Navigating Stakeholder Management in Product Development

Explore strategies and models for effective stakeholder management, crucial in steering products towards success in a collaborative ecosystem.

In any product management course, you will discover how stakeholder management is one of the critical responsibilities. It is also one of the most challenging skills to develop in product management, as the professional must be the centre of business, people, and technology. 

As a product manager, you have to pass on information at different stages of the product development process to those working on or are involved in just one aspect of it. They do not get the full picture like you envision with your product roadmap. 

Yet, it is your responsibility to align all stakeholders to create a successful product. You have to involve them with a strategic mindset more than intuition. It should be one that inspires, that does not push them in silos. Nor can you make them think they can incorporate additional features based on personal favours towards you. 

To help in your learning journey, we highlight the most important questions, strategies, and areas pertaining to stakeholder management, specifically, in product development. 

What is Stakeholder Management?

Stakeholder management is a process of collaborating and maintaining positive relationships with stakeholders. This involves identifying, analysing, and managing their expectations through proper prioritisation, engagement, planning, and implementation.  

This is a systematic process with these steps involved. 

• Determining the people who are able to influence in developing the product. There are usually different categories to group into. Here, stakeholder analysis is required. 
• Prioritisation comes first for those who make maximum impact on the project. 
• Engaging their interests and demands is to help understand what outcomes they get once the product is developed. 
• Charting out their motives, further helps in crafting a plan for engaging them. 

Who are Product Stakeholders?

In general, when defining stakeholders, they could be anyone with an interest in the product who can affect or be affected by it. These are the ones who help in creating the product that is specific to the business. 

According to Marty Cagan, “The main test of whether a person is a stakeholder is whether or not they have veto power, or can otherwise prevent your work from launching.”

It is important to know the role of stakeholders in the context of product management. The emphasis is on their priority when dealing with their concerns.

• Engineering/developers, designing, and QA teams are constantly involved in the product life cycle. Collaborating with them closely is most important. 
• The C-suite of executives who are the decision-makers, and whom the product manager reports to. 
• The board members and the investors. 
• The product team and colleagues. 
• The internal customers who are the marketing, operations, and customer support teams. 
• Focus groups on whom the prototype of the product is tested. 

The primary objective of a product manager when handling stakeholders is to align them all to one vision. All the developers, teams, and seniors must work towards it. 

Let’s explore why. 

Importance of Stakeholder Management for the Product Manager/Owner

Effective stakeholder management helps the product manager to…

Facilitate Decision-Making

The product manager does not have the main decision-power, but taking a product from an idea to an end-user is their goal. Outside the product team, they have no formal control. So, they have to collaborate and make sure the decisions made during the product life cycle are the best. Otherwise, the result will be a failed product. And since the product manager must take ownership, the failure or success is associated with them. 

Prevent Risks of Product Failure

The stakeholders come with their own areas of expertise. If the product manager does not appreciate or understand their vest interests, they will work in their own directions. The product is not likely to succeed in this scenario. As mentioned in earlier sections, the goal is to align their expertise and do everything to satisfy the ‘What’s in it for me?’ quotient. 

In the next sections, we have compiled some key strategies and tips from noted experts such as Roman Pichler and Graham Kenny. 

Strategies for Stakeholder Management

Identifying the Right Stakeholders

In this aspect, the right stakeholders are the ones who can help the product manager develop a successful product. They are the ones who will make it convenient for the professional. 

These questions must be answered at this stage. 

• How important is the stakeholder to the company, and in what way do they positively impact the company? 
• Do you know who will understand and execute your vision of the product?
• Is the stakeholder replaceable?
• Will you be able to focus on relationship building?

Stakeholder Analysis

Analysing stakeholders is the next step, where you focus on understanding their interests. This analysis is important because you need to categorise who are most and least important. 

There are two models, which we mention below. 

Power-Interest Matrix

This matrix, first mentioned in Colin Eden and Fran Ackermann’s book, Making Strategy, features four quadrants.

 

High Power, High Interest: Influential in Decision-Making, Actively Engaged in Project

High Power, Low Interest: Influential in Decision-Making, Limited Interest in Project

Low Power, High Interest: Limited Influence, Actively Interested

Low Power, Low Interest: Limited Influence, Limited Interest

Salience Model

The Salience Model determines the significance of stakeholders based on three key attributes. 

Power: This refers to the stakeholder's ability to impose their will, influence decisions, and control resources. Stakeholders with high power have the capacity to significantly impact a project or organisation.

Legitimacy: Legitimacy pertains to the perceived validity or appropriateness of a stakeholder's involvement in a project. It involves their perceived rights, role, and authority to be involved in decision-making.

Urgency: It reflects the time sensitivity or criticality of a stakeholder's needs, concerns, or issues related to the project. Stakeholders with urgent needs may require immediate attention or resolution.

This model Salience Model categorises stakeholders based on their levels of power, legitimacy, and urgency into seven to eight categories. 

Dormant stakeholders: Possess power but lack urgency or legitimacy, requiring minimal engagement.

Discretionary stakeholders: Legitimate but without power or urgency, needing periodic details and regular updates.

Demanding stakeholders: Seek immediate attention but excessive focus yields limited project gains.

Dominant stakeholders: Hold both legitimacy and authority, necessitating constant consideration.

Dangerous stakeholders: Combine power and urgency, demanding attention for product success.

Dependent stakeholders: Legitimate and urgent but lack equivalent power, needing information.

Definitive stakeholders: Merge power, urgency, and legitimacy, requiring consistent attention for product success.

Stakeholder Prioritisation

Based on any of the frameworks above that you use, you should categorise the stakeholders. 

The primary stakeholders are ones who are directly involved in the development process. Like your engineers and QA team. 

The secondary stakeholders are not directly involved but are affected by the product. 

Then there are your main or key stakeholders who have the buying and/or decision-making power. 

By evaluating them, you can identify further ways to develop engagement. This is important to create at before the product life cycle begins. 

Stakeholders’ Needs and Interests Evaluation

Along with that, you should interview or schedule meetings to fully understand their comforts in reporting to you or when they are ready for feedback. 

Tips on Handling Stakeholders Effectively

• Focus on relationship and trust building. Techniques such as active listening, empathy, integrity, and taking ownership of your mistakes are some great ways to inspire stakeholders. 
• Prioritise collaboration. Teamwork is what will help you and your stakeholders align with your product’s vision. 
• Keep the stakeholders updated regularly. Let everyone have a sense of ‘shared ownership’, as Pichler suggests. 

Aligning Stakeholders for Product Success

What you learnt so far

• Stakeholder management is essential for product managers to bridge divergent interests and steer products towards success.
• Understanding and engaging stakeholders is vital in creating a collaborative ecosystem, aligning diverse interests for product innovation.
• Prioritisation for product success crucially drives product alignment with organisational goals.