What is a Stakeholder Analysis?
When it comes to any organizational project, all of the internal people and teams who the project will involve or affect are called its stakeholders. A stakeholder analysis is a process of identifying these people before the project begins; grouping them according to their levels of participation, interest, and influence in the project; and determining how best to involve and communicate each of these stakeholder groups throughout.
What’s the Purpose of a Stakeholder Analysis?
Project managers, program managers, and product managers alike may conduct a stakeholder analysis for several strategic reasons, including:
1. To enlist the help of key organizational players.
By approaching company influencers, executives, or valuable stakeholders for help early in your project, you can leverage the knowledge and wisdom of these key players to help guide the project to a successful outcome. Enlisting these players early on will also increase the chances you will earn their support for your project.
But before you can determine which influencers and other key stakeholders to approach, you’ll need to conduct a stakeholder analysis.
2. To gain early alignment among all stakeholders on goals and plans.
Because your stakeholder analysis will help you determine which people to involve in the project, you will then be able to bring these people together for a kickoff and early-stage meetings to communicate the project’s strategic objectives and plans.
Over a third of product managers in 2021, wish they had a clearer purpose and company strategy. A stakeholder analysis will help ensure everyone starts the project with a clear understanding of what success will look like and how they can contribute to that successful outcome.
3. To help address conflicts or issues early on.
Without a stakeholder analysis, you and your team could be well into a company project before you realize a key person in your organization—perhaps an executive—does not see the value of your initiative, or would prefer to redeploy some of your resources to other projects. Such a person might actively work to thwart or derail your project.
If you had conducted a stakeholder analysis before you began, you would have likely identified this executive as potentially important to your project’s success. You could have then presented your plan to the executive, listened to their objections, and worked to earn their approval to proceed.
Why should product managers conduct a stakeholder analysis?
Conducting a stakeholder analysis can be strategically valuable when kicking off any type of complex company undertaking. The more stakeholders you can identify early on and the more you can tailor your communication to win approval and support from various stakeholders, the more likely your project is to succeed.
But if you consider how much of an organization is either involved in or affected by the development of a product—engineering, design, procurement, sales, marketing, product, finance, accounting, customer success, etc.—you can understand why stakeholder analysis is an essential exercise for a product manager.
After all, the way you manage the many stakeholders across your company whose jobs your product could impact—starting with identifying them through a stakeholder analysis—could mean the difference between these stakeholders enthusiastically helping your product’s development or trying to block its progress.
How Do You Conduct a Stakeholder Analysis?
Stakeholder analysis exercises will vary by company, industry, and the teams conducting them (e.g., project management vs. product management). But there are useful steps common to most of these types of analyses. Here’s how many organizations conduct a stakeholder analysis.
Step 1: Determine who your stakeholders are.
Start by brainstorming with your team a list of all possible stakeholders for your project. Of course, youu can reduce this list later, but you don’t want to miss a potentially pivotal stakeholder at this early stage.
The list of potential stakeholders could include:
- Executive staff
- The heads of all affected business units
Step 2: Group and prioritize these stakeholders.
After you’ve completed your brainstorming session above and determined which people and teams will indeed be stakeholders, you should start categorizing them in terms of their influence, interest, and levels of participation in your project.
One example of how to do this is by using the power/interest grid.
As you can see, you will group stakeholders into four categories:
- High power, high interest: These are your most important stakeholders, and you should prioritize keeping them happy with your project’s progress.
- High power, low interest: Because of their influence in the company, you should work to keep these people satisfied. But because they haven’t shown a deep interest in your project, you could turn them off if you over-communicate with them.
- Low power, high interest: You’ll want to keep these people informed and check in with them regularly to make sure they are not experiencing problems on the project.
- Low power, low interest: Just keep these people informed periodically, but don’t overdo it.
Another approach, popularized in the book Making Strategy: Mapping Out Strategic Success, groups stakeholders into four different but similar categories:
- Players: These are the high-power, high-interest individuals with whom you will want to collaborate and keep fully engaged.
- Subjects: These are the low-power, high-interest stakeholders who can offer great insights and ideas for the project but whom you don’t need to always say yes to.
- Context-setters: These high-power, low-interest stakeholders (heads of departments, for example) can have a lot of influence over the project but don’t want to be involved in the details. Keep them up to date.
- Crowd: Finally, the low-power, low-interest stakeholders are called the crowd. These individuals will require some ongoing communication about the project’s progress but probably the least of all stakeholders.
Step 3: Figure out how to communicate with and win buy-in from each type of stakeholder.
Once you’ve built your list detailing which stakeholders fall into which category, it’s time to think strategically about how best to earn the ongoing support of each of these stakeholder types. First, you will want to ask yourself questions about your stakeholders such as:
- What motivates this stakeholder?
- What other priorities do they have, and how can we align our project with those priorities (or at least ensure the project won’t threaten them)?
- Will this stakeholder likely have a positive view of our project? If not, what can we do about it?
After you’ve built out these profiles of each stakeholder type, you’re ready to begin the next phase of the stakeholder management process—developing your stakeholder communication plan.
Takeaways of a Stakeholder Analysis
Company projects require participation, guidance, and approval from a wide range of people across the organization. If they don’t understand or agree with the project’s objectives or execution plan, any of these company stakeholders can become obstacles to the project’s success.
However, if you enlist the help and approval of these stakeholders early on, you can turn many of these individuals into avid supporters of your initiatives. This is why it is a smart strategy to conduct a stakeholder analysis before launching any complex company project, identifying all potential stakeholders and determining how best to earn their support.