Why Good Businesses Are Built on Good Stakeholders
And why every serious decision affects more people than you think
Written with assistance from ChatGPT
Most business decisions are made with one stakeholder in mind.
Sometimes it’s shareholders.
Sometimes customers.
Often, it’s whoever is shouting the loudest at the time.
The problem is that no business operates in isolation.
Every decision ripples across a wider group — and ignoring that doesn’t remove the impact, it just makes it unintended.
Strong businesses don’t optimise for one stakeholder.
They balance all of them — deliberately.
The Stakeholders Every Business Has (Whether It Likes It or Not)
At a minimum, most businesses have:
Shareholders/owners — capital, risk, long-term sustainability
Employees — capability, delivery, culture
Customers — demand, cash flow, reputation
Suppliers and partners — reliability, quality, resilience
Community — talent pool, goodwill, licence to operate
You don’t get to choose whether these stakeholders exist.
You only choose how consciously you manage them.
Theme One: Every Decision Affects More Than One Stakeholder
A decision that looks sensible from one angle often creates unintended consequences elsewhere.
Examples:
Cutting costs may protect short-term profit, but weaken service and morale
Aggressive pricing may win customers but destabilise suppliers
Rapid growth may excite shareholders while exhausting teams
Delayed investment may preserve cash while eroding long-term relevance
The mistake isn’t making trade-offs.
The mistake is pretending trade-offs don’t exist.
Good directors ask:
“Who does this help, who does it hurt — and is that acceptable?”
Balance Is a Leadership Skill, Not a Compromise
Balancing stakeholders doesn’t mean trying to keep everyone happy.
It means:
recognising competing interests
understanding second-order effects
making conscious, defensible choices
This is why leadership becomes harder as businesses grow.
Decisions stop being “right or wrong” and start becoming judgement calls.
Ignoring stakeholders doesn’t simplify decisions — it just postpones the consequences.
Theme Two: You Don’t Just Serve Stakeholders — You Select Them
Here’s the part many businesses overlook.
Your stakeholders shape you just as much as you shape them.
Customers: Bad Customers Destroy Good Businesses
Not all customers are equal.
Some:
value what you do
pay reliably
grow with you
Others:
constantly negotiate
drain time
distort priorities
Businesses that tolerate the wrong customers:
underprice
overdeliver
burnout teams
Good businesses don’t just win customers.
They choose them.
Employees: Capability and Attitude Compound
Employees aren’t just a cost line.
They determine:
execution quality
decision speed
culture under pressure
A small number of the wrong people can:
slow everything down
normalise mediocrity
block improvement
Strong businesses invest deliberately in:
capability
expectations
accountability
Because people's problems compound faster than financial ones.
Suppliers: You Are Only as Strong as Your Weakest Link
Suppliers are often treated as interchangeable.
They’re not.
Well-run suppliers:
reduce risk
improve consistency
absorb shocks
Poor suppliers create hidden fragility — often exposed at the worst possible time.
Good businesses don’t squeeze suppliers indiscriminately.
They build mutual reliability.
Community: Reputation Is a Long Game
Community isn’t just about charity or visibility.
It affects:
who wants to work for you
who refers business to you
how forgiving people are when things go wrong
Reputation is built slowly and tested suddenly.
Businesses that ignore their wider impact often discover too late that trust isn’t easily rebuilt.
Shareholders: Stewardship Beats Short-Term Optimisation
For owners and shareholders, the temptation is often short-term extraction.
But businesses built purely for extraction:
underinvest
lose talent
hollow out capability
The most resilient businesses treat ownership as stewardship:
balancing reward today with strength tomorrow
recognising that value is created before it’s extracted
This mindset benefits all stakeholders — including shareholders themselves.
A Useful Question for Directors
Before major decisions, ask:
“Which stakeholder am I prioritising here — and who carries the cost?”
If the answer isn’t clear, the risk probably isn’t either.
Closing
Healthy businesses are ecosystems.
They work best when:
decisions consider the whole system
stakeholders are chosen deliberately
trade-offs are made consciously
Ignoring stakeholders doesn’t make decisions easier.
It just makes outcomes harder to control.