple generations or over multiple business cycles are effectively permanent. Such a list might include cities, countries, religions, professional associations, sporting clubs, and some government agencies, for example. At the other end of the continuum are communities that form spontaneously and last for little longer than the span of the first and only meeting. Examples might include emergency assemblies, concerts, demonstrations, staff inductions and rallies, etc.

Members of a community may be individuals or other communities. Communities contain eight non-exclusive classes of participant:

  1. Members - All participants are members, regardless of whether they are also members of the other classes.
  2. Beneficiaries - Information, goods and services consumers
  3. Suppliers - Information, goods and services providers
  4. Patrons - Funding providers who therefore also tend to direct
  5. Governors - Providers who administer, moderate, direct, control access, monitor, and tune.
  6. Custodians - Provide the infrastructure, durable assets, information warehouse, community tools.
  7. Partners - Provide compatible, complementary non competitive services or goods consumed by members in association with those of the community, but not as part of the community.
  8. Public - Comprised of potential participants, and participants who may also spontaneously form communities that compete with or otherwise influence the context of the community.

The more mature the community, the more clearly these roles are differentiated and actively operating. For a community to reach stability over an extended time the more important it is for these duties implied in these roles to be fulfilled.

Members of a community:

  • share in a communal identity,
  • have a shared purpose with other members,
  • need similar access to information, and
  • draw from a common set of tools.

The community will interact with other communities both individually and as a group. The more cohesive and mature the community is, however, the more likely it is that it will interact as community with other communities through nominated representatives.

The community is the fundamental building block of an organisation, but communities are structurally recursive and fluid. Communities themselves naturally subdivide into teams that service particular interests or needs of the community. These teams from their own communities, and together these internal communities form a network of interacting communities. The larger and more heterogeneous the parent community the more noticeable, numerous, segregated, larger and autonomous these internal communities become.

These internal communities may also interact directly with external communities, and have external participants in otherwise internal communities. The more predominant the external participation is, the more likely is the internal community to transition though the parent community boundary to become an external community (with respect to the originating parent community). Similarly the higher the proportion of community participation from a single community in an external community, the more likely that external community will transition to an internal contextually constrained community.

Each community is, therefore, comprised of a fluid network of communities contextually constrained by, and in some way supporting the activities of the parent community.

Community based organisational structures extend horizontally through unconstrained networks of interactions and vertically through community subdivision and absorption into constrained networks of specialised communities.

Making and Strengthening a Community

The longer a community survivies - the more mature it becomes - the more clearly the community identity, roles and rules become. For example, a group of people with a common interest in a playing of cricket meet by chance through visits to a local field - perhaps looking for a game being played. Over time they tend to arrive more regularly and predictably at around the same time in greater numbers. Some start bringing equipment and start a game, while others join in fielding or watching. As the predictability of the presence of other interested parties grows, participants start arriving in the expectation that others will also be present, while other participants bring supporting material - like refreshments, etc. Gradually, a community is forming with self nominated and perhaps suggested or allocated roles.

Eventually the group might suggest a common name - the Sometimes Cricket Club - and others might attempt to organise more sophisticated or permanent resources, and eventually the funding needs of the group might dictate an expansion in its membership and the need to more formally manage finances on behalf of the group, etc. Rules might initially be common-sense and unspoken (like not stealing the bat and ball from the guy that supplied it), others may be agreed through shared experience. Sharing or common interests and the need to improve predicatbility of participants in games will encourage the group members to share contact details and channels of communication. The more individuals invest their time, energy and resources on behalf of the group, the more they will expect later joining members to make a catch-up contribution for the existing investment - and the community may start placing barriers to entry in the form of membership criteria and fees.

As the group grows handshake agreements may need to be formally agreed and recorded, and individuals will be formally allocated roles and leadership agreed. Along the way as disagreements arise (like who should bat first) dispute resolution mechanisms will be required.

Thus a community has been formed and gradually self-organised. If the initial casual group fails to ever define roles, find equipment supplier(s), it will be most unlikely to ever get to the stage of even the first game. If it fails to agree its meeting place and times of meetings it will probably not achieve the second game. If it fails to identify its membership and establish an identity (and therefore a brand) and all the other functions of a cricket club it will be unlikely to last out a season.

