Tag: Managing Key Stakeholder
Don’t underestimate the requirement to have a good working relationship with the project stakeholder. As stakeholders have the ability to make or break projects. This makes them a risk to the likelihood of the project being completed. For this reason, the stakeholders of any project should be pinpointed, understood and managed, to increase the likelihood of project success. In this article we will look at who stakeholders are, what their interests might be, understanding them and managing them effectively, to give a project the greatest chance of succeeding.
Stakeholders can be identified as any person or group that has an interest, stake in the project or programme. Within the organization they might include the board, senior managers, different teams, internal customers and staff, among others. Externally to the organization they could include customers, suppliers, the media, local or national government, lobby groups, the community and different agencies. Remember the stakeholder is not necessarily the person funding the project. Brainstorming is one useful method to understand who the stakeholders are for any given project.
Stakeholders may have interests in projects for a variety of different reasons, depending on who they are, and their relationship to the project. In a number of cases, interests may be financially motivated. For example, the board may have an interest in an IT automation project succeeding, because it may reduce costs for the organization. Alternatively, a customer will have an interest in the project not overrunning on budget. Operational interests may also have a role to play, especially with regard to time. Media and community groups may be interested to some degree if a project has the potential to impact on the public or local environment. Other stakeholder interests might include employees who may resist change, especially if they have not been consulted in any way. Resistance to change can be one of the most detrimental factors impacting on the likely ability for the project to succeed.
Best practice stakeholder management requires understanding the interest that stakeholders have in a project, and the power they may have. Stakeholders can be ranked as either having high or low interest, or high or low power. This categorization of the different stakeholders helps guide how to work with them to engage effectively on the project. Some stakeholders may have a high level of interest but a low level of power, and these should be managed differently from those with high power and high interest, for example. High power and low interest groups need to have an eye kept on them, as they can significantly influence a project’s success if interest is sparked in them.
The most important stakeholders from a stakeholder management perspective are those that have high interest and high power. These groups may be considered key stakeholders, and they need to be carefully managed to drive the success of the project. They have the ability to help the project to succeed, but they can also bring it down if they are not engaged. Key stakeholders will vary depending on the type of project, but in a business, they will typically include the business owner that is eager for project success, and possibly the board too. In public projects the government or local council may very well be a key stakeholder.
While some stakeholders may have high interest and low power, and might therefore not be considered a threat, they still need to be consulted and their interests managed. This is because stakeholder groups can combine with one another to become more powerful – such as community groups working with the media, to influence government, for example.
Good stakeholder management is a function of leadership. Stakeholders need to understand what is going on and why, and they need to see projects moving forward with purpose and adding value. One of the main tools that a programme or project manager can use to work with stakeholders effectively is communicating well with them. This means building relationships and discussing their needs with them, any communication should be two-way, e.g. not just talking, but listening too. It is only through consulting with stakeholders that it is possible to develop solutions that will be palatable to the widest number of stakeholders. Communication needs to be regular, to keep stakeholders up to date on aspects of the project that are of particular interest to them. A common stakeholder complaint is not being kept up to date, and this is easily rectified with good communication.
Another tool is other members of the project, who need to show consistency in the way that they work with stakeholders, to build trust. Employees working on the project are all key representatives of it, in the eyes of the stakeholders. The bottom line is that building and maintaining relationships is critical to effective stakeholder management. Keeping in touch with stakeholders throughout the project, monitoring their power and interest and ensuring that most are kept satisfied as far as possible will give the project the highest chances of achieving its goals and delivering value.
The reality of project management is that some stakeholders will have the capability to significantly influence whether a project can succeed or not. This means that a key component of a project or programme manager’s job is to understand stakeholder needs, and work with them effectively, building relationships and managing issues, to ensure that they stay on side. Understanding a stakeholder’s level of interest and power with regard to the project is helpful in shaping the way in which the project manager manages the situation with the stakeholder. Both communication and building trust are essential tools in effective stakeholder management.
Please let us know your thoughts on Stakeholder management and the methods you use to establish good working relationships.
As project managers, we often tend to think and act like we own the projects we manage. In reality, we don’t. Usually, a number of players have an ownership stake, with the sponsor having the final say.
