Olivia: Most business advice boils down to one thing: be tougher, be faster, crush the competition. It’s a battle. Jackson: Right, it’s all Sun Tzu, The Art of War for the boardroom. Every MBA program has a course that basically translates to ‘how to be a shark.’ Olivia: Exactly. But what if the most powerful strategy for long-term profit isn't a weapon, but a handshake? What if the secret to winning is to stop fighting everyone? Jackson: Okay, that sounds… nice. A little idealistic, maybe? Like bringing a friendship bracelet to a knife fight. Is this a business podcast or a wellness retreat? Olivia: I hear you, but that’s the provocative idea we’re diving into today. It comes from a book that was way ahead of its time, The Stakeholder Strategy: Profiting from Collaborative Business Relationships by Ann Svendsen. Jackson: The Stakeholder Strategy. Got it. Olivia: And what's fascinating, and I think this is the key to the whole thing, is that Svendsen wasn't a CEO or a finance bro. She's a consulting sociologist. She came at this from the perspective of human relationships, which was pretty radical for a business book published back in 1998. Jackson: A sociologist writing a business book in the 90s. That is an unusual combination. That’s like a poet writing a car repair manual. So what does this ‘stakeholder collaboration’ even look like in the real world? It sounds messy. Olivia: It can be. But when it works, it’s transformative. And when it fails, it’s a cautionary tale. The book lays out this fundamental mindset shift: is a stakeholder—an employee, a customer, a local community, a supplier—is that person a threat to be managed, or an ally to be cultivated? Jackson: A threat or an ally. That’s a pretty stark choice. I feel like most companies would say ‘ally’ in public and ‘threat to my quarterly earnings’ in private. Olivia: And that’s the tension. Svendsen gives these incredible real-world examples that show the night-and-day difference between those two mindsets. It starts with the traditional approach, which she calls stakeholder management. Jackson: Management. That word alone sounds controlling. Like you’re managing a problem. Olivia: Precisely. It’s defensive. It’s about buffering the company from outside demands. The PR department handles the public, HR handles the employees, legal handles the regulators. Everyone is in their silo, trying to placate or control their specific group to minimize damage and cost. Jackson: That sounds… like every big company I’ve ever interacted with. It’s a series of walls. Olivia: Exactly. But Svendsen contrasts this with stakeholder collaboration. This is a completely different philosophy. It’s about seeing these relationships as a source of opportunity, of competitive advantage. It’s about reciprocity and building a bigger pie for everyone. And the best way to understand the difference is with a story.

Jackson: Okay, I’m ready. Give me the story. Show me what this looks like when it’s not just a theory in a book. Olivia: Alright, let’s go to British Columbia, Canada. The company is BC Hydro, a massive utility that provides power to millions of people. For decades, they were locked in a bitter dispute over a hydroelectric dam on the Allouette River. Jackson: A power company versus the locals. A classic story. I’m guessing the locals were concerned about the environment? Olivia: You guessed it. Fish habitats, wildlife, recreation, flooding. Then, BC Hydro announces plans to increase the dam’s generating capacity. And everyone loses their minds. The Allouette River Management Society, which was a group of concerned citizens, First Nations communities, naturalists, government regulators—they all banded together and threatened to sue BC Hydro into oblivion. Jackson: The classic standoff. So under the old model, BC Hydro’s lawyers would just gear up for a decade-long court battle, right? Olivia: That would be the stakeholder management playbook. But under immense pressure, they did something radical. They invited every single one of their opponents to the table to form a committee. And here’s the crucial part: BC Hydro sat at that table not as the boss, but as an equal player. Jackson: Whoa. So they gave up control of the meeting? To the people who were actively trying to stop their project? Their shareholders must have freaked