FIRST: THE MEANING AND DEFINITION OF STAKEHOLDER ENGAGEMENT AND STAKEHOLDER MANAGEMENT
A stakeholder is someone or a party with an interest in a matter or venture. Engagement is no more than the involvement of a party – with head (ratio), heart (emotion), and hands (action). Stakeholder project management and stakeholder analysis aims at influencing what people say, do, or want. Awareness of the social dynamics and underlying needs foster respect and stability.
IMPORTANT: A STAKEHOLDER MODEL CLARIFIES, COMMUNICATES, AND ACTIVATES LEAN EXECUTION
There are different models, definitions, frameworks, maps, and ways to come up with an effective stakeholder strategy. Glad you ask! It means you are a ‘people manager’ or aware of the risks of ignoring this crucial process in effective, efficient project management. With the many (verified and unverified) theoretical diagrams on the web and in guides, how do you know which one to pick? Well, simply put, it doesn’t matter. As long as the framework you are using helps you to clarify, communicate, and activate the right people at the right time.
WHY A STAKEHOLDER ANALYSIS MATTERS IN A COMPLEX, GLOBAL, SOCIALLY DYNAMIC WORLD
A stakeholder analysis is nothing new. We do it all the time. It goes together with optimizing our lives. For example, very likely you ask yourself questions like: What should I tell my boss or investors to get their trust, permission, and budget? What requirements, objectives, and perspectives do we uphold for the deal to succeed (and make us rich)?
Everything is connected. Ecosystems include both nature and people with their organizations. It is common sense that today’s license to operate as a business depends on every detail: from how we manage customer complaints to how we design our services and functions. Social media can instantly expose and disqualify our corporate legitimacy, including all the good work we do at transforming the social landscape to be more inclusive, equal, sustainable, and meaningful.
THE BIG PROBLEM AND CHALLENGE WITH HONEST, TRANSPARENT STAKEHOLDER MANAGEMENT
The problem with stakeholder management lies in that it might reveal too much. It can be overwhelming. We cannot handle the big picture and the inconvenient truth underlying our organization, industry, and business. You know, it feels safe to not know it all, not to look beyond my department, silo, country, or island. What if we are less innocent than we like to think? What if we are actually guilty at ruining the planet at an increasingly faster rate? How do we let go of the power that we have gained? How do we start afresh? How do we move into the unknown? What will we find?
Game over. Start again. I wish our societal challenges were that simple. I cannot help it but be afraid for people’s reactions once they realize sustainability is a real life game, with real winners and real losers. Only then we might realize it was not a game after all. ~ O. Westra van Holthe
The big challenge of today’s business development lies in how to deal with complex multi-party, multi-layered issues strategically. What regulatory monitoring and reporting is required? What expectations and conflict resolution methods can we use in the management of downsizing, decommissioning, and divestment? How do we make socially responsable investments? The bottom line: how do we relate with ourselves, especially emotionally? Agile re-positioning can make you and all of us winners – so we can reset, reconfigure, and reboot.
RELATIONAL AND EMOTIONAL AGILITY MAKES BUSINESS DEVELOPMENT AND EMPLOYEES FUTURE FIT
Change is the only constant. So you better get used to it. The business landscape and context map can radically change due to events or actions from a variety of internal and external stakeholders. Actors like governments can suddenly change energy policies towards higher sustainability standards. Civil society uprisings or public protests can challenge the legitimacy of your business. What wants to be heard? By whom? How much longer are we willing to ignore the voices of minority groups? How can we be inspired with their unique views? How can they actually help us in answering the many existential, practical, pragmatic, and emotional questions that come up? No one can stop the insecurity, the fear, the anger, the sadness when it comes to business change, transformation, and leadership. You better learn to deal with this, both personally and in relation with others within the corporate context you operate in.
STAKEHOLDER CAPITALISM ENABLES STRATEGIC INNOVATION AND RISK MANAGEMENT
Rapid planetary resource depletion and rising global inequality demand a change from ‘free markets’ into ‘stakeholder capitalism’ – one that does structurally include sustainability and the wisdom of minority voices. First research shows some remarkable statistics that are worth to quote here. These can be seen as an indication for more complexity and sustainability research to be published. Numbers like these will pave the way for business case development of engagement. Besides, formulas may get us to the essence of key ‘social dynamics’ strategies.