To make an effective long term community we need to pay attention to the characteristics that form a community and ensure that these characteristics are serviced. From the simple example above we see that a community has:

  • Members
  • Shared resources
  • Identity / Brand
  • Communication
  • Define and shared purpose
  • Location - a meeting place (which may be virtual)
  • Roles
  • Rules
  • Governance structure
  • Barriers to entry (note this might be as small as deciding to participate)
  • Patron (implied or formal)

We grow and strengthen a community by addressing these characteristics directly. Ignoring any one of these will result in the failure of the community over time. For a community that assembles for a single purpose for only a short period of time - such as a demonstration, or an entertainment event this may not be a concern. If we wish the community to have any kind of longevity we will need to consider how we enable the defining charcteristices of the community.

It is with some surprise that we note that when we look at the permanent communities within many organisations we will find that several of these characteristics are only weakly addressed - if at all - rarely understood, and even more rarely considered. Herein lies the key to the internal structural failure of many organisations that have grown much beyond the oversite of their founders splitting into many semi-autonomous communities.

The Organisation as a Community

Here we distinguish a physical organisation from the organisation of its operations and resources.

A physical organisation - such as a company, government agency, not-for-profit, or even a political party - is:

  1. a community containing a network of communities,
  2. a patron of both internal and external communities
  3. a custodian of information and provider of infrastructure for communities
  4. a governor of community mandate, direction, performance, and culture, etc.

The physical organisation is, by definition, a community, but its boundaries may be so fuzzily defined that as a community it is little more than a container for a network of communities, whose primary allegiances are directed outside of the physical organisational boundary. Some communities in the organisation's network are planned and facilitated communities, while others are not planned but facilitated (such as professional associations, unions, standards bodies) and others are neither planned nor facilitated (but, perhaps, accommodated) (such as schools, sporting clubs, arts groups, social movements, etc.).

As a patron the physical organisation plays it primary role. Patronage is provided through a funded pool of resources that can be applied to communities as participants and enablers of community infrastructure, and through direct funding of community operations, or through funding infrastructure provision, etc. Patronage is about funding, and every gift "in kind" of resources or equipment, etc is an implied gift of funding as well. Patronage is accompanied by some ability to influence direction - if only from the implied threat of future funding cessation.

As a custodian, the physical organisation will also provide services to communities of storing knowledge, providing and maintaining technical and physical infrastructure used by communities, and management of liquid assets, etc. These are called custodian functions because they are about the preservation of assets, wealth, capability and capacity.

In its governance function the physical organisation imposes accountability for patronage, standards, policy compliance, legal compliance, strategic direction, performance measurement, financial control and resource utilisation, etc

All organisations are simultaneously intersected by many special interest communities:

  • The average workforce is riddled with communities some intersecting the organisation, some not - union(s), professional bodies, schools (if staff have school age children), political, sporting, social, OHS cases, divisional, project, etc.
  • Industrial associations, standards committees, regulators, etc.
  • The company is surrounded by public interest groups, political and semi political groups, consumer advocacy groups, and the public relations industries.
  • Internally the organisation might have communities of buyers, marketing and sales, logistics, process & quality improvement, governance, safety, research and development, financial control, etc.

Communities do not respect the conventional boundaries of corporate or governmental agencies. Communities that interact with external stakeholders, for example, draw in members of the public and convert them into organisational stakeholders in the process, but not employees (at least in the conventional sense).

The Advantages from using Communities to Model Organisations

In some organisational theories, communities are represented as external and internal forces or drivers, but are not directly modelled into the organisational structure. The organisation is seen as a collection of consumer-provider relationships - whether those relationships are about transmitting instructions, funding, goods, services, resources, etc. The relationships are essentially hierarchical - even in matrix organisations - and feed back and feed forward control systems have to be imposed on the structures to make them work. Structural entropy gradually causes the structure to disassemble without constant maintenance on the organisation structure itself.

The community is an advance on the classic consumer-provider interactive model, because it:

  • assumes most business relationships are multi-directional exchanges between the provider and the consumer and other providers and consumers extending over a period of time;
  • recognises that all transactions between parties involve a series of micro exchanges going in both directions, not a single uni-directional exchange. For example, a purchase involves the consumer providing information (identity, location, preferences, competitor data, demand level, buying cycle, etc.) and possibly funding, a sales team matching the need to available offerings and defining and providing the promise, a legal team defining the obligations, a delivery team to deliver the good or service, a quality and support team providing quality management, logistics team providing transport, etc. All of these are participants of the same community involved in meeting client needs.
  • delivers the benefits of the one-stop-shop process models, without the training cost, and inherent quality variability, by forming a community of specialists to collectively provide the single point solution.
  • provides a model for structuring the online presence of an organisation.
  • provides an organisational architecture that distributes the costs of providing and consuming goods and services across the community rather than exclusively concentrated in the larger party. For example, a buying community might assume some of the costs of sales by providing their details online directly into the client database, select from available product (by watching videos, reading information and product comparisons provided from central location), or submit special orders online, respond to questions from other clients in hosted forums, and advertise the organisation's products and quality in organised reviewer sites, or social networking sites.
  • places the provider and consumer into the same "team" and positions them as jointly trying to meet a need. The community model facilitates all participants contributing jointly and sharing ownership of the outcome - rather than one party meeting the needs of the other.

