- Empowerment and Stakeholder Management
By Holden Karnofsky 8 min read

Empowerment and Stakeholder Management

Empowerment and Stakeholder Management

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I've been writing recently about sweeping, very-long-run trends in whether things are going well or poorly in the world.1 One candidate trend I haven't talked about yet: what some see as a trend toward vetocracy, kludgeocracy, bureaucracy and/or red tape - things getting harder to build, more costly, etc.

I basically buy the idea that we are seeing - and should broadly expect to continue seeing - trends in this direction. I think some of this is specific to particular parts of the world (e.g., the USA), but I broadly expect there to be overall trends in this direction over time, pretty much across the board.

That's because I think there is a deep connection between:

  • Empowerment - increased options and capabilities for people (including e.g. technology), which I consider one of the most robust historical trends.
  • Stakeholder management, or the challenge of carrying out activities that lots of people want input into. I think stakeholder management can explain a lot of what we see in terms of rising bureaucracy, red tape, etc.
  • To be clear, I think stakeholder management can be a good thing too, and that empowerment is broadly "worth it" despite the stakeholder management challenges.

Here, I'm going to lay out the conceptual basics of what I mean. Future posts will likely refer back to this one, when trying to make sense of ways in which the world may be getting better or worse.

What is stakeholder management?

The term "stakeholder" comes up a fair amount in corporate and nonprofit settings. I'd define it as someone who cares about a decision, wants to weigh in on it, and might react badly if they aren't satisfied by it.

For example, if a company changes its compensation policy, affected employees are stakeholders for the decision; if it changes its product, both employees and customers are.

It's common to do "stakeholder management" in advance of making some change: contacting some key stakeholders, hearing from them how they'd feel about the change, and looking for compromises on the aspects they feel strongest about in order to keep as many people as possible happy and avoid blowback. The more stakeholders there are, the more challenging this can be, and the more it can slow projects down and make it hard to make changes.

(I think the best public examples of what "stakeholder management" looks like tend to come from stories about how legislation gets passed, such as in the movie Lincoln and the book Showdown at Gucci Gulch. I also liked this article; sections 2, 5, 8 and 9 are particularly germane.)

When we make personal decisions like where to work, whom to date, etc., we don't tend to have to satisfy a lot of stakeholders - if anything, modern individualism means we're more "on our own" here than we used to be. But when it comes to companies setting policies, legislators making laws, diplomats reaching agreements, schools designing syllabi, governments trying to build subway stations, and more, stakeholder management can be a huge part of where the effort goes. The more active, opinionated stakeholders there are, the more conflicting desires there are to satisfy, and the harder it is to move things forward quickly, decisively or cheaply.

This is often a good thing! (And in nonprofit circles, it's often assumed to be.2) I'd guess most decisions are much better when they have input from interested and affected parties, vs. when they're just made unilaterally. I think the right amount of stakeholder participation is more than zero - but I think there's also an amount that just makes it very hard to accomplish anything. For a vivid example, see this article on two San Francisco residents who have been solely responsible for blocking large numbers of city projects:

Two San Franciscans seem to have made it their pandemic hobby to file appeals for just about every emergency action taken by the San Francisco Municipal Transportation Agency in the past six months ... [E]ach of the five appeals will cost about 100 hours of work by ... staff ... each hearing at the Board of Supervisors, which serves as the judge and jury in these cases, costs a combined $10,000 in city officials’ and attorneys’ time. In fact, Tumlin said each appeal is taking more time and money than it took to create the emergency programs in the first place."

I think the modern world sees a lot of instances of stakeholder strength growing to the point where making any kind of change to the status quo becomes prohibitively difficult. Some central examples in my mind:

  • NIMBYism: any attempt to build a subway station, power plant, or just more housing is met with complaints and blocking maneuvers (as above) by the people directly affected.
  • A dynamic sometimes referred to as "why we can't have nice things": there are increasing numbers of people who might get injured or hurt (or just upset) by some product or service, possibly suing over it, and so providing the product or service requires more and more measures to pre-empt possible ways in which it could harm someone. Some nice examples are in this post (see comments from John Schilling, bkearns123, CatCube).