EMERGING EVIDENCE: HOW A STAKEHOLDER ASSESSMENT GIVES YOU A COMPETITIVE ADVANTAGE
If you think about it: it makes sense that the one who takes into account the views, needs, perspectives, objectives of others, is on the long run better off than those who are less emotionally agile. The same goes for business. First research points indeed in this direction. Stakeholder assessement policies give you these stakeholder benefits:
boost profitablity and reliability of business operations
- +18% higher returns on equity with sustainable investment portfolios (social, governance, environmental)
- -50% lower volatility in earnings with an environmental, social, and governance policy within a business
optimize customer, business, and quality performance
- +68% of business leaders report new ways to reduce costs, create revenue streams, and develop business models
- +67% customers prefer brands with a cause who engage their stakeholders with a personal interaction strategy
align human capital with brand equity and create a mutually beneficial synergy
- +60% reputation increase (in brand trus) adds +7% increase in market value
- +20-30% higher employee retention rates due to higher pride, morale, and loyalty
From these numbers, it makes sense to map group and social dynamics in mergers and acquisitions, investments and portfolios, strategic restructurings, culture development and (internal/external stakeholder) engagement, corporate responsability and sustainability, and in industry-wide innovation, change, and transformation initiatives. How do you relate? How honest, transparent, and compassionate can you be? How do you reset, reconfigure, and reboot? There must be ways to simplify (social) systems of interactions. And there must be benefits to project plans, right? Indeed.
BENEFITS OF A STAKEHOLDER ANALYSIS, MAP, MODEL, GRID, PROCESS, MATRIX, AND FRAMEWORK
In communication trainings, we are often taught how to speak better, faster, and with more elogance. However, those in leadership positions know the importance of listening. What is someone really trying to say? What is the point that needs to be heard and included in our policy? The simpler our models are in engaging people, the better we become at what is needed most. Like the Dutch saying: ‘speaking is silver, listening is gold’. A stakeholder strategy map help to:
- align internal stakeholders, support, and influence
- boost employee retention and customer satisfaction
- establish strategic external communication channels
- intensify up and downstream supplier collaboration
- beat the competition with a broader, trusted network
- mitigate risks, prevent conflicts, and respond quickly
- identify new business development and create markets
- integrate corporate (social) responsability in operations
- build trust, reputation, and space to reinvent the industry
#1 THE 2×2 MATRIX (GOAL: MAP STAKEHOLDER IMPORTANCE, INFLUENCE, INTEREST, AND YIELD)
The 2×2 matrix is the most favorite of strategic consultants and project managers in business. It is a very right-brain model. For emotional and intuitive learners, this can be confusing at times. It maps the power or influence on the one axis. It maps the stake or level of interest of the party on the other. Its use is quite limited as the mapped stakeholders can move quickly across the matrix, depending on the project phase (e.g. design, procurement, construction, operations) or because of sudden changes in the industry. You can of course change the values of the axes, e.g. with impact on a corporate value or key competency.
AN EXAMPLE OF THE 2X2 STAKEHOLDER ENGAGEMENT MATRIX: WHO ARE MY MOST RELEVANT STAKEHOLDERS?
In this four-category model you may discern different levels of influence and interest in your project or business:
- those key for business: these are crucial partners for business activities (e.g. resources, production, transport)
- those who facilitate the business: legal/governmental or public policy officers who can block your licence to operate
- the beneficiaries: those who cannot organize themselves yet depend on your service (e.g. healthcare patients)
- the sideliners: these you can monitor and learn from with regards to the industry’s biggest challenges ahead
#2 THE ONION MAP (GOAL: MAP STAKEHOLDER INTEGRATIONS VISUALLY INTO A SIMPLE DIAGRAM)
The onion stakeholder map is a favorite tool for hands-on and not-so analytical project managers. It can widen the horizon of those who are very much in the operations. And it is nicely used in an interactive and facilitated brainstorm setting. The circles can have different values, depending on the scope of your assessment. Are you trying to make a stakeholder engagement map of a whole business, a project, or of a product? The use of this diagram generally starts on a micro-what-level, e.g. the team’s members and how they support each other. Then it scales up to include its wider how-context: the other departments that you work with, e.g. you get information from or pass on outputs or tasks. Lastly, it includes the societal/market/industry trends (the why).