Each community is a collection of participants (members) who share common operational characteristics, goals, interests and/or functional needs. The greater the extent to which the participants share characteristics, interests, needs and goals in common the greater the cohesion in and resilience of the community - in simple terms the community is active, "tight", involved, and the members share a sense of identity, belonging and, most importantly, ownership.

Communities are semi-autonomous, self-selecting, self directed, and inclusive. This does not mean communities are necessarily "open-access". In fact communities with higher barriers to entry often have the highest sense of cohesion because membership is something hard to attain and therefore something of value. Cohesion does not necessarily mean active, however, and lack of activity generally makes a community less interesting organisationally. Communities survive by exchanging things. The greater the volume of services, tangible goods or intangible goods (such as information), that flows through and around the community the stronger the community becomes. In the community model an organisation therefore benefits by fostering participation and particularly communication among all its members.

What is the Stakeholder Community Network Model?

The stakeholder community network model is an organisational design and analysis paradigm that sees the organisation as a network of co-dependent stakeholder communities positioned in a larger network of interacting (but not necessarily co-dependent) communities. Within this paradigm, all of an organisation's services, functions and facilities exist to service the needs of the various stakeholder communities in the network.

It should be noted from the outset, that co-dependent does not mean cooperative. As with domestic co-dependent relationships, the community network may include some positively destructive co-dependent community relationships.

The model defines an organisation as consisting of a network of operations that may extend beyond the boundaries of the organisation's body corporate. One such situation might arise in franchised operations or trading networks where an external entity provides critical services on which the corporate organisation depends.

The model works as an organisational design paradigm, a process design framework, an IT strategic design paradigm and a risk and performance analysis framework. It is directly suited to modern network, online, virtual, service operational models as well as bricks and mortar industries including utilities, government, general and project manufacturing, and education. It has not been tested in the resources sector or transport sector.

As an analysis tool identification and labelling of existing implicit and explicit communities and the physical and virtual flows between them against current planning, score cards, policies, performance measurement systems, service agreements, compliance frameworks, risk models, quality, control and feedback systems highlight areas of dysfunction, duplication, redundant effort, counter-productive strategies, missed opportunities, and structural inefficiency and ineffectiveness.

As a design tool it results in the alignment of organisation wide activities to identifiable purposes with targeted participants and measurable performance. It facilitates structurally many different and potentially divergent simultaneous strategies while painting a boundary and direction for such divergence. Such support in organisational design is essential for dealing in global, highly cyclic, or political markets where cultures, rules and geographic features may require the ability to operate as "her to him and him to her", and to retire and replace entire limbs rapidly.

As a customer, partner and supplier service process model it results in bound customers and suppliers and well integrated partners while distributing a significant portion of the organisations costs to the participants.

As an IT systems framework it provides an efficient protocol for defining shared services, community portal service architectures, intra-cloud and cloud services, virtualisation clusters, etc.


The Organisation

Organisations are networks of communities. These communities are comprised of members drawn from inside and outside the organisation's corporate legal identity, and may include communities of which the organisation has no effective control (in traditional terms).

Under the stakeholder community network model we view an organisation as a community comprised exclusively of interconnected sub-communities of people providing and consuming goods and services. Each sub-community forms multiple sub-sub-communities within it, and the community subdivision continues recursively until the costs of organising communities out way the benefits gained from the additional community.

Contrast this view of an organisation with that of other models that classify organisations in terms of bureaucratic, divisional, matrix, and similar structures. Under the stakeholder network view all of these structures can coexist in an organisation simultaneously as they are simply overlapping communities defined around structural paradigms. The stakeholder community network model does not replace such paradigms - it absorbs them.

In the stakeholder community view an organisation is a free-flowing evolving network of teams forming and disbanding as required, with some acquiring near-permanent status, while others enjoy but a single day in the sunshine. Community membership is not exclusive and it is normal for members of one community to also be members of other communities.

The Community

The model first defines a structural unit (the community) that possesses identifiable and comparable characteristics, such as focus, information need, functional need, etc. Secondly, the model looks to the mechanisms of facilitating stakeholder communities in a cost effective and consistently reliable and predictable way, utilising common services designed to enable and utilise the shared or distinguishing characteristics. So initially, at least, the model is community structure agnostic.

