If you’re a big BBQ fan, maybe the sound of the word “stakeholders” gets you thinking about a juicy, dry-rub ribeye. Well, sorry to disappoint you, but we won’t be talking about an s-t-e-a-k today. Instead, we’ll discuss the role of stakeholders (people, not cuts of beef!) in product management and look at how to analyze their potential impact on your project.
Not THAT stakeholder
But first things first, let’s clear up the terms and define who the stakeholders in the project (or product) management are.
What is stakeholder and stakeholder management?
A stakeholder in project/product management is basically anyone who is affected by or who can affect the project/product. Some stakeholders are actively involved in the project, while others just monitor the progress or are only interested in the outcome.
In other words, we can say that stakeholders are anyone working on the project, controlling it, approving it, paying for it, assisting it, or using its results.
We can differentiate various stakeholder categories depending on diverse criteria, for example:
- internal (belonging to the same organization as a marketing team or the C-suite) or external (outside of the organization like third-party data providers or consultants);
- those who can affect product development (e.g., investors) or those who are affected by the product (e.g., end customers);
- individuals (e.g., a product manager), companies (e.g., competitors, governments), or groups (e.g., team members, industry influencers); and so on.
Some external and internal stakeholders types
Since stakeholders are of direct relevance to how your project goes or how your product is developed, it’s obvious that to achieve your objectives, you have to somehow build and maintain effective relationships with them. That’s called stakeholder management.
In other words, stakeholder management is the process of identifying, analyzing, and engaging with various groups and individuals who have an interest in the project. These activities are mostly conducted by a product or project manager – or a business analyst.
Handling relationships with stakeholders is one of the key aspects of product management and is equally important for projects and organizations of any size. Why? For example, you can have the best product idea ever, but if you don’t get buy-in from your sponsors (say, you didn’t communicate potential benefits well enough), you might simply not have sufficient resources to bring it to life!
Or, if you don’t align the project objectives across different stakeholder groups, you risk having all sorts of conflicts during product development which can slow it down significantly – just because of a lack of communication or an improper approach.
So stakeholder management is an essential, ongoing process during the entire product lifecycle. It ensures that all relevant input and perspectives are incorporated into the product requirements document, aligning the project's vision with stakeholders' needs and expectations to create a more successful product. And one of its main components is stakeholder analysis – which finally brings us to our main topic of discussion.
What is stakeholder analysis and why is it important?
Stakeholder analysis in project/product management is the process of identifying stakeholders, scrutinizing them, categorizing them, and evaluating their needs and requirements. Some sources don’t include the identification part and describe it as a separate, preparatory stage, but for the sake of getting a complete picture, we’ll discuss it as well.
The primary goals of stakeholder analysis are
- to identify and align all stakeholders,
- to define the needs and expectations of each stakeholder,
- to assess the impact of various stakeholders on your project, and
- to categorize stakeholders into groups for further management activities.
As Dmytro Hurkovskyi, a business analyst at AltexSoft, shares, “Stakeholder analysis is very rarely formalized. All project managers and business analysts have to interact with stakeholders and manage them, but they seldom do the full-fledged analysis – unless issues arise.”
We recommend performing a stakeholder analysis before or during the early stages of your project as it will give you an understanding of further interaction strategies. Moreover, it’s not the once-and-for-all thing. Consider conducting stakeholder analysis at each new stage of your project or at sensible intervals to see if anything changed and adjust your stakeholder management strategies if needed.
Analyzing stakeholders will help you understand how to
- communicate with various stakeholder groups depending on their position, interests, and impact level;
- engage stakeholders and gain their support;
- address stakeholder-related conflicts/issues that can hinder or otherwise harm the project; and last but not least,
- balance the interests of different stakeholders – since, as you might know from your professional experience, they often contradict each other.
Conducting a comprehensive stakeholder analysis will allow you to know your stakeholders in and out, learn their expectations, predict their reactions, and find optimal ways to approach them to gain the best results for your project.
On top of that, Dmytro Hurkovskyi confesses, “We often lack efficient communication from our stakeholders’ side. We sometimes wish they also performed a stakeholder analysis to optimize our interactions.”
So stakeholder analysis can prove to be a helpful practice for any company. Now that we see its benefits, let’s talk about how to perform it.
How to do a stakeholder analysis?
A stakeholder analysis includes several key stages. As we mentioned earlier, first you have to find out who your stakeholders are. So the initial stage is identification.
Identify: Make a list of all stakeholders
To identify stakeholders, look around for anyone you interact with on the project, who might have an interest in the outcome, or who can influence what you do in any possible way. Some ideas for coming up with a complete list are
- brainstorming with your team,
- asking other teams/departments who their stakeholders are,
- checking historical data from previous projects, and
- exploring the market and competing companies for similar projects.
