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Why Learning Stakeholder Analysis is Important for the Business Growth?

What do you understand as a stakeholder?

The key people who would get impacted by any business project are stakeholders. Also, they are responsible for and accountable for the project. In other words, key players of any project are referred to as stakeholders. 

They focus on the outcome of the project. Stakeholders get impacted by a positive or negative output. All the stakeholders need to be on the same page.  All the stakeholders need to be on the same page. 

It's very important that there is no communication gap between them. Any kind of conflict needs to be resolved with negotiation.

For any organization some of the common stakeholders are -

  • Clients or Customers
  • Product Managers
  • Business Analyst
  • Project Managers
  • Project Sponsors(Internal or External)
  • Team Members (Developers, BA, QA, Support Team)
  • Leadership Team or Management

Stakeholders Type - 

Stakeholders Analysis

  • Primary stakeholders: They are most impacted by the end result of product
  • Secondary stakeholders: They are indirectly impacted by the end result
  • Tertiary stakeholders: They are very little impacted. 


Why stakeholders are important in business?

Well, the answer lies in the question as well. This is to run a successful business.

Stakeholders are the driving factor of any project. 

The product line gets aligned because of them. They influence the project. 

They get impacted by the overall delivery of the project. 

Their interest lies in the successful output of the project. That’s they have a common business need.

Responsibility of Stakeholders - 

  • They approve all the deliverables of the project. 
  • They assist in defining and refining the requirements.
  • All of them need to be available for meetings.
  • They need to make timely decisions as in when required.
  • They have to provide constant inputs on the domain related queries.

Stakeholders constantly work to improve economic commitments to the business.

How to identify the stakeholders?

  • Identification of stakeholders for any project depends on multiple factors - 
  • Who are the people, team or organizations that are interested in the initiative taken?
  • Who are the people impacted by the end result of the product?
  • Who all come under approvers?
  • Who all sees the project as a threat to their business units? 

These questions when answered helps to identify the stakeholders. 

It’s beneficial to identify the stakeholders. It falls during the early stages of the process. This helps to ensure that they are engaged from start. It gives them an idea of their role during the project.

Spotting out stakeholders improve the quality of the project. This is done with continuous feedback.

Stakeholder Identification - Onion Diagram 

The stakeholder onion diagram has a project goal as the center point. It checks stakeholders relationships with the project goal.

It has multiple layers like an onion. All these layers have various stakeholders.

They are kept in multiple layers. This helps to establish relationships among them. 

In the end, all the stakeholders are mapped to the project goal or end product. This is irrespective of their assigned layers.

The focus is to achieve successful delivery. 

Read: How to Be the Best Business Analyst?
  • Layers of Onion Diagram - 
  • Product/Solution/Project Goal 
  • The Business System
  • The Business 
  • The Environment 
  • Any other stakeholders

 Check out the onion diagram -

Stakeholders Analysis 1

Stakeholder Identification - Wheel 

The stakeholder wheel helps to identify different groups of people. They might be external or internal. But the important factor is to map them.

It is a very powerful and simple tool. It helps to map people with the scope. 

It helps to identify and define the roles of most of the key contributors. 

This is how stakeholder wheel is depicted in picture format - 

stakeholder wheel

What do you mean by power influence matrix?

Let’s simplify this - 

  • Power means the ability or capacity to do something in a particular way. 
  • Influence means to have an impact.

Since this is related to stakeholder management, it works towards it. 

It is a tool that maps project goals. It is done based on the power and influence of stakeholders in the organization. 

It focuses on key stakeholders who can make or break a project. 

At times, they are grouped based on their power and influence.

The project manager needs to check on each of the stakeholders. Anytime a low power stakeholder might become a high power stakeholder. 

It facilitates stakeholders prioritizations. 

At some point in time, it is used as power interest technique but not always. Influence shows active participation. Power shows the level of authority.

Understanding of Stakeholder Engagement Techniques

Now we have a much better understanding of - 

  • How to identify stakeholders?
  • How powerful stakeholders can be?
  • How much influence they have on the product?

But then the project manager needs to really work hard. They need to regularly engage the stakeholders. Project Manager needs to identify - 

  • Their Interest 
  • Decision Making Capability
  • Specific Requirement
  • Approver

Power/ Influence vs Interest

The following matrix shows Power/Influence vs Interest Matrix - 

Power/ Influence vs Interest

  • The stakeholder at the top right corner has the highest power and interest. This stakeholder is most important to the project. A project manager needs to work very closely with this group or person.
  • Similarly, a stakeholder in the top left corner has the highest power but less interest. This stakeholder should be satisfied. This person does not need daily updates on the project. 

 

What do you mean by Stakeholder RACI?

Read: What is Requirement Management? Top 13 Tools for Requirement Management

RACI means - Responsible, Accountable, Consulted, Informed

These four angles are very important for stakeholders. It clarifies the role of each one of them.