Communities form for multiple reasons, including:

  • shared geographic proximity
  • shared heritage
  • shared communications technology
  • shared language
  • shared interests
  • shared skills

The things we share are like gravitational attractors around which people cluster in self organising social units we are calling communities.

As communities grow beyond a few members they form sub communities whose members service the parent community or concentrate in some specialised capacity in addition their other roles as members of the community.

The communities in which we are most commonly interested (in the general organisational performance improvement context) are those forming around shared interests and skills. Within an organisation the geographic, and language communities may be crucially important, and in some contexts would be directly accommodated but they will also usually need some form of communities formed around skills and interests (like, at the very least, consuming or providing something), in order to assist the organisation achieve its purpose.

Within each community formed around shared interests or skills are a further set shared interests such as membership, meeting space, information, branding, commercial services, engagement, arbitration, and support. As these needs are common (with minor variations) across all communities they are an attractive first target for shared service provision across all communities. In designing these shared services one should remember that a properly harnessed community can be self managing, peer supporting and self selecting. Shared service provided to communities should be designed to encourage this ownership by the community membership.

A community model assumes a multi-way conversation within the community among the community members - not a massively parallel bilateral conversation between the community members and the organisation. The latter is a client-supplier relationship and by excluding inter-member interaction it embeds the costly push model of marketing, sales and service delivery. By encouraging intra-community conversation we harness the consumers in the community into one or more of the many supply roles in the community. In a customer/client oriented community supply roles span such things as marketing assistance with reviews, discussions and forum participation to support assistance in peer help spaces, and even product improvement and testing such as in software Beta programmes. On the supplier and partner side, supplier side community roles include online supply of certifications, supplier self-registration of details, self selection of available contracts, online invoice entry directly by suppliers, and suppliers providing new product information feeds matching community standardised classifications and measures, etc.

The Stakeholder Community

A stakeholder community, is a collection of people, agencies, or units of an agency, that share three traits in common:

  1. They have an interest in the organisation being modeled or analysed (IE: they are stakeholders).
  2. As a group, they are co-dependent with other groups of the same organisation. (IE: the groups can not operate with complete autonomy as they depend on each other for their functioning and survival).
  3. They possess additional distinguishing dimensions of their interest in the organisation that allow them to be functionally separated from some members of the collection and similarly grouped with others (IE: they form an identifiable and functionally similar subgroup of stakeholders).

A stakeholder community of an organisation might be defined as geographically based, and representing all customers within a geographic area, or it might be an enterprise wide collection of staff injured in forklift truck accidents, or a worldwide extra net of ECL policy advisers, or suppliers and corporate buyers for raw materials,... or any one of a long list of possible organisation specific or related groupings.

We call the members of a community "Resources". A resource may be a person or another collection of resources such an organisation, a unit of an organisation, another community. In all cases where a collection of resources is a member of a community, that collection will participate through one or more "community representatives". So in a sense resources can be seen as ultimately comprising people (even though they may be members fulfilling constrained roles).

The Stakeholder Community Network

A stakeholder community network is a collection of stakeholder communities that form a network of loosely co-dependent communities.

The communities comprising the network preserve the rules of membership of a stakeholder community domain (as defined above). The links between member communities represent the co-dependencies. The dependencies are functional in nature and may be about information, goods or services - provision or supply, etc. They therefore represent the first layer of potential service level agreements in an organisation.

Technically speaking, the graph connecting all members of the stakeholder network is a digraph (directed graph) when the functional attribute of the network relationship is included in the inter-community link definition.

The Well-formed Stakeholder Network

In the universe consisting of all possible stakeholder communities of an organisation, a complete network would include all communities in the network topography. Such a network is said to be "theoretically complete".

Theoretical completeness is neither practical nor possible to achieve in practice. We can not know, and thus enumerate, every possible stakeholder community as each resource and every possible combination of two or more resources up to and including the entire membership of the organisation's stakeholder domain is potentially a community.

Another way of viewing completeness is to first test to ensure that all members of the stakeholder community are also members in one or more of the other communities in the network. This network is then complete in terms of a organisation's resource coverage.

It is worth noting that an organisation's stakeholder resource list may include both members of the public and entities that have no direct dealing with the organisation as well as staff, clients and suppliers (etc.) of an organisation.

The Stakeholder Community Network Model

The stakeholder community network model views an organisation in terms of stakeholder communities with shared needs, interests and/or purposes.

