What Is Stakeholder Management?
Stakeholder management is the process of identifying, prioritizing, and engaging stakeholders throughout the product development process. It’s an essential component of product management because stakeholders – the individuals or groups who can either impact the success and execution or impact the product – ultimately play a significant role in a product’s life.
Product managers (PMs) must first accurately identify who their stakeholders are to cultivate and nurture strong stakeholder relationships successfully. PMs also need to fully understand the unique points of view and needs of their stakeholders. Like any solid relationship, it requires ongoing strategic engagement and effort.
What Are the Different Types of Stakeholders?
There are many different types of internal and external stakeholders. Examples include employees, customers, shareholders, suppliers, communities, and governments. Upstream stakeholders contribute to or approve the activities required to design, build and bring a product to market. Those who buy or use a product and those who support, sell, and market a product are considered downstream stakeholders.
Regardless of type, stakeholders generally have these attributes in common:
- Influence: Stakeholders have enough power and strategic importance to the business that their ideas and opinions can impact the ability to advance the product strategy, create a roadmap, and execute it.
- Connection: Stakeholders are concerned about the product because they are impacted by product decisions—from investors concerned about financial performance, market share, and valuation to customers worried about how the product will continue to support their needs.
- Power: Stakeholders have something product managers need (e.g., information, approval, budget, cooperation, etc.).
- Irreplaceability: Each stakeholder or stakeholder role (e.g., CFO) brings a unique value to the project.
In addition, some stakeholders are self-evident, like a CFO who must sign off on a pricing plan or critical customers who will ultimately use the product to get built. But not all stakeholders are as apparent.
How Do You Identify Your Product’s Stakeholders?
The first step in stakeholder management is to conduct a stakeholder analysis, which helps you identify the right individuals or groups before your project begins. There are three primary components to a stakeholder analysis:
Step 1: Identify Your Stakeholders
Who will be affected by your project the most? Brainstorm a list of potential stakeholders with the product team.
Step 2: Prioritize Your Stakeholders
Assess stakeholder interest, influence, and level of participation in the project. A helpful way to visualize this is to create a Power Interest Grid. (See below.) People in your grid’s High Power/High-Interest quadrant are your key stakeholders and should receive full engagement throughout the process.
Step 3: Understand Your Stakeholders
You’ll need to determine the best way to involve and communicate with each of your stakeholders to earn their buy-in and support. One way to do this is to create a stakeholder profile that asks three questions: What motivates them? How does this project align with their priorities? Do they have a negative view of the project? Once you have a clear idea of who your stakeholders are and what each one needs, the next step is to develop a communication strategy to guide engagement throughout the process.
Stakeholders each have unique points of view, which can sometimes be at odds. Moreover, they favor layoffs to reduce organizational costs.
It can be challenging to please everyone all the time. That’s why careful prioritization is crucial for decision-making, along with a strong communication strategy that considers the best way to engage with each stakeholder based on their profile and priority (e.g., face-to-face meetings, weekly email updates, etc.).
Why Is Stakeholder Management Important to Product Management?
Identifying the right people and groups, developing a keen understanding of stakeholders, and managing engagement and communication with them are critical for a product’s overall success.
In addition, key stakeholders have a great deal of influence over resources, budget, and other necessary components, which you need to bring a product to market. PMs should approach stakeholder management strategically to get key stakeholders on board.
When executed effectively, stakeholder management keeps all stakeholders on the same page and helps manage expectations, easing minds and reducing the urge to micromanage. It builds trust, strengthens relationships between individuals and teams, and aligns a product idea with strategic objectives. Effective management can also improve collaboration and expertise sharing, as well as critical information sharing across teams.
Ultimately, stakeholder management is about bringing the right people together to leverage their influence, authority, and expertise to successfully bring a product to market.