The Changing Rationale: Why Stakeholder Management is Evolving

During Tractivity’s 2025 Customer Day, I gave a presentation on Next-generation stakeholder management - how a changing world demands so much more.

This is the first of three articles exploring the themes raised in that session.

Why stakeholder management has evolved

The idea of stakeholder management isn’t new; organisations have been experimenting with different ways to undertake it for years.

By and large, there have been two distinct approaches:

• Those who have recognised that it is a risky world and many things can go wrong for organisations of all kinds.
  Part of a sensible allocation of resources involves such bodies investing in stakeholder management – primarily as a way of building and sustaining strategic relationships with individuals and organisations that may have an impact on them. It may be unfair to compare it to an insurance policy, but this is essentially defensive stakeholder management – an investment ‘just in case’ you need friends.
  
  
• Others have taken a clear decision to view stakeholders as a pivotal group of interfaces, relations with whom can have a beneficial impact upon your organisation. 
  Indeed, it might go further and include scenarios where cultivating and leveraging stakeholder relations can make a material difference to achieving your objectives. This is positive stakeholder management, though at the extreme it can border on aggressive stakeholder management – when organisations seek decisive change in their working environment.

However, it is all changing.

The shift from defensive to strategic stakeholder engagement

Today, there is more focus on Return on Investment. Organisations can only justify allocating scarce resources if they can identify measurable benefits from the financial outlay, and with far more risks to public as well as private institutions, having a relatively passive ‘watching brief’ may not yield sufficient return on that investment

The shift from defensive to positive stakeholder management can be illustrated in several ways:

• It looks as if the penny has dropped for many Whitehall and Central Government departments. 
  It was a painful learning curve for politicians and civil servants, but they have now realised that passing laws in Parliament or setting up new administrative initiatives or schemes rarely work unless relevant stakeholders buy into the plan. 
  Twelve years ago, in 2013, two Professors of Politics, Ivor Crewe and the late Anthony King, published “The Blunders of our Government”, since acknowledged as the definitive text of how Ministers of all parties frequently failed to make things work. 
  By analysing large numbers of projects from the original botched proposals for identity cards, through to the abandoned NHS IT system and the infamous Poll tax, they could pinpoint the flaws that led to failure.
  In almost all cases, they identified ‘operational disconnect’ as a key issue, along with ‘a deficit of deliberation’. Stripped of academic spin, they meant that policy-makers were too far removed from the detailed implementation issues, and that insufficient effort was made to have an informed dialogue with those who understood the complexities.
  Slowly but surely, the civil service has embraced the language of stakeholder management and created processes whereby stakeholder input is considered before policies are implemented.
  For example, if HMRC wants to estimate the likely impact of a change in taxation, it will try to ‘model’ prospective outcomes. But these models are only as good as the assumptions that have been made, and the only way to design and test these is by identifying the relevant stakeholders and probing their attitudes and likely reactions and behaviours.
  The same applies if you are OfGEM and trying to guess the impact of changes in energy subsidy rates. Or if the Department of Education is estimating the impact of curriculum changes on the workloads of teachers.
  
  

• For anyone engaged in planning future projects, whether in the public or private sectors, the disciplines of modern project management have inexorably moved stakeholder relations up to the top of the agenda. 
  The bigger the projects, and the wider their economic and societal impact, the greater is the demand – and expectation - for proactive stakeholder management.
  In simple terms, whereas major project implementers would, thirty years ago, have deployed a community liaison officer and maybe a facility for handling media enquiries or complaints, these would essentially have been low-status defensive investments – maybe even a grudge purchase.
  In 2025, everyone from the Chief Executive downwards knows how important it is to be responsive to affected communities, their political representatives and to the various watchdogs that will scrutinise their behaviours. High-profile projects like HS2, Nuclear Power Stations, Electricity transmission projects and many others illustrate the perils of making mistakes in managing key stakeholders.
  As a nation, we have sought to build processes for consultation and engagement in the period leading up to major decisions, but have paid insufficient attention to the perils of poor IMPLEMENTATION.
  Smart organisations have realised that identifying and building positive relations with those who affect or are affected by the project is becoming essential. Failure to do so leads to delays and disruption. Both cost enormous amounts.
  
  

• Public bodies or private Companies affected by public policy or external market shocks have also discovered the need to be agile and responsive to change at pace.
  There has never been a more volatile time when assumptions change rapidly. Weep for anyone now having to prepare the traditional five-year plan for organisations used to a more stable political or commercial environment. It becomes virtually impossible. 
  With international tariff regimes fluctuating every month, and spatial planning policies also subject to abrupt changes, it’s a challenging time for business and municipal leaders anywhere in the UK.
  The silver lining is that for Combined Authorities in England, now obliged to devise serious Growth plans for their local areas, it has forced them to develop much closer relations with other service providers and enabling institutions.
  There are lots of them – Water Companies, Energy providers, Road/Rail transport undertakings, Universities, House Builders, IT network providers, and the rest.
  Where once a small department could maintain contact details of relevant stakeholders and send them communications every couple of months, collaboration (and coordination of such collaborations) has become a key performance indicator (KPI) for the entire Authority. Mayors like Andy Burnham or Ben Houchen know that the way they build and manage local stakeholder relations is crucial for their success.

A turning point for stakeholder practice

All these examples show a decisive trend towards a more professional and mission-critical approach to stakeholder management. Progress may still be patchy, and I have no doubt that many organisations still take a fundamentally defensive stance.

Using stakeholder relations positively has enormous benefits. It builds and sustains influence that can help organisational resilience and shape rather than just respond to policy changes and external market shocks. This adds another dimension to corporate leadership and enhances organisational capability in an increasingly important area.

This is not the only challenge that is emerging, and the next articles will explore the evolution of stakeholder communications and the need to move the focus from FORM to FUNCTION.

Key takeaways

• Stakeholder management has evolved from a defensive safeguard to a strategic driver of value.
• Organisations are focusing on measurable returns and proactive engagement.
• Government, infrastructure, and local authorities are leading the shift.
• Positive stakeholder management builds resilience, influence, and long-term success.
• The future belongs to those who see stakeholder relations as mission-critical, not optional.