Why You Might Be Getting Stakeholder Engagement Wrong—And What To Do Instead

Entrepreneurial ecosystem building, almost by definition, involves stakeholders.

But many community leaders, ecosystem builders, and leaders in the local business community make a critical mistake in their approach to getting stakeholders on board and working together.

To understand this mistake—and what ecosystem builders should do instead—we first need to understand stakeholders themselves.

Understanding Stakeholders

In the context of an entrepreneurial ecosystem, a stakeholder is any individual or institution that has a vested interest in the ecosystem’s success.

This definition is purposefully broad, which means it includes a lot of people.

Entrepreneurs themselves are the most important stakeholders, since entrepreneurial ecosystems exist first and foremost for them.

But stakeholders also include government actors, banks, investors, educational institutions, community organizations, larger corporations, corporate services providers, entrepreneur support organizations, and the local residents who patron new businesses.

To build an ecosystem, you have to engage each of these stakeholders with the ultimate goal of ensuring success for the entrepreneur.

The problem is that many ecosystem builders misunderstand their stakeholders. 

This is often caused by viewing other stakeholders as competition; we feel like we need to fight other stakeholders over finite pools of funding or the entrepreneurs we can claim to have supported.

This scarcity mindset is toxic to the ecosystem, and entrepreneurs in the community will suffer as long as it persists. So what’s the remedy?

The Common Mistake: Collaboration vs. Alignment

Many ecosystem builders rightly see that a competitive mindset is unhelpful, so they push hard for collaboration between stakeholders instead.

But when a leader makes collaboration their primary goal, it can quickly lead to burnout and frustration if that desire is not met by other stakeholders.

We often hear community leaders say things like “If only our stakeholders were willing to collaborate,” or “No one is collaborative here, that’s why nothing is working.”

When it comes to stakeholder engagement, our experience is that the language of collaboration hurts more than it helps. That’s because collaboration means you’re doing something together, where you both contribute and benefit from shared effort on an initiative.

But true collaboration within an entrepreneurial ecosystem takes a ton of effort, endless coordination and meetings, and more time than either party usually has.

What you really want between stakeholders is alignment.

Alignment means that everyone agrees on a common vision and goal, and understands the unique part they play in reaching that goal. You work on the piece of the puzzle that you’re responsible for—you’re not doing everything together.

Achieving Alignment

If stakeholder alignment is the goal—not collaboration—how do you actually achieve it?

You have to focus on the shared vision. If everyone is on the same page about what success looks like for the ecosystem, it will be much easier for each stakeholder to play their own part.

This doesn’t mean getting stakeholders to buy into your vision. This is not about galvanizing stakeholders around your leadership. Rather, you need to invite everyone into a conversation to craft the vision together.

You might naturally ask, “How do I get all my stakeholders to agree on a vision?”

The good news on this front is that most stakeholders actually want similar things for the community; they might express those dreams in different words, but most people want to see some combination of:

• A booming local economy
• Financial opportunity for all
• Thriving businesses
• A culture of mutual support and giving back
• Investment in youth so that our kids stick around
• More people to move here, and for people who have left to return

Once you come to an agreement on a vision, that’s when you figure out who plays which part.

If you only remember one thing from this article…

Because the ecosystem exists for the entrepreneur, the success of your stakeholder alignment approach should be measured by how easy it is for the entrepreneur to get what they need.

Think of your ecosystem like a jigsaw puzzle, where each piece fits snugly with the others, sealing any gaping holes or cracks. 

Where are the cracks that entrepreneurs still fall through in your local ecosystem? Some common ones that we’ve seen include:

• A lack of a clear starting point for people are interested in starting businesses but don’t know how
• An absence of pathways to capital and funding
• A lack of resources for existing businesses in an ecosystem built for idea-stage

Once you identify the cracks people are falling through, ask: Which stakeholders make the most sense to assume responsibility for those gaps?

When everyone feels like they own their responsibility, cohesion in the ecosystem happens much more quickly.