Multi Stakeholder Initiatives (MSI)

When several 'principalities' want or need to work together

March 4, 2020

The term ‘Multi Stakeholder Initiative’ (MSI) was coined during the 1992 UN conference in Rio, even though this form of project had existed long before then. What is meant here is the initiation of a transformation project that can only be successful by bundling the competencies and strengths of various independent interest groups.

As a rule, overarching goals are pursued in this process which cannot be decided or implemented by an organization or company on its own. In order to understand the high complexity of such an undertaking, a brief description of a classic transformation project is outlined here:

A classic project initiated by an organization to design and implement change must also take into account a wide range of interest groups (stakeholders). These can be different functions, such as sales, production, development, purchasing, IT, etc. or different countries and continents with their own perspectives. To do justice to this complexity, most project approaches rely on the participation of as many stakeholders as possible.

All relevant points of view are heard, and solutions are coordinated with the stakeholders in the best possible way. Naturally, conflicts arise when it comes to priorities, the allocation of budget and resources or the distribution of power and positions. However, the ultimate responsibility to make binding decisions lies with the highest level of the hierarchy, the boss.

Of course, it should be possible to make decisions that are supported by as many employees as possible, but in the escalation phase, there is only quick clarity when the boss decides. Maximum participation simply does not mean that decisions are made democratically. The more serious the change is, the more painful and challenging the implementation usually will be. With professional change management, however, transformations can lead to the desired results.

Multi Stakeholder Initiatives (MSI) can take very different forms and have varying degrees of complexity. A joint venture or a loose partnership between two companies is a comparatively simple constellation, global sustainability initiatives with partners from governments, companies and non-governmental organizations (NGOs) are a completely different proposition. Many programs that aim for a climate-neutral city or company will only be able to be implemented meaningfully as an MSI. 

The typical stakeholders are the city or municipality, energy suppliers, public transport service providers and larger companies. What all initiatives have in common is that there is no ultimate authority here that can both define the scope for a desired transformation and later make decisions that are binding for all those involved. A suitable legitimation with a governance model must first be created or developed.

As a rule, a stakeholder takes matters into his or her own hands and thus first makes the need for a change transparent for himself or herself and for others. Already during the first considerations it is usually clear that further independent stakeholders are needed for a successful initiative. The first hurdle is already the pre-selection and order of the additional stakeholders to be addressed. The fewer stakeholders there are, the faster and easier it is to reach agreement on the scope, steering model and project approach.

A sensitive ego can already be hurt if involved last. Conversely, the risk of failure is potentially higher if powerful adversaries appear later whose interests were obviously recognized and considered too late. Mistakes can also occur in the choice of project partners if it turns out too late that the common goals do not harmonize with the individual goals of a stakeholder.

The greatest difficulties usually arise during the development of the steering or governance model. What are the coordination and decision-making processes? Are there veto rights? And which committees, roles and responsibilities are installed and by whom? In this context, it is important to clarify beforehand how close or intense the collaboration between the stakeholders should be. The lowest intensity of collaboration is simply for stakeholders to be heard with their issues and perspectives. The maximum intensity of collaboration is shown with a concrete commitment to implementation. 

This also means clear contributions in the form of budget, infrastructure and resources. An accepted way of working must be established that reconciles the rights of all stakeholders to have a say and define their obligation to contribute – the classic give and take must be right. In the same way, the later benefit in terms of image or communication will also play a role. Who, for example, gives an interview and who cuts the red ribbon at the opening, etc.?

There will usually be panels or bodies such as a steering committee as the highest authority for decisions. It is essential that a very good basis of trust is established and maintained here. An advisory board can, for example, take on a non-executive expert role and serve as a ‘communication multiplier’. A project team is staffed with employees from all relevant stakeholders to carry out the project work. The challenge here is that the team members must act and communicate in the area of conflict between the organizational interests of their home organization and the overriding project interests. Possible conflicts arising from this ‘double loyalty’ must be resolved immediately.

For an MSI to be set up correctly from the outset, all economic, political and social interests must be made transparent. A difficult task is also to fill certain leadership roles from among the stakeholders. Who will chair the steering committee? Who will be the project manager? Whoever chooses the obvious solution here and selects the people from the stakeholder group with the largest budget will probably have to face a lot of resistance. Rotation principles, for example, have already proved more effective here. If possible, the entire MSI should be accompanied by neutral moderation and facilitation.

The classic form of a project approach normally intends for the project team to do the technical work and submit the results to the Steering Committee for decision making. The project manager is often the person who explains the results to the entire decision-making committee. If not all queries can be answered there, delays will occur.

Furthermore, this approach offers room for political maneuver and non-transparent decisions. Confidence among each other can be endangered. Best-in-class procedures, on the other hand, involve all relevant roles and persons, such as decision-makers, experts, project teams, at relevant moments in the decision-making process, and everyone participates in the finalization of the solutions.

There are thus no observers, but rather mixed teams working across all hierarchical levels. In a large workshop, all topics and results are discussed transparently and usually also decided directly. Necessary compromises must be explained in such a way that all non-participating persons of the respective stakeholder group (home organizations) can also understand the result.

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