out. Olivia: I’m sure they were nervous. But look what happened. For eight months, this diverse group—engineers, environmental experts, First Nations leaders, local citizens—they met. They didn't just debate BC Hydro's plan; they threw it out and started from scratch. They developed joint objectives for managing the water. They looked at all the data together. They argued, they negotiated, they built models of different operating plans. Jackson: That sounds incredibly difficult. How do you even start that conversation without it devolving into a shouting match? Olivia: It requires a genuine commitment to the process. It’s about building trust, slowly. The book emphasizes that by being an equal partner, BC Hydro showed it was there to listen, not just to dictate. And after eight months of intense discussion, the committee reached a consensus. On everything. Jackson: A consensus? With that many opposing groups? That’s a miracle. So what was the outcome? Olivia: This is the punchline. BC Hydro actually lost some of its generating capacity. Jackson: They lost capacity! That sounds like a failure from a business perspective. Olivia: On a spreadsheet, maybe. But look at what they gained. They got an operating plan that every single stakeholder supported. The threat of lawsuits vanished. The river became healthier, with more salmon. The company’s relationship with the community, especially the First Nations groups, was so transformed that it led to new, profitable joint ventures later on. BC Hydro was so blown away by the success that this collaborative model became their new company-wide standard for decision-making. They traded a little bit of power for a massive amount of stability, trust, and new opportunity. Jackson: Okay, that is a powerful story. It’s a total reframing of what ‘winning’ looks like. But… that’s one nice story. Let’s talk about the elephant in the room from that same era: Microsoft. Olivia: I was waiting for you to bring them up. Jackson: They were the absolute opposite of this. Famously ruthless with competitors, allegedly predatory with suppliers. They were the definition of stakeholder management, if not stakeholder domination. And they became the biggest, most profitable company on the planet. Doesn't that just prove the whole collaboration thing is a nice-to-have, not a need-to-have? Olivia: It’s the perfect counterpoint, and Svendsen addresses it head-on. She doesn’t argue that Microsoft was a financial failure. She argues they paid a different, more insidious kind of price. The company was built on relationships with hardware makers and software developers, but as stories of their ruthless tactics spread, the public perception soured. Jackson: The anti-Bill Gates websites, the monopoly lawsuits… I remember that. Olivia: But the real damage was internal. Svendsen highlights that company executives started having extreme difficulty recruiting top talent. People just didn't want to work there. And the employees they already had were becoming demoralized. There's this one devastating quote in the book from a Microsoft employee at the time. Jackson: What did they say? Olivia: They wrote, "A few months ago, everyone I met seemed to think that working for Microsoft was a pretty cool thing to do. Now strangers treat us like we work for Phillip Morris." Jackson: Oof. To be compared to a tobacco company. For a tech company built on attracting the best and brightest, that’s a dagger to the heart. That’s a cost you can’t easily measure on a balance sheet. Olivia: Exactly. It’s a cost to your reputation, your culture, and your ability to innovate. So while BC Hydro was building a resilient ecosystem of allies, Microsoft was inadvertently poisoning its own well. They won the battle for market share, but they were losing the war for trust and talent. Jackson: So the cost isn't always immediate or obvious. It's like a slow rot from the inside. That makes sense. You can't force brilliant people to be passionate about working for a company they don't respect. Olivia: And that's the perfect bridge to the second big idea in the book. You're right, Microsoft's stock didn't collapse overnight. But Svendsen argues, with a surprising amount of data for the 90s, that these 'soft' costs eventually hit the bottom line. It's the difference between a sugar rush and long-term health.