TWO EXAMPLES OF THE ONION MODEL: HOW TO ENGAGE INTERNAL AND EXTERNAL BUSINESS STAKEHOLDERS?
For a holistic business engagement map, you might want to use, categorize, and define stakeholders as follows:
- primary stakeholders: those who are directly involved in the financial transactions of the business
- e.g. investors, creditors, owners/shareholders, customers, directors, employees, suppliers
- secondary stakeholders: those who directly affect or are directly affected by the activities of the business
- e.g. government, media, activists, local communities, municipalities, religious/spiritual leaders
- contextual stakeholders: what makes life and the way we organize now possible on this planet
- e.g. natural resources, the environment, nature, animals, plants, past and/or future generations
For a digital project manager, however, a stakeholder map with three circles may look like this:
- the core team you work with and the single most important client you design the application for
- the internal integration with other business (software) systems, departments (e.g. marketing, sales)
- the external environment with digital trends, media outlets that can promote your product or service
#3 THE SALIENCE STAKEHOLDER MODEL (GOAL: DEFINE WHO IS YOUR MOST IMPORTANT STAKEHOLDER)
The stakeholder salience model is loved by lean and agile consultants as well as with project managers. Much like the 2×2 matrix (#1), it maps stakeholders on the basis of their power (are they active or dormant?) and urgency (are they demanding or not?). In the salience model, the factor legitimacy is added: how appropriate is it that the party involves him or herself, really?
THE STAKEHOLDER SALIENCE MODEL DIMENSIONS APPLIED AND EXAMPLE STRATEGIES TO HAVE A SAY
Mitchell was the one who introduced the stakeholder venn diagram. Yet, with the overlaps it creates a plethora of stakeholders, which makes the model quite complicated at times. However, it can be useful for a project manager to assess if it should listen to a party or not. You can assess the context of the message by analyzing a stakeholder’s:
- Power: What does the financial, brand, or image of this party tell me?
- Urgency: Should this be solved now and when (if at all) for this party?
- Legitimacy: Who funds, controls assets, or is impacted by this party?
With this snapshot analysis you can determine if people contacting you are no, latent, expectant (two factors apply), or have become key/definitive stakeholders (they score high on all three dimensions). A party seeking influence should:
- build a coalition of interested (media) parties (and amass a bigger reach, size, and legitimacy)
- stress your relative economic size or influence and access to governance or policy-makers
- align your message with that of management (it is more likely that they will listen and act)
HOW TO USE THE SALIENCE STAKEHOLDER MODEL AND KEEP YOUR HORIZON OPEN FOR OPPORTUNITY
The salience stakeholder model very quickly narrows the scope of your analysis, e.g. to ignore those without a voice. Think of animals, nature, or environmental stakeholders. Besides, the model is anxiety-driven instead of opportunity-driven. After all, those who are “dangerous” can after all also be your biggest supporters once you meet them at the level that they want to be heard. For instance, sometimes it can be useful to give your biggest critics and pessimists a role. Think of making them an (informal) brainstorm and anchor partner. If they are okay with it, others will love it.
#4 THE 9C STAKEHOLDER ANALYSIS (GOAL: QUICKLY MAP YOUR BUSINESS STAKEHOLDER LANDSCAPE)
This is the most concrete and simple mapping technique we have seen. It very practically defines all organizational stakeholders. It is like making a stakeholder list but by organizing them by category. This method is highly regarded by those investing in corporate and social responsability of a firm. It opens doors to check what stakeholders you like to have more clarity on, and who to get in touch with (e.g. by doing an interview, sending them an invitation for an event about your industry’s governance, or by reaching out with a questionnaire). What’s at stake?
