Project launch is go-time for project managers, as many efforts are won and lost in the planning phase. However, executive sponsors also must be ready to sprint, because, at that early stage, they're in the best position to spot potential conflicts, identify resources and set priorities. Though it is too early to know all the details, it is probable that the recent $170 million FBI “Virtual Case File” project failure can be attributed, at least in part, to poor planning and inadequate stakeholder analysis.
It certainly wouldn't be the first time—and it won't be the last—that failing to address all stakeholder needs resulted in project issues. Just ask Tom Scott, executive vice president of operations and CIO of Direct Holdings Worldwide, the parent company of catalog retailer Lillian Vernon, based in New York, N.Y., USA. In September 2003, Lillian Vernon launched a $7 million initiative to change all nine of the catalogue's major systems. Once the users started using the system, they discovered that the impact on their jobs had not been adequately addressed. What's more, because there was a delay in answering their concerns, employees increasingly resisted using the system.
Many employees failed to complete training sessions for the new application, assuming that the new system would not help them do their jobs better. The system was delayed temporarily, and the overall project timeline suffered while the executive worked with the team to create a new communication plan based on a belated analysis of this group's perceptions and interests.
The full rollout and use of the system is back on track, and Mr. Scott now is a firm proponent of stakeholder analysis. “This needs to happen right up front, at the earliest possible stage. The executive sponsor must take a more active role to ensure the project starts out right.”
Having an incorrect stakeholder analysis is one of the biggest risks on a project. That risk lies not only in failing to recognize where stakeholder resistance might crop up but also in failing to identify people who could contribute to a project. “It's easy to ignore valuable resources, people who might be helpful,” says Rachel Manktelow, a director at Mind Tools Ltd., a London, U.K.-based management training firm and career development services Web site. Executives have a wider net than most project managers, so they should take the lead here.
executive summary
Executives tend to think of stakeholder analysis as something that belongs only within the project manager's domain.
Executives must get involved in key areas, including setting priorities, developing communication strategies and balancing conflicting interests.
Stakeholder analysis also relies on a responsive reporting strategy.
Detractors must be managed with understanding.
Stakeholder analysis is a relatively simple process. Ms. Manktelow outlines the basics:
Identify your stakeholders. The first step is simply to brainstorm who the potential stakeholders are, in conjunction with the project manager. Cast a wide net—think of all the people who will be affected by the project, who have influence and power over it or have an interest in a successful or unsuccessful conclusion. Potential stakeholders include: the CEO, senior executives, the project team, users, vendors, customers, shareholders, alliance partners, suppliers, government agencies, the press, special interest groups and the community.