Jackson: Okay, I’m intrigued. This is the big question for any business leader listening. Does being a ‘good’ company, one that collaborates and cares, actually pay off? Or is it just expensive PR? Olivia: It’s the million-dollar question. And even back in the late 90s, the evidence was starting to pile up. Svendsen cites this landmark study by Harvard researchers John Kotter and James Heskett. They looked at companies over an eleven-year period. Jackson: An eleven-year study. That’s some serious data. What did they find? Olivia: They compared two types of companies. The first group was purely shareholder-focused—their main goal was to maximize profit for investors, period. The second group had what they called a stakeholder perspective—they cared deeply about customers, employees, suppliers, and the community, in addition to shareholders. Jackson: And the results? Olivia: The stakeholder-focused companies showed four times the growth in sales and eight times the growth in employment compared to the shareholder-only companies. Jackson: Eight times the employment growth? That’s staggering. That’s not a minor difference. Olivia: It’s huge. And it points to this idea that a healthy, growing company is one that nurtures its entire ecosystem, not just its stock price. Jackson: But the skeptic in me has to ask: correlation isn't causation, right? Maybe those companies that treated stakeholders well were just better managed companies to begin with. Maybe being nice was a symptom of good management, not the cause of their success. Olivia: That is the perfect skeptical question, and Svendsen brings in another study that addresses that exact point. Researchers Sandra Waddock and Samuel Graves analyzed the Fortune 500 reputation surveys. They found that, yes, there was a strong link between good stakeholder relations and strong financial performance. But they also found something else. Jackson: What was it? Olivia: Companies that were rated highly by their peers for their quality of management were almost always the same companies that had strong relationships with their stakeholders. The perception among business leaders themselves was that treating people well was a sign of superior management. The two were intertwined. Jackson: Huh. So it's like a company's reputation is its immune system. You don't always notice it when it's working perfectly, but when it fails, everything seems to get sick at once. And other business leaders can spot a healthy immune system from a mile away. Olivia: That’s a perfect analogy. And this immune system is built on trust. Svendsen quotes someone who said, "There is a long-term cost to unethical behavior that tends to be neglected. The cost is to the trust of the people involved." Once that trust is gone, cooperation breaks down, innovation stalls, and everything becomes more difficult and expensive. Jackson: And this matters more and more as the world gets more connected. A bad reputation isn't a local problem anymore. Olivia: Absolutely. The book gives the example of European consumers boycotting Canadian forest products because of environmental concerns. That boycott had a massive financial impact and forced Canadian companies to change their policies. This was in the 90s, before Twitter! Today, that kind of consumer action can be organized in a matter of hours. Jackson: It’s true. A 1997 study she cites found 76 percent of consumers would switch to a brand associated with a good cause. I can only imagine that number is higher today. People want to buy from companies they feel good about. Olivia: They do. And Svendsen wraps up this idea with a look at the car company Saturn. They were famous for their no-haggle pricing and their community focus. They organized reunions for owners and built playgrounds. They weren't just selling cars; they were building a tribe. Jackson: They were selling a relationship. Olivia: Exactly. And the book ends this section with a killer quote that I think sums it all up. It says that when you and your competitor both offer a great product at a fair price, quality itself becomes a commodity. It's necessary, but it's no longer an advantage. Success will depend on relationship quality. Jackson: Wow. That feels like it could have been written yesterday, not over two decades ago. It’s about the intangibles. The trust, the connection, the feeling that a company shares your values. Olivia: That’s the core of it. The book argues that in a knowledge-based economy, these intangible assets—reputation, employee know-how, customer loyalty, supplier trust—are becoming more valuable than the physical assets, like factories and machines.

Jackson: So, when you put it all together, the book is making a pretty bold claim. It's saying that the most strategic, long-term, profitable way to run a business is to build genuine, collaborative relationships. Olivia: It is. What Svendsen was really saying back in 1998 is that a business isn't a machine in a vacuum; it's a living organism in an ecosystem. Your relationships with your employees, your customers, your community, even your critics—those are your roots. You can ignore them for a while, and the tree might still look tall and strong, but you're incredibly vulnerable to the first big storm. Jackson: And in today's world of social media, where a single bad story can go viral in an hour, that ecosystem is more fragile and more important than ever. That quote about Microsoft employees feeling like they worked for a tobacco company... that's a modern nightmare for any tech recruiter trying to hire top talent on LinkedIn. Olivia: It’s their worst nightmare. The power has shifted. A company’s reputation is no longer just what it broadcasts in its advertisements. It’s what its employees say on Glassdoor, what its customers post on TikTok, and what its community says at a town hall meeting. Jackson: It’s a web of relationships, and every strand matters. If one breaks, the whole web shakes. Olivia: So the takeaway isn't just 'be nice.' It's that this web of relationships is one of your most valuable, though often invisible, assets. The challenge Svendsen leaves us with is a powerful one: are you actively and strategically building that web, or are you just hoping it doesn't break? Jackson: That’s a great question for any leader or aspiring leader to reflect on. It makes you think about business in a fundamentally different way. We'd love to hear what our listeners think. Does this collaborative approach feel more possible today, with all our technology and social awareness, or does the pressure for short-term profits make it even harder? Find us on our socials and let us know. Olivia: We’d love to hear your take. It’s a conversation that’s more relevant now than when the book was first written. Jackson: This is Aibrary, signing off.