It is used to have a clear overview of a complex project.  

This is a very powerful tool in stakeholder management. It has different names in the market - 

VERI Matrix

RAM 

LRC

Navajo Blanket 

The four different roles of this matrix have different tasks to perform - 

Responsible -

  • Responsible for getting work done. 
  • Decision Making Authority
  • Task Performer
  • An Individual Contributor or a team 

Accountable - 

  • The person who owns the task. Sometimes its Product Owner. 
  • They are the approvers of the project. They give sign off on the project. 

Consulted - 

  • Stakeholders whose inputs are very important. 
  • They provide constant feedback. 
  • Suggest Improvisation. 
  • These stakeholders can help to drive the project for successful output. 

Informed - 

  • They need to be informed after completion or progress of the project. 
  • It is a one-way communication.

Visio could be used to build the RACI Matrix. It follows a specific standard of horizontal and vertical axis. 

The horizontal axis specifies roles. The vertical axis specifies tasks.

In some projects, it is roles vs process as well. 

Let's take the example of creating a purchase order. 

Use - Case: New Year Gift Order to all employees 

See the details of RACI Matrix -  

RACI Matrix

Personas of Stakeholders in Stakeholder Management

Stakeholder personas are roles played by each stakeholder in the project journey. Success and failure of a project are highly dependent on personas.

Personas are mapped as per their ability. This step highly impacts the outcome of the project. 

Personas might think like a leader or a contributor.

On a broader aspect, there are two kinds of personas - 

Read: Business Analytics Careers - Know Why They are in Great Demand
  • External Personas
  • Internal Personas

External personas refer to stakeholders outside the organization. These are clients, competitors, end-users, etc.

Internals personas refer to people within the organization. These are the driving force at various levels in the firm.

Persona Identification Factors - 
 

Persona Identification Factors

Understanding of Stakeholder Alignment and Sponsorship

Stakeholder alignment is quite a critical skill. It comes up with great responsibility and quite an experience. 

Sponsors are stakeholders who provide funds. They also take recognition of the project. 

The relationship between firm and sponsor is called partnership. Project Managers are representative during the journey of the project. The partnership is aided by an agreement. 

The agreement holds -

  • Details of the project
  • Estimated returns
  • SLA’s
  • Benefits to the sponsors.

This holds ground for future partnership. 

A sponsor needs to give enough time to understand the project. Its duty of the project manager to align the sponsors with the project. 

The sponsor invests in the project with the sole idea of having successful returns.  This partnership needs to give the best results.

For that, the project needs to align the other stakeholders properly - 

Steps involved in stakeholder alignment - 

Stakeholder identification is the first step. 

  • Determining what kind of role-play each person is going to perform. For Ex - Sponsor, Client, Product Managers, Owners, Decision Makers, Business Analyst, Developer, Tester, Operations, Sales, Customer Support, SME, Trainers
  • Involving them together for the project goal. This is where actual alignment comes into the picture. This shows their participation in the project. 
  • Inform the sponsor that all stakeholders are involved and aligned.
  • Create a culture of understanding between each stakeholder. This would help to resolve conflicts. 
  • Determine the needs of each stakeholder.  
  • Keep a check on each stakeholder’s responsibility during the entire course of the project. 

The way to manage internal stakeholders

Every stakeholder comes up with different needs and expectations. They have to be carefully handled for internal stakeholders. 

So who are internal stakeholders - They are everyone in the organization. 

  • Owners
  • Board Members
  • Employees
  • Managers
  • Investors

They carry huge responsibility like - 

  • Successful completion of the project.
  • Taking the right decision at the right time.
  • Performance of product in the market.

Because of so many criteria and responsibilities managing them is not an easy game. The Project Manager needs to put continuous effort into managing them. 

These are some of the ways to manage internal stakeholders - 

  • Proper and effective communication among all of them. Project Manager should try to bridge the communication gaps. 
  • Project Manager has to try various negotiation skills. This would help to resolve conflicts among them. This required for the good health of the project. 
  • There has to be an analysis on needs of each one of them. A project manager needs to do this in proper order.
  • It is important to know your audience. 
  • All the meeting minutes should be documented so as to avoid dispute. 
  • And most importantly, try to educate them on emotional intelligence.

Regular brainstorming helps in the successful analysis of stakeholders. Project Manager has to be mature enough to keep the right communication. All this comes with keep on asking questions. 

Always remember, effective teamwork leads to a successful product. It’s always “We” that works and not “I”.

 

Read: What is important to know about UML Concepts and Overview



    Nidhi

    I believe in knowledge sharing and bringing change in people's lives. As a business analyst by profession, I love to explore everything about the way businesses should drive. I keep in touch with the latest business analysis updates.


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