As you do all that, you might end up with a lot of irrelevant listings but worry not. Just cross out all the unnecessary points when you have the final list of stakeholders. It’s still probably going to be long and frightening but further categorization will help, believe us.
Assess: Collect information
Once your list is done, collect as much information on your stakeholders as possible. Now, we don’t mean interrogating your investors or thousands of potential customers about their childhood fears or favorite names for a pet. We also don’t suggest you stalk them or hire a private investigator to learn their secrets.
She probably knows a thing or two about stakeholder analysis. Source: Don’t Get Serious
Just try to find out anything about them that can relate to your project such as their values, financial state, business interests, political position, and so on. These details will help you better understand their motivations and concerns and accurately categorize them later on.
To collect this information, you can use different means depending on the type of stakeholders. For example, you can talk personally with stakeholders from in company, send an email with a questionnaire to your sponsors or investors, or conduct interviews with your target audience to understand your customers better. As you do that, consider sentiment analysis to better identify emotions in the replies.
Just go ahead and open that stakeholder chocolate box. Source: Twitter
Here are some questions you might want to ask.
- What are your expectations for this project?
- What does project success look like to you?
- How does the project's success benefit you?
- What is your desired/ideal level of engagement in the project?
- What project information would you like to receive?
- Do you have any concerns about the project?
- Are there any stakeholders that you believe are in conflict with your interests?
Of course, the exact question list will depend on the stakeholder. Ultimately, the goal is to find out how much power each stakeholder has, what their interests are, and how exactly they can impact your project. You have to be careful to register their perspective, not yours, as you fill in the information.
You might then want to create a table where you consolidate all the collected information.
A sample stakeholder analysis table
Categorize: Create a stakeholder analysis matrix or use the Salience model
Now that you’ve acquired so much knowledge about your stakeholders, you have to, well, put them into boxes (not literally, of course) – or categorize them. This process is called stakeholder mapping.
The idea is to allocate the stakeholders from your list into relevant categories according to different criteria. We’ll discuss the main approaches.
Power-interest matrix. The most popular and well-known matrix or grid allows you to distribute stakeholders depending on their level of interest and influence.
Power-interest matrix
As you can see, you’ll have 4 main stakeholder groups (the exact distribution greatly depends on the project, so we can only provide an example).
- High influence and high interest – this category will probably include your investors or sponsors, your key partners, and so on. Make sure you actively collaborate with them on a regular basis.
- High influence and low interest – you might want to place the regulatory entities and board members in this quadrant. As this group is capable of impacting your project, it’s important to keep them informed and satisfied with the progress. However, be careful not to turn them off by over-communicating (remember the low interest part which means they don’t need too many details).
- Low influence and high interest – these might be, for example, your team members. They might have great ideas for the project but keep in mind that they aren’t the ones who have a significant impact. Establish a regular communication schedule to keep them in the loop and take advantage of their passion for the project and overall commitment to the company's success.
- Low influence and low interest – these are secondary stakeholders like end customers. You don’t have to communicate with them closely but be sure to check on them once in a while to see if their interests or attitudes change. Plus, remember they can become a significant force if they act together (hello, social media!).
Stakeholder Knowledge Base Chart. A less popular approach with a similar grid, it evaluates the levels of awareness of the project and attitude towards it. It can help you identify those who are uninformed (or misinformed) and educate them to gain more support. You’ll also define those who understand the project well but still oppose it.
Stakeholder Knowledge Base Chart
The Salience model. This categorization approach is based on three main dimensions: legitimacy, power, and urgency. It uses a Venn diagram that illustrates the 8 types of stakeholders.
The Salience model
- Discretionary stakeholders – those who have legitimate claims but little urgency or power;
- Dormant stakeholders – those who have power but no legitimacy or urgency. They rarely become heavily involved but make sure to keep them informed;
- Demanding stakeholders – those with little power or legitimacy but wanting everything to be done immediately. They often require the most attention and can also influence other stakeholders;
- Dominant stakeholders – they have both formal power and legitimacy, but little urgency so they tend to have certain expectations that must be met;
- Dangerous stakeholders – those who have power and urgency but are not really pertinent to the project. They can cause issues so they have to be carefully managed;
- Dependent stakeholders – they have urgent and legitimate stakes in the project but little power, so keep an eye on them as they can exploit other groups to gain control;
- Definitive stakeholders – they have it all: power, legitimacy, and urgency which makes them the most important group to be managed closely; and
- Non-stakeholders.
This approach is more complicated but can give you greater clarity on how to build further relationships.
The RACI matrix. RACI is an acronym that stands for responsible, accountable, consulted, and informed. This is more of a responsibility assignment technique but is sometimes used for stakeholder analysis as well.