All those players, in John Kotter’s words, form the “guiding coalition”. The more focused and organized that group is, the greater the chance of project success.
However, change to the key stakeholders, the decision-makers in the guiding coalition, can derail the most well-run project. Here’s a case where the project manager did a masterful job of managing a number of key stakeholder changes to keep the guiding coalition functioning at peak efficiency and deliver a successful outcome.
Thanks to L.D. for the details on this case.
This wholesale building materials company had operated successfully for decades using a variety of mostly homegrown legacy applications, built with legacy tools and running on disparate legacy technologies. But, the times they were a-changin.
More and more, their retail customers were looking for tighter technology tie-ins, on inventory, ordering, billing, delivery status, and customer service. The privately held company was also getting pressure from its owners to increase profitability. The returns and growth have been consistently excellent over decades but the owners thought more was possible, especially given the old technologies the company was using. Finally, there had been a steady increase in turnover in their IT organizations, from programmers who wanted to work with something more than Cobol and Visual Basic, from the Computer Operations staff who wanted exposure to something more than IBM mainframes and Windows 7 machines and from the PMO and project management staff who wanted bigger, more challenging projects.
The CEO got the message. Things had to change. So, he formed an internal triumvirate to help him figure out what they needed to do and how to get it done without blowing up the company in the process. The triumvirate included the VP of Business Operations, the CFO and the CIO. To that group, he added an external consultant and long-time friend who had been his sounding board and confidant for many years. He called the group the Fab Five.
The Fab Five took a number of days over a three month period to figure out how best to tackle the challenge and map out a strategy that would see the business transform over time in a high return low-risk manner. They established the following goal.
To transform the capabilities of our people, operations, and technologies, working together to address the needs of our customers and suppliers while delivering a foundation for future growth and prosperity. We expect to spend up to $3 million over five years and achieve a 25% return on investment within the following boundaries:
- The specific scope and priorities will be established as the initiative progresses.
- We will seek to minimize operational change while maximizing value.
- We expect implementations to take place at least every six months to manage risk, gain experience and deliver value progressively.
- The key to our success will be the skills and talents of the people involved, including those who are with us today and those who will join us to help us on our journey.
Through discussions with the consultant, the Big Five agreed on a Project Director to lead the transformation program. He had extensive project experience in the ERP field, a stellar track record, and superb, bullet-proof references. We’ll call him Michael.
The first order of business when Michael arrived on the scene was to determine who the key stakeholders were and what roles they were playing. Michael’s first take on the program’s guiding coalition had the CEO as sponsor, the VP of Business Operations, the CFO and CIO as targets and the consultant as a change agent. Michael’s own role was as a change agent as well. With Michael’s arrival, the Fab Five became the Big Six.
Michael recognized some gaps in the decision-making group and suggested adding the Sales VP to the Big Six in a target role. The recommendation was approved and the Big Six then became the Super Seven, the group that would drive the transformation program through to completion.
Michael also recognized the importance of the company’s customers and suppliers going forward and so, with the approval and involvement of the other Super Seven members, he formed customer and supplier groups. That was a challenge because individual companies didn’t always want to share, so he also established key contacts with vital suppliers and customers to provide advice and feedback. Both the groups and key contacts would function in a target role.
As the guiding coalition was taking shape, Michael also started to form his transformation team. It included two architects, one an external contractor he had worked with previously and the senior architect from the company’s IT organization. He also added two senior software developers, one external and one internal, a process manager from HR, a senior Operations manager, SME’s from the core business operations and a senior member of the Internal Audit staff. Michael always liked to have the Internal Audit group engaged from the start.
With the core team in place, Michael launched a three-pronged analysis phase covering organization, procedures, people and technology perspectives:
- A process and functional strengths, weaknesses, opportunities, and threats (SWOT) review
- A SWOT review from the customers’ standpoint
- A SWOT review from the suppliers’ standpoint
As the SWOT reviews were being wrapped up, the transformation team developed a scope and priorities draft using a MUSCOW categorization (Must, Should, Could and Would) and reviewed it with the Super Seven. As a result of that review, a number of changes were made to the scope and priorities. The Super Seven members reviewed the resulting material with their teams with facilitation assistance from the transformation team members. Feedback out of that process was incorporated into the baseline scope and priorities and approved by the Super Seven for program launch.
