Stakeholders — Missing Piece of Most Strategies
Without stakeholder analysis, a strategy is destined for failure.
When helping clients with strategy automation we see strategies that come in all shapes and sizes, varying in format and level of detail:
— Most of them have a bunch of KPIs
— Some tailor business frameworks like Balanced Scorecard or OKRs to suit the specific needs of the management
— Others use confusing terminology, mixing KPIs with goals in a huge spreadsheet
— A few exceptional strategies are well-defined by several levels of decomposition, displaying a clear distinction between goals, KPIs, initiatives, and risks
The Absence of Stakeholder Analysis => Failed Strategy
Despite this variety, we’ve noticed a common bias in most strategies:
Strategies seem to exist in a vacuum, shaped by the visions of top managers, with little evidence of stakeholder engagement.
When you implement such a strategy, it gives you a bunch of results, but not many real outcomes. Managers often attribute this to front-line employees, calling it a result of “poor strategy awareness” or “lack of alignment.”
Here are some suggestions to help your team in adopting a stakeholder-oriented mindset.
1. There should be a _stakeholder_ behind the goal
Key question: Why is this goal on the scorecard?
The right recipe for defining a goal: a rationale + identification of some stakeholders.
“Question every requirement,” as Elon Musk said in one of his interviews.
2. … and the stakeholder’s needs should be _real_, not invented
Key question: Why do you think the stakeholder needs this solution in this format?
We cannot simply listen to stakeholders and create the faster horse they ask for.
The approach we follow in BSC Designer:
- Gain insights from conversations with clients and from your understanding of the problem area.
- Create the MVP according to your best understanding of the customer’s needs.
- Test it in a real environment, allowing it time to reach the clients’ 3H (hands, heads, and hearts).
- Wait for insightful interaction with stakeholders (step 1). Improve or retire the function.
3. A good solution is aligned with the needs of _various_ stakeholders
Key question: Does the hypothesis you want to try benefit many stakeholders or solve several problems at once?
I’ve noticed that solutions addressing a single problem are typically underdeveloped. For me, when a solution addresses multiple problems simultaneously, it’s a sign of thorough research.
Think of Apple, introducing USB-C in their new phones as an innovation for end users. They also satisfied the regulator stakeholder that established USB-C as a standard and upsell adapters as it takes time to switch all gadgets to USB-C.
4. Satisfying the needs of stakeholders should have a _tangible impact_ on the business
Key question: What is the impact of the identified stakeholders on the business bottom line?
We need to prioritize!
The best criteria for prioritization is the expected impact of satisfying the needs of the stakeholders on the business bottom line.
5. Aspirations should be convertible into _action_ plans
Key question: Can you convert the initial aspirational goal into sub-goals and specific initiatives (e.g., do the strategy decomposition)?
Ultimately, we are discussing strategy, and strategy is about change. Let’s focus on those aspects of stakeholders that we can manage and improve.
Learn more about stakeholder analysis and management.