THE 9C STAKEHOLDER ANALYSIS FOR BUSINESS TO BUSINESS OR GOVERNMENT TO BUSINESS TO CITIZENS APPLIED
Commissioners are financiers who pay to get things done. Customers are those that buy/use the product or services you provide. Collaborators are those you design and deliver services/products with. Champions are the ambassadors of the project, whom actively promote the idea. Channels are the ways you get to the market or customers. The consumers are the end-users served by your customers. Contributors are those who the organization purchases content from. Those that make opinions are for instance market, industry, political, or religious commentators.
#5 THE FORCE-FIELD ANALYSIS (GOAL: MAP RESISTANCE AND HIGH IMPACT LEVERAGE POINTS)
The Force Field Analysis (FFA) was first introduced by Kurt Lewin, a social psychologist. He explored what is needed for change. It is probably one of the simplest models to be used in effective decision-making and change strategy. It basically maps a journey, much like when you travel from A to B. And then it adds forces that impact your travels. How steep are the hills? What reactions will you face? What workarounds you need to make? What outcome do you expect?
THE PROCESS AND 6 STEPS TO DO A FORCE-FIELD RISK ANALYSIS: HOW TO USE IT AS A PROBLEM-SOLVING TOOL
A force field analysis can enhance multi-criteria analysis, as well as financial, operational risk management. Online you can find many templates, pdfs, charts, toolkits, software tools, and force-field exercises. The steps basically include:
- Define a scope: formulate a desired change, vision, idea, measure, or project. What will be different?
- Map the forces, ideas, people, happenings that may impact successful implementation of your desire.
- Assign scores as to the weight of the identified forces, and see what total force combination wins?
- Identify to what extent individual forces can be changed, molded, or influenced by you. Can you?
- See what forces or groups you can empower, strengthen, or how you can decrease their influence?
- Do a gap analysis: where are you now, what next steps help, and where do you exactly want to be?
WHAT YOU SHOULD KNOW WHEN YOU WANT TO USE THE FIELD FORCE ANALYSIS SAFELY AND EFFECTIVELY
With the judgments baked into the core of this model (“good” vs “bad” force), the analysis reinforces rather than challenges the status quo. First, individual or collective biases may not be detected if interpretations are not verified with experts, data, and the disagreeing minority. Second, the world is not black and white only (some would even argue fifty shades of gray). You might create conflicts and camps where there would be none. Third, the forces and stakeholders can quickly flip for the better or worse. After all, the world is a dynamic interplay of transforming forces.
TECHNIQUES AND METHODS TO USE THE FORCE FIELD ANALYSIS FOR GOOD AND EFFECTIVE DECISION-MAKING
Continuously review your force-field analysis to reflect reality better as you move on with your project. Ask yourself:
- What or who wants to be heard? What is screaming for attention? What voice is structurally ignored?
- What are we now aware of and what not yet? What is it that we cannot, want not, or may not see?
- What do we do, say, feel, and want (in the past, presence, future)? How do we experience reality?
- What social patterns or structures do fit, have served us, and will support each other’s contribution?
WAIT! NOT TOO FAST: RATIONAL VS EMOTIONAL STAKEHOLDER MAPS, MODELS, GRIDS, AND ASSESSMENTS
Stakeholder mapping can be very useful. However, it can get very quickly very complicated. Why? Chances are big that you try to think too much. Besides, conflicts are very obvious at times, so why do another analysis? Right! In the end, everything in the above is not about the analysis (paralysis). Rather, it is one way to become aware of the big picture. What systems are we part of? What systems do we relate to? This no longer is a rational question. Rather, true, deep, transformatory stakeholder analysis and stakeholder engagement is about the experience we have. Human dynamics cannot be understood only rationally. Breakthroughs require our human involvement —including our anger, sadness, and hopes. It requires us to relate differently, to attach different emotions to what we need to let go, and to what opportunities arise. Besides, our own experience of distress may reflect the wider dynamics in our organizations and industries. Once we become aware of the increasing importance of intuitive, flexible, transformational, experience-based methods, we are on our way to profound change. Get in touch if you like to learn more, or find yourself stuck?
~ This article is written by Oscar Westra van Holthe, the founder and CEO of BLOCKBUSTERS. Upon request and with an explicit notice by the organization, the contents here may be republished.