After three months, the organization had agreed to the program’s scope and priorities and so set about considering alternative solutions. A key decision that emerged from the scope and priority deliberations was the question of buy versus build. The deliberations concluded that the end to end performance of the core business processes, not customization, was the most significant driver in maximizing value and positioning for the future. Therefore the decision was made to buy the software and/or technology services rather than to build in-house. That decision was reinforced by the realization that buying could deliver the required capabilities much more quickly and at less cost and risk.
The dialogue with the company’s customers and suppliers had identified three potential ERP software/service vendors. A review of the company’s competition and the market players added one more candidate to the list.
An RFQ was issued to the four vendor candidates based on the scope and priority work. Three of the four vendors responded to the RFQ and within six weeks of the RFQ being issued, a vendor was selected and approved.
A project manager from the selected vendor was added to the Super Seven and the group was renamed the Great Eight. Michael and his team worked with the selected vendor to ensure they fully understood the scope and priorities, to build the release plan and assemble the team to deliver the project. The fact that the project was recognized as a corporate priority throughout the organization and actively lead by the CEO and the senior management team made getting the right resources (people, facilities, funding) a walk in the park.
As the work got underway on the first release, disaster struck. The CEO, the program’s leader, and sponsor died from a massive heart attack. As the company mourned his loss, the VP of Business Operations filled in as acting CEO and project sponsor and work on the project continued.
After three months, a new CEO was appointed. He was an outsider with no experience in the building materials space. Michael managed to arrange an early appointment with the new CEO to brief him on the project and his vital role as sponsor. The new CEO didn’t buy it. He stated “I’m not the project manager. That’s your job. Get on with it”. Michael was taken aback.
Over the following six weeks, with the relentless support of the other Great Eight members, Michael explained what the sponsor role involved and why the CEO was the only one who could fill that role. He relied on a tool he had used many times before called Are You Ready to be a Sponsor. Michael explained the significance of the program to the current and future viability of the organization. He also reminded the new CEO of the owners’ desire to get a greater return from their investment as a significant reason for the CEO to lead the change. He pointed to decisions that had been made to date that were only the CEO’s to make. He identified future decisions that would need to be made and asked the CEO who else should make those decisions. The CEO usually acknowledged, often after some debate, that they were his to make.
Initially, Michael struggled to get even 30 minutes of the new CEO’s time. However, after each meeting discussing the CEO’s role and the progress of the project, the new CEO was a little more interested, a bit more informed and somewhat more inclined to be involved. Finally, the new CEO acknowledged his responsibility for the initiative and agreed to fill the sponsor role. The Great Eight was back to eight members.
Work progressed on the first release under the guidance of the Great Eight until its implementation seven months after the program launch. The delivery was a bit late and a tad over budget but the affected customers were thrilled with the incremental functionality, performance, and quality. Internal polling of the company’s staff revealed a high degree of support and satisfaction as well. So the Great Eight were thrilled too.
The second and third releases were delivered over the next nine months, mostly on plan and estimate, with rave reviews from all involved. As the fourth release was midway through its plan, disaster struck again. The owners had sold the company to a venture capital firm. In short order, the new CEO was replaced as was the CFO. The Great Eight was now down to six members and without a sponsor.
Michael and the remaining coalition members sought an early meeting with the new owners. In the meantime, they kept the fourth release going in the hopes that it would be a worthwhile investment. They recognized that suspending the work would not necessarily yield significant savings in the short term and would impede their ability to restart the work if they did ultimately receive approval to continue.
Fortunately, Michael and his colleagues did get an early hearing. Also, fortunately, they had a roadmap to follow for how to bring new key stakeholders up to speed quickly and effectively using the approach that had worked with the previously new CEO a couple of years prior. And fortunately, the new owners liked what they heard and gave their blessing for the project to continue as planned. Michael and his colleagues used the same approach to bring the new CEO and CFO up to speed and get them fully engaged. In less than a month, the Great Eight was back!
