No one makes decisions alone. Especially in this technologically interconnected age, we are beholden to the interests and opinions of many groups of people: consumers, investors, brand enthusiasts, industry influencers… the list goes on. Each has a distinct point of view, an interest in the outcomes of our decisions, and often an investment of time, money, interest, and even reputation on the line.
When so many parties are stakeholders in the choices made by companies, brands, or influencers, how can we be certain that we are meeting the demands of our many constituent groups? How can we capture and consider the interests of our stakeholders? Enter Stakeholder Analysis – the process by which an organization can analyze the priorities and interests of various parties involved in a project or decision in order to create understanding and build consensus.
The Importance of Stakeholder Analysis
The blog at AVC contains reliably interesting and useful musings regarding news, technology, and leadership in today’s complex world. A post there addressing Stakeholder Analysis compares an organization’s stakeholders to the community surrounding a neighborhood school, noting that “In theory every one of those stakeholders has a vested interest in the success of the school but in reality there is often conflict between them.” This is because “all complex systems have many stakeholders and while they all want the system to succeed, because they have a stake in it, they rarely view success in the same terms.”
Stakeholder Analysis then is not only prudent but necessary as a process that enables those in leadership positions to gain a deeper understanding of these various definitions of success in order to fulfill as many of them as possible. This is invaluable when trying to create consensus among stakeholders both during a particular project and at its conclusion.
MindTools presents Stakeholder Analysis as a tool for project management, saying “Stakeholder Analysis is the first step in Stakeholder Management, an important process that successful people use to win support from others. Managing stakeholders helps them to ensure that their projects succeed where others might fail.” But what does the process entail?
A Diagnostic Tool with Practical Applications
WorldBank notes that Stakeholder Analysis (SA) is highly time-sensitive, and should begin before the implementation of any major decisions that either require consensus or may spark backlash from any groups with a stake in the results of that decision. “In early stages of policy formulation,” they write, “SA can help gauge the likelihood of acceptance and sustainability of anticipated policy reforms.” They suggest that the process begin with research and interviews with stakeholders (or their representatives) in order to diagnose areas of concern and determine the stakeholder’s level of interest and their power to influence decision-making.
Once this information is gathered, Stakeholder Analysis can begin through establishing the organization’s priorities. This is done using a Power/Interest matrix. Placing each major stakeholder on the grid (one axis represents Power, the other Interest) helps determine what stakeholders need from the organization to enable their support and investment.
For example, a stakeholder with high Interest (in the decision’s outcome) but low Power (to impact decision-making) should be “kept informed” of progress in order to satisfy their interest. A stakeholder with low Interest but high Power must be “kept satisfied” in order to maintain their support. Those with low Interest and Power should be “monitored” but require low effort on the part of the organization, whereas those with high Interest and Power must be “managed closely,” as they are both invested in outcomes and able to impact the trajectory of the project or decision.
Armed with this knowledge, an organization or leader is able to make informed choices about their interactions with stakeholders and streamline the effort underway to reduce delays, conflicts, or disagreements that may damage the end result.
Creating Value for Stakeholders
While this may seem like a defensive tool against those with decision-making power (and in certain cases may be necessarily used as such), I believe Stakeholder Analysis is a powerful and effective tool for creating consensus even in the absence of major conflict or power struggles. When deployed as part of a good-faith effort to meet the needs of all parties interested in a project or decision, it enables leaders to act with knowledge of how their decisions impact their various stakeholders and to satisfy the interests of all (or most) of those involved.
The idea of “stakeholders” itself is a constantly broadening one. As decision-making processes become more transparent, team-oriented, and subject to public scrutiny and opinion-sharing, today’s organizations have a responsibility not only to their boards or literal stockholders but to their customers and communities as well. Even for-profit companies feel a push towards social responsibility and a mandate to create value for many interested parties.
Ideally, the Stakeholder Analysis process can be used proactively to identify ways of creating value for everyone involved in a particular project or endeavor, both during and after the decision-making stage. We may never be able to please everyone, but the brands, companies, or influencers who are able to satisfy their stakeholding communities are ultimately the most effective and successful. In complex markets with ever-diverging interests and points of view, Stakeholder Analysis is an invaluable tool for creating both consensus and value.