The model is a government and business meta-organisational model for organisational design, performance analysis and competitive strategy. It founded on a theory of operational design that embraces networked co-dependent business structures (such as outsourcing, join-ventures and social networking), while not mandating them. The step into communities, however, fundamentally changes the organisational focus from internal structure management to external service delivery. By rejecting all activity not designed to service an identifiable community it forces the entire enterprise to embrace a service culture at every level - everybody is a client of somebody else and in a stakeholder relationship (and usually responsible to someone, or responsible for something) with many other people.

The community structure inherently distributes some of the costs of marketing, sales and servicing, from the net providers to the net consumers within the community, but is effectively a premium willingly paid by community net consumers for greater influence over service form, more relevant and timely information, improved service speed, and risk perception confirmation (the role of public forums), etc.

Communities are essentially self determining and semi-autonomous so a community network modeled organisation naturally accommodates multiple value streams simultaneously. The ability for a community to recursively sub-divide into smaller overlapping specialised communities means the enclosing community structure can accommodate not only multiple value streams internally, but also multiple agendas. Thus financial performance can be enhanced, while quality improvement, social policy or research (and other long term strategies) are driven with equal priority. Further, new value streams can be added to the structure without compromising the integrity or culture of the existing structure.

The semi autonomous nature of communities means that both competitive and and non-competitive business architectures are compatible with the community network model.

We say it is a "meta-organisational model" because, while you might design your physical organisational structure around the model (particularly at the business unit level, or in the online context), it is more common to use it to redesign the roles, service agreements and strategies of existing organisational structures in an organisation. The meta-organisational model is one that floats through a physical organisation providing a new virtualisation of the organisation by re-engineering the service agreements, social networks and logistical networks in an organisation.

One way to think of this is that the impact of applying the community stakeholder thought process is to rearrange the plumbing, the lifts, the corridors and the internal doorways inside a heritage listed building. It is still the same building on the outside, but now you don't get lost inside it, and clients and customers start sharing your destination, not just what you do.

Sure you could tear down the building and replace it with a campus that modelled your stakeholder community structure exactly, but you do not need to do so to get the benefits, and in fact doing so might be counter productive to your market.

The model does tend to have certain organisational impacts - even as a thought exercise:

  • The model encourages networked structures and specialisation of semi-autonomous co-dependent internal units.
  • The communities share common servicing needs and efficiency dictates some form of shared service provision for these common needs. These structures imply additional cost, which in a zero-sum change process implies that resources will have to be transferred from somewhere else.
  • The network model will tend to reach across multiple divisions of an organisation in defining communities.

In the normal entity (government or business) an individual or even business unit might participate in multiple stakeholder communities at once. So the communities are not necessarily defining an organisational structure as much as a set of interlocking co-dependence structures around which services can be consolidated and streamlined, duplication identified and removed, and context specific organisational purposes can be clearly articulated.

Applying the Stakeholder Community Network in Practice

Step 1. Identifying and Defining Stakeholder Communities

We must fist decide whether we a looking for a directed outcome such "quality improvement" or an undirected (normal) outcome. This impacts the design of every community.

In a directed outcome model the directed outcome becomes a community in its own right that is automatically a participant in every other community. This allows consideration of the requirements of the directed outcome community to be capture and implemented in every other community structure.

In the undirected model no such imposed membership is mandated and the community architecture is left to optimise the framework with which it has been equipped.

In most situations we use the undirected model for analysis and the directed model in conceptual design (refactoring into an undirected model once the directed redesign has been finished).

Step 2. Identifying and Defining the Community Ennoblement Functions

In the model, the central object of the organisation is to ensure communities are facilitated, serviced, and harnessed for the purposes of the organisation as best it can, or otherwise "actively managed". The model sees only communities - so every participant within and without the organisation must be able to be defined as falling into one or more stakeholder communities if the model is to be considered "well-formed" (read "complete").

Within the model, the aim of the enterprise is to facilitate communities (generally) and a defined set of communities specifically - which translates into:

  • identifying stakeholder communities
  • mapping new and existing stakeholder communities to organisations objectives, mandate and purpose as they change
  • mapping inter-community work flows testing and identifying duplicated communities, duplicated flows, and under resourcing, etc
  • seeding communities as required
  • funding stakeholder communities (eg seed capital, cross charging, external billing, etc)
  • organising stakeholder communities
  • branding stakeholder communities
  • fostering community participation and outcome ownership
  • providing the and possibly managing the infrastructure for community self organisation
  • liaising/interfacing between stakeholder communities (eg. client community versus customer community)
  • delivering the community's requested service or goods
  • harnessing community ownership of the service/product improvement process
  • trapping and archiving expert knowledge from both internal (to the organisation) and external community participants over time

Within an organisation adopting the stakeholder community network paradigm operationally, the stakeholder community network must be actively managed. This means it must be facilitated, moderated and funded. Resourcing is required to make it fast and efficient to implement and equip new communities and retire existing ones. Part of equipping a community is establishing its charter, budget, performance measures, governance, operating rules (constitution), core membership, decision model, meeting space, common (shared) tools and specialised applications or services need.