The fourth release and two subsequent releases were completed successfully to finalize the planned transformation. The total cost was $3.7 million, somewhat in excess of the budget but fully managed by the Great Eight. Actual ROI was 32% versus the 25% target. Staff turnover in IT declined to near zero from the time the program was introduced. It seems the company’s software developers, IT Operations staff and project managers were excited by the new direction.
Surveys of the company’s customers and suppliers found they were almost universally positive about the changes and the part they played. The company became a highly valued reference account for the vendor. And Michael, the Project Director, went on to manage a number of similar programs for the company’s new owners, the venture capital firm. They were obviously duly impressed with the job he had done and the results he had achieved.
How a Great Leader Delivered
Michael did a lot of things right on this initiative but the dominant theme here is the masterful job he did in managing the changes to the key stakeholder group. In fact, three lessons stand out:
- Know your key stakeholders – know and articulate the roles of all key decision-makers involved in your project and make sure the key roles – sponsor, target and change agent – are filled appropriately. If there’s someone who can play the role of champion, all the better. On the other hand, we’ve all seen a “steering committee” with assorted players who are unsure of their roles and responsibilities. Its function too often evolves to being a critic and shooting the messenger, usually the project manager. We know what damage that can do to an individual’s health and welfare and to overall project performance.
In this case, the membership in the guiding coalition was explicit and well communicated. The CEO started the process with his Fab Five. Michael continued to guide the evolution of the group to the final Great Eight. It was a “Goldilocks” group – not too big, not too small, just right! That significantly amplified their effectiveness.
If anybody tries to push their way into the guiding coalition without having a decision-making need to be involved or a formal role to play, keep them out of that body. More doesn’t always make merrier. For more on this, see Managing Project Interlopers
- Use best practices to create and direct the guiding coalition – Michael used a typical change management organization model – sponsor, target, change agent. Everyone in the guiding coalition knew the model and everyone’s role in the program which enhanced communication and decision-making effectiveness. He also used the “Are You Ready to be a Sponsor” template to help new additions to the guiding coalition to make the leap to full, effective membership.
There are others models available. Select one that works for your project and organization. But, make sure you pick one that includes the target role. A target is a manager (decision-maker) who directs the individuals or groups who must actually change the way they think and work for a change to be successful. A target’s sole responsibility is to ensure that his or her organization will operate successfully after a change is implemented. It’s an essential and powerful foil to the sponsor’s demands and is as vital to a change’s success prospects as the sponsor and change agent roles.
Targets can also include managers who are external to the organization initiating the change, such as customers, vendors, partners, and distributors. Michael did form customer and suppliers groups and identified key customer and supplier contacts but he didn’t give them a spot at the guiding coalition’s table. Instead, their interests were looked after by specific Great Eight members.
For more on the stakeholder model, see A Great Project Manager – the Sponsor’s Best Friend. I’d add a target’s best friend as well.
- Actively engage new key stakeholders – if your project has a change in key stakeholders, the decision-makers, do whatever you can to get the new player(s) identified and engaged as quickly as possible. They need to be brought up to speed on the decisions that have been made, the rationale for those decisions and the decisions yet to come. Otherwise, that knowledge gap will be a drag on the guiding coalition, on the new stakeholder’s commitment and performance and on the project as a whole.
In this case, Michael managed to bring the Sales VP, the vendor’s project manager, a new CFO and two new CEO’s up to speed quickly and minimize the impact of those changes on the program’s progress. Also, while this case focused on the key stakeholders, the same urgency for building currency applies to all those affected by the change. For more on this, see Coping with Stakeholder Change.
Having an effective guiding coalition for a project is THE key success factor. It drives every decision that follows. So, put these points on your checklist of things to consider so your project can have a great guiding coalition and you too can be a Great Leader. Also remember, use Project Pre-Check’s three building blocks covering the key stakeholder group, the decision management process, and Decision Framework best practices right up front so you don’t overlook these key success factors.
Finally, thanks to everyone who has willingly shared their experiences for presentation on this blog. Everyone benefits. First-time contributors get a copy of one of my books. Readers get insights they can apply to their own unique circumstances. So, if you have a project experience, good, bad and everything in between, send me the details and we’ll chat. I’ll write it up and, when you’re happy with the results, Project Times will post it so others can learn from your insights. Thanks