I see this phenomenon - a growing "stakeholder management" burden - as having a likely deep connection to historical trends toward greater empowerment. As people become wealthier, more educated, and more informed, they become louder and more opinionated, active stakeholders.

To reiterate: I think this is a good thing overall. But it means there are increasing numbers of hurdles to building new things and changing the status quo in domains that invite a lot of stakeholder participation.

I like the "stakeholder" lens better than lenses based around "over-regulation" or "bureaucracy" or "red tape," because it points at the underlying cause rather than blaming some particular government or institution.

  • It seems to me that across the world's rich countries, we're seeing consistent trends toward more difficult and costly stakeholder management. For example, I believe it's getting harder in ~all rich, urban areas to build new subway stations.
  • I think this dynamic affects private companies, governments and more. While "red tape" appears in institutions, I think the underlying cause of the "red tape" often comes from the behavior of private individuals. And I don't think the world becoming more "libertarian" (at least in the narrow sense of seeking to shrink government) would necessarily solve much (at least, I wouldn't expect it to lead to more subway stations!)

Legacy systems and kludgeocracy

Even holding the amount of stakeholders constant, the burden of stakeholder management - and the difficulty of changing the status quo - could grow over time, via a couple of common dynamics.

The first is legacy systems: things that aren't how we would do them today, but that lots of people have built their lifestyles/routines/businesses around, such that change is painful. Simple examples:

  • A lot of government and other bureaucratic processes still give prominent roles to written paperwork and fax machines; switching over to electronic records tends to be a huge project, even though it would've been easy to start out that way if the technology had been available earlier.
  • When the World Wide Web was new, there was an opportunity to define the basic protocols and languages that power it - such as HTML - with a lot of freedom. Today, if there were some obvious improvement to how HTML should work, implementing the improvement could cause a lot of websites built under the old system to break, and there's a tremendous amount of effort needed even for relatively modest upgrades. I think most people would agree that the current way HTML, CSS and JavaScript work together to power most websites is a mess, and not the way we'd set things up if we were starting over - but also that fundamental change is unlikely.

The second is kludgeocracy: when any new initiative or change (to policies, neighborhoods, etc.) has to navigate legacy systems and compromises with opponents, a system can get more and more complex over time. This can make it more and more difficult to understand what's going on, more and more difficult to understand the full effects of a change, and thus even harder to make changes.

The term "kludgeocracy" comes from this essay by Steven Teles, which is focused on the US but which I'd expect to be somewhat applicable across the board. The abstract states:

The dictionary tells us that a kludge is “an ill-assorted collection of parts assembled to fulfill a particular purpose…a clumsy but temporarily effective solution to a particular fault or problem" ... “Clumsy but temporarily effective” also describes much of American public policy. For any particular problem we have arrived at the most gerry-rigged, opaque and complicated response.


In modern, politically stable societies with high levels of empowerment, there's reason to expect that lots of things could get gradually "harder to do" - and in particular, systems could get harder to change - over time. I think this explains many observations about vetocracy, kludgeocracy, bureaucracy and red tape, etc.

I think the degree of these problems varies from place to place and domain to domain, and depends on lots of details of how systems are set up and how stakeholder input works (e.g., what can people sue for or formally block, as opposed to just complaining?) I think there's probably plenty of room to significantly mitigate these challenges via well-designed processes for considering - but not being totally beholden to - stakeholder input.

But overall, we should expect this sort of thing to be a challenge that grows with modernity. I think it's "worth it" and consider empowerment overall to be a good thing, but recognize there's room for debate there.

It's also possible that these sorts of problems are pretty temporary in the scheme of things. As these problems become more and more noticeable, there may be increasing pressure to change governance practices and norms to make changes to the status quo easier. Or perhaps some other change will come along that makes it all look like small potatoes.

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  1. Has Life Gotten Better? discusses whether quality of life has improved for the average person over the course of human history. Where's Today's Beethoven? discusses whether our society has become worse at scientific and artistic innovation over the past few centuries. 

  2. Here's an example I grabbed by taking the first Google result for "nonprofit stakeholders."