The RACI matrix helps clarify the roles and responsibilities of various team members and other stakeholders too. So what you do is basically make a table with all your main stakeholders and the key project tasks or processes and then distribute the R,A,C, and I designations. Here’s a nice example.
RACI gives clarity and enhances coordination but can be a bit time-consuming. Source: Quora
Again, as we said, change is pretty much inevitable (except from a vending machine) so you might need to reassess your stakeholders periodically.
Prioritize: Make an engagement plan
The last step of your stakeholder analysis involves developing a plan for further interactions. All stakeholders are different, require a different amount of attention, and prefer different communication channels – and you just can’t be everywhere at the same time to make everyone happy.
So you have to prioritize your stakeholders and define how and to what extent you’ll interact with each group. Obviously, your communication strategy should be based on regular interactions with the most important stakeholders. For example, you have to inform your investors quarterly, report to C-suite monthly, discuss the project with the team weekly, and so on.
A sample communication plan. Source: Tractivity
You might also want to delegate some of the interactions to different team members (for example, have the marketing specialist establish communications with end customers or let the business analyst collect product requirements from the client).
Besides, think about the motivations and priorities of each stakeholder group to find the best ways to approach them and gain support. Also, consider any sensitive topics or issues that you’ll want to avoid or approach cautiously.
The plan you develop should schedule interactions with each type of stakeholders and include the communication channel, the message you want to convey, and the goal you want to achieve.
After that comes the actual stakeholder management juggling: balancing between confronting parties, considering all interests, keeping everyone informed and happy, and all that fun stuff. But that’s a topic for another big post.
Being a project manager ain’t easy. Source: Medium
Well, stakeholder analysis is tough, no doubt. Let us try to make it a bit easier for you.
Stakeholder analysis templates and checklist
Documenting the results of your stakeholder analysis will help you stay on track with your findings. But working on those stakeholder analysis deliverables can take ages. Templates allow you to save time and avoid reinventing the wheel. So here are some handy links you can check out and take advantage of.
- TemplateLAB is a great source of diverse stakeholder analysis templates.
- Smartsheet is another collection of downloadable stakeholder analysis templates in various formats.
- ProjectManager designed a stakeholder analysis template, stakeholder map template, and communication plan template.
- Tools4dev provides a well-built stakeholder analysis matrix template.
- Tractivity offers a consolidated version of stakeholder analysis table.
Another useful thing is the stakeholder analysis checklist by ProductPlan you can download for free and use as a roadmap in your uphill battle.
Stakeholder analysis tools
You can definitely perform your stakeholder analysis with pen and paper or play around with those colorful sticky notes to make the process seem more cheerful. You can go with good old Excel spreadsheets or templates we suggested above. You can also configure a visual collaboration platform like Miro for this purpose or store all records in your CRM. The choice is wide – and up to you.
But you should know that today there are a number of specialized software products designed to facilitate and automate your stakeholder management activities – including stakeholder analysis. Some of the providers of such focused tools are
- Tractivity (comes with an easy-to-use mapping tool, a survey builder, and a robust engagement platform);
- Simply Stakeholders (includes task management and an AI-driven sentiment analysis feature);
- Syrenis (offers robust planning and engagement support); and
- Borealis (has neat reporting capabilities).
These solutions can help you keep all the stakeholder-related data in one system, conduct sentiment analysis, engage your team members, and view the dynamics throughout the project lifecycle. You’ll also be able to create all the essential stakeholder management deliverables, record your interactions, and build reports for the managers.
Common stakeholder analysis pitfalls
Summing up, we want to highlight a few common stakeholder analysis pitfalls and ways to avoid them.
Being late with stakeholders analysis. As we said, it’s better to start analyzing your stakeholders as early as possible so that you can build the optimal communication strategy from the very beginning of the project (think of somewhere around the product discovery stage). Besides, stakeholders can add an idea or two to your requirements list that has to be formed before you start the actual product development.
Not including important stakeholders in the list. You want to keep all your most important and impactful stakeholders informed and satisfied so do thorough research as you form the list. Brainstorming sessions are a common way to approach this task.
Misinterpreting stakeholder needs or motivations. The success of your entire stakeholder analysis depends on your ability to put yourself in someone else’s shoes. We can’t know exactly what other people think, but do your best to see things from their perspective and understand their real attitude toward your project. Crafting accurate interview questions is helpful too, just remember that answers can sometimes be insincere, so you still have to reconsider them yourself.
Conducting stakeholder analysis only once. As we’ve mentioned, nothing is static, so a good practice is reassessing your stakeholders once in a while, especially if your project is a long-lasting one.
Stakeholders are a crucial factor in your project's success so you shouldn’t underestimate the importance of engaging them and nurturing your relationships. With proper analysis done on time, you can build an efficient interaction strategy and turn your stakeholders into the most avid supporters.