This necessitates the creation of a new centralised or distributed role of community facilitator(s) and a central role of community registrar (manager). The former is about equipping and assisting new communities, identifying and seed communities as required and advising and improving existing communities. The latter is about containing, policing, funding, planning, judging and budgeting communities.

Step 3. Considerations in Designing the Stakeholder Community Analytical Structure

Once we have a standard definition of the community concept as it applies in our analysis and organisation, the next step is to define a framework of communities through which to analyse the organisation.

As each community shares facilities between their members, the fewer top level communities there are the better the efficiency gains in the entire model will be. Unless, of course, their are too few and the resulting groupings are not homogeneous over sufficient characteristics, or the communities are badly chosen with many shared characteristics between the groups rather than within the groups.

Secondly, the choice of communities can slant the servicing view internally or externally, or indeed could simply mirror existing organisation structures. None of these effects are likely to produce efficiency gains sufficient to justify the operational overhead of the stakeholder community support systems. The gain comes from achieving 100% coverage of participants, with communities comprised of both external and internal participants, with the minimum need for intra-community process or system customisation. By demanding the mixing of internal and external members aim to eliminate duplication between external and internal systems and processes servicing the same need.

So, ultimately, the choice of top level stakeholder communities proves to be crucial to the outcome of the model - on all fronts.

In our experience, if the model is well designed the chosen top level community groups will tend to be highly co-dependent which automatically provides a structure and focus for service level agreements, and intra-community risk profiles will be highly consistent.

The choice of stakeholder communities used is prima-facie up to the organisation and the purpose of the analysis. While generalisation is possible at the highest level, as the view descends through the communities into their member sub-communities the groupings become quite specific to an organisation.

After many years of using and refining the concept we have settled on a standard top level stakeholder community model we call SCNM03. It has proven to be work predictably in both government and commercial agencies in both physical (eg manufacturing) and virtual (eg software) organisations. Alternative models include the groupings under Porter's Theory of Competitive Advantage.

Standard Stakeholder Community Network Model: SCNM03 in Practice

SCNM03: Bishop's Model Stakeholder Network


In the standard BPC model (SCNM03) - also known as Bishop's Model Stakeholder Network - all organisational functions and services are seen as belonging to one or more of 8 top level stakeholder communities:

  • clients,
  • customers,
  • suppliers,
  • partners,
  • custodians,
  • workforce,
  • governance, and
  • the public.

Each community is comprised of a mixture of the community service providers, enablers and consumers of community services sharing a common focus. Community members share common functional interests and therefore may be serviced with shared services (whether human, networked, or electronic).

The meanings of the communities are explained in detail below. Here we will draw out some specific features:

  1. The model conceptually splits "the customer" (she who pays) from "the client" (she who receives) - often they are the same, but when they are not (such as in many government agencies) is is a crucial difference.
  2. The model splits partners from suppliers, and moves contractors to the workforce.
  3. It simultaneously recognises several communities of governors in the governance community including finance, executive, internal audit, board, cabinet, regulators, parliament, external audit, shareholders, etc.
  4. Custodians community includes those communities entrusted with a multi year wealth preservation/accumulation and service mandate such as IT, Treasury, Asset Management, etc.
  5. The model embraces the public as a specific community to be managed as they are the ultimate source of all the other communities' members and specifically the group that can influence the governance community to legislate your organisation out of existence. This community is both the source of greatest opportunity while also being the least organisable community and the most potentially threatening. A stakeholder network organisation notionally endeavours to move all members of the public community to one or more of the other communities with more manageable risk profiles.

Risk and the Stakeholder Community Network Model

Risk in the model tends to vary with time and the degree of influence the organsiation (the meta-community) has in the specific community being examined. This influence will vary over time.

Consequently, in the longer time frames (ie. the strategic time frame) the Public and Governance communities are usually the highest inherent strategic risk communities in the model. The organisation tends to have the least influence over the sub-communities contained there-in and may participate only as a guest (information receiver, price-taking customer, subject of legislation, etc.), or not at all. Public attitudes can swing against the activities of the organisation, and influence the legislators, who, in turn, can legislate the marketplace or the organisation out of existence. Consumer preferences can change as technology progresses, making the organisation's business model irrelevant. The stakeholder network model therefore naturally tends to encourage both lobbying and active public relations management (or the exact opposite: invisibility!), and participation in external communities for information gathering.

