When developing a product, it is necessary to have a close look at all stakeholders. If you don’t, either customers, employees, creditors, suppliers or another stakeholder might get unhappy – and who wants to deal with that?
As already published on our LinkedIn Account, the key to successful stakeholder management (Fig. 1) is to:
- Identify stakeholder
- Organize stakeholder
- Manage stakeholder
In this article, we will have a closer look at external stakeholders. But what defines external stakeholders? It is simple: an external stakeholder is someone outside your organization/project. Possible stakeholders are customers, suppliers, distributors, creditors, communities, government, etc. Usually, external stakeholders are not actively involved in organizational decisions, but are influenced by them.
Let’s introduce different groups of stakeholders.
Customer
Customers are one of the most, if not the most, important stakeholder group. Without customers there are no sales, which means no revenue, fewer employees, fewer products… – you see where this is going. Especially while developing products, it is essential to involve customers early on. If you collect feedback and derive actions from it, your product will have the necessary and desired features in a shorter period of time. This leads to lower loss of money and more time for viable products, ideas and features. Moreover, you must consider that some customers might depend on your organization and product. Some customers (e.g. health institutions, hospitals) rely on perfectly working products or a smoothly running software. Without customers, your organization won’t survive.
Supplier
There are many touching points when an organization deals with their suppliers, e.g., negotiations, purchases, deliveries. Suppliers are external stakeholder, that are influenced by your organizational decisions. And they might even influence your organization, as both, you and the supplier, depend on each other. You want to have the right supplies, in time, in the right quality and right quantity. Furthermore, the supplier determines his forecast by depending on your orders. Influences can range from changing prices, conditions to delivery bottlenecks. Good supplier management is an essential part of good stakeholder management.
Creditor
Even though Creditors (e.g. banks or investors) are usually not involved in your daily business, they too have a strong interest in your organization being successful in the market. Their main goal is to get back their loans or profit from the shares they own. Some challenges with this group might be changing loan conditions, pressuring you to get into a market faster, or influencing your strategic decisions. If your organization does not have any creditors, you can count yourself lucky.
Government
It is easy to forget, but the government is also a big stakeholder as all organizations are influenced by political decisions (e.g. taxes, subsidies, …). In general, governments have an interest in increasing the GDP driven through a thriving industry in their country. Another factor is laws and regulations, which are normally legislated by the current government. Especially in some industries (e.g. MedTech) there are lots of regulations concerning the product development process or IP management.
Community
Furthermore, local communities might be stakeholders, too. If the local community supports your organization, they probably buy the product or even apply for a job at your organization. On the other hand, they are influenced by your traffic and emissions. It is always good to have the local support to avoid problems and grow your business.
As you can see, there are lots of external stakeholders to consider apart from your internal stakeholders. Now, the first step you should take, is to define the external stakeholders influencing your company. How to do that? Easy, you just bring all the right people in your organization/project together (e.g. important team members, knowledge carrier). Then you brainstorm together and think of everyone who might be involved or influenced by your organization/project and of everyone that is influencing your organization/project. One approach is to do a silent brainstorming session first (approximately 5-10 minutes) and then discuss the findings with the whole group. Depending on how many people participate, you can also discuss in teams of 2, then 4 and then the whole group (1-2-4-all). You might consider asking the following questions during brainstorming sessions [to support ideation]:
- Who are my customers?
- Who does my organization influence?
- Who influences my organization?
- Who has an interest in my organization?
- Who is financially involved in my organization?
- Who is involved from outside (e.g. experts, freelancer, supplier)?
- Who benefits from my organization, who might be at risk?
- Whose support does my organization need?
- What laws and regulations must my organization follow?
Once you have identified all stakeholders, it is time to categorize them. There are typically four categories (Fig. 3):
- Manage Closely
- Keep Satisfied
- Keep Informed
- Monitor
To analyze in which category the stakeholder group fits, you should ask yourself:
- How high is their interest in my organization/project?
- How much influence/power do they have over my organization/project?
After categorizing each stakeholder in a matrix, you now plan on how to interact with each stakeholder group – who are the complicated ones, who will be monitored only, what information does the stakeholder need, …?
Keep Satisfied: Stakeholder in this area should be taken seriously. They might not have a lot of interest, but they can easily cause problems. An idea is to invite them to review meetings or ask for feedback, so that they may raise concern at an early stage.
Manage Closely: These are the key player. Involve them in your organization/project and invest time to keep them satisfied. Invite them to important meetings and stay in personal contact.
Monitor: Stakeholder in this group just need the most important information, which you can communicate via regular newsletters or simple coffee talks.
Keep Informed: These people may add great value to your project/organization. Consult them and ask for their ideas and feedback. Keep them in the loop and contact them, when needed.
Define actions for each stakeholder according to their category and assign people to perform the actions. Once you are done, you need to review your stakeholder analysis and actions regularly.
Sounds reasonable? So, get going and analyze your stakeholders, if you haven’t already done so!