Where time-frames being considered are shorter, ie. from an operational or tactical risk perspective, Workforce will rank as one of the highest risk spaces. If we think of Workforce as being comprised of smaller communities - say contractors and employees, and then each of these in turn being comprised of even smaller communities - say divisions, units and ultimately individuals we see that the more we subdivide the group the closer we get to a community of one member - the individual. In the very short term humans thus represent a highly variable factor.

In the micro-community of one person. the only member of the community that exists inside the employee's head is him or her self. All the risk minimisation and behaviour modification controls naturally present in a larger community are dependent on that one member. In that community one person fulfills all the roles of the multi-member community. Strategies such as training, and standard processes work over an extended time frame to reduce the probability of incidents and create predictability across the workforce as a group, but in the very short or immediate time-frame the individual is still entirely responsible for each action with little chance for other community members to intercede (because there aren't any!). In the instant, this micro-community can make an unsafe decision that impacts the well being of the larger organisation (as well as themselves). Planning, thorough and extended training, careful member selection, 'idiot-proof' machine and user interface design will improve the predictability of the individual - but all these strategies take time to design, implement and achieve their effects. So, over the shortest unit of time - say, a second into the future - the individual can make a very bad decision with disastrous outcomes. This is a technical way of saying that people do dumb things that can be prevented with enough preparation and training - but only if enough time is available.

Competition and the Stakeholder Community Network Model

The SCNM03 model captures a deliberately divergent view of competitive strategy from that presented by many earlier authors. In this model, competitors are seen as potential suppliers, partners, clients, customers or workforce and strategies to bring them into one or more of those communities would be pursued.

Crucial to understanding the SCNM03 stakeholder model is that, purely applied, the model sees the entire universe in terms of these communities. It starts with the ideal vision built-in and therefore models a best fit to that scenario.

One obvious issue, then, is that there is clearly no community of "competitors". Under the pure SCNM03 stakeholder network model our aim is to make competitors a member of one or more of the other communities. We are therefore encouraged to both define our service offering away from competition and structure ourselves as complementary to another's offering or needs. The extent to which we are not able to achieve this influences the inherent risk that lays in the public communities.

We do not loose the unresolved participants, instead they appear as sub-communities of the public community and are subject to a range of risk mitigation strategies.

Stakeholder Communities and Sub-Communities in SCNM03

Each of these 8 communities is comprised of smaller communities with more specialised shared needs. For example, workforce is comprised of two specialised communities: contractors and staff (or other appropriate terminology). While many requirements of these groups are the same, there are specific differences in engagement, management, ancillary services, social interaction and disclosure levels between these groups to warrant separate community identities.

Conceptually the stakeholder network organisation is (almost) a franchiser of community management systems within a defined product/service space and in a given organisational cultural context. An organisation adopting this model will naturally look to standardise the managerial and technological profile of the communities it manages.

Applying the stakeholder network model in process design, performance analysis, compliance management or risk assessment often results in process structures and views that differ dramatically from the Divisional, Matrix, Hierarchical and Service models under which the organisation may operate. The community network model is agnostic when it comes to organisational structure (with the one exception being an organisation exactly mirroring the network model itself).

By way of example, an organisation that produces widgets, might traditionally see itself in terms of functions and processes concerning widgets. It has widget raw materials planning and acquisition, inventory management, widget production, widget distribution, widget order management and sales, etc. The same organisation in the stakeholder network model would see the world in terms of satisfying the needs of defined stakeholder groups first - not the things they were manufacturing.

In the SCNM03 stakeholder network model the natural home of the manufacturing functions is in the customer community where they are firmly focused to the customer (note - not client) desires, and materials acquisition function might be seen to contract the services of both the partner and supplier communities to satisfy material demand.

A couple of outcomes of the model are immediately apparent from this example, the model blurs the distinction between internal sourcing and external sourcing,

From a computing perspective, the model automatically leads to service portal based architectures, systems consolidation, cloud structuring (whether internal or externally hosted), and highlights the places where inter-system integration and system standardisation are needed. From an operations perspective it leads to service focused organisational architectures with defined client groups and document service standard agreements.

The SCNM03 Communities Explained

An individual is often a member of multiple communities (eg Customers and Clients). Our standard stakeholder communities (which in 12 years have yet to be wrong) are:

Clients Stakeholders who receive or deliver services Clients are interested in rapidly finding information, requesting service, reporting hazards / incidents / events / ideas.

A classic result of the client stakeholder focus are client portals. In a local government these might take the form of a resident portal, where a city rate payer can find in one spot all the online systems for garbage collection, events, bylaws, parking permits, voting, pet registration, planning applications and objection lodgment, etc. In a direct-to-customer manufacturer the client might have access to a portal with product information, product enhancements, support, manuals, training, online-store, peer forums, product reviews, newsletter/blog, and peer/expert hints and suggestions all in one spot.

Customers Stakeholders who pay for services that clients receive. This is separation is very common.

Customers want to pay for things in as convenient and consolidated a way as possible, and have mechanisms available for enquiring, revoking or monitoring services for which they pay. Companies that send multiple bills for the different services they provide are examples of firms that seriously need to look at their customers as a stakeholder group.

Governments provide the classic examples of customer and client separation: A State Government might pay for (or part-pay for) some services that are received by citizens of a city government. The state government is the customer, while the citizen is the client.

Suppliers Suppliers of services and materials to the organisation. Suppliers have common service interests such as finding tenders, quotes, interfacing supply catalogues to purchase order systems, checking on payment status, locating standard contracts, etc.
Partners Partners are providers of complementary services. A “meals on wheels” charity provider may function as a partner to a local government, delivering services complementary to those of the city government, but funded by non-City sources.

Partners are mainly interested in ensuring their services stay complementary and not competitive with the organisation. So information on strategies, management of joint projects, identification of opportunities, etc are of interest.

Roads constructions authorities are partners who provide accident minimisation services, and traffic impact control services, etc. that complement those of the local or city government roads teams.

The relationship between insurance companies and the fire service is another example of a partnering structure. Insurance companies have an interest in facilitating the fire control services as they reduce their insured risks.

Franchised sales teams for a retailer, independent software manufacturers for a computer or games console manufacturer, and joint-ventures are all examples of partner community networks.

Workforce Workforce include both employees, contractors and consultants. HR systems, payroll, contract management, OHS, incident management, etc. are examples of services needed by this community.
Treasury/Custodians Treasury & other custodians are always an internal community. Their members are charged with maintaining assets and lowest level enabling systems for the other communities.

IT/IS, Building Management, Maintenance and Treasury are always members of the custodians group. They protect assets and provide the infrastructure on which the community specific applications reside.

Email, communications, data storage, server management clearly fit under this group.

Governance The governance community, like the workforce community includes multiple sub-communities, such as the executive, regulators, government bodies, risk management, compliance management, etc. These communities use services related to the provision of control and performance monitoring. Finance, council management, boards, executive team, performance review committee, inter-government reporting, risk, and compliance systems, and planning/budgeting systems are typically included here. Governance community members are both internal and external bodies with which the organisation has an accounting and reporting relationship.
The Public The public includes everyone else. This is a very important community as it has the ultimate power to remove the entire organisation from existence, or cause government to legislate it out of existence.

It is also the group from which all the other stakeholders originally come. From a strategic perspective, the aim of every organisation should be to get every member of the public community to transition to one of the other stakeholder groups.

The public need to know about the services an organisation provides, its ethics, and social performance.

While most membership of this community is reasonably obvious, the presence of public relations teams, lobbying and marketing in this community may be less so.

An organisation is always a member of the public stakeholder communities of all other organisations.

Applying the Stakeholder Network Model

The stakeholder networks model is recursive. It applies organisation wide and through each sub grouping down to the individual business unit level (in fact it can also work at the individual level – but not generally in an IS context). Just as the organisation has these broad stakeholder groups, each business unit has the same stakeholder breakdown, all be it with most stakeholders in the various communities being internal to the organisation – rather than external to the City.

The stakeholder community network has clear relationships between the elements - particularly as realised in SCNM03 - and provides a model under which social networking and portal systems naturally fit. The model leads naturally to both network organisations (those using mixed in and out-sourcing, shared service models and joint-ventures as their standard business model.

The stakeholder community model has a number of applications:

  1. As an IT system design paradigm and idea promoter.
  2. As a full organisational modelling paradigm. In this form it results in dramatically different organisation models from those in general usage and is thus often too radical for executive comfort.
  3. As an analytic “best practice” benchmark it is outstanding, and even when only partly applied results in improved and more cost efficient process design.
  4. In designing and online and web service business presence. With a little thought it should be apparent how effective the stakeholder model is in designing an online presence and structuring of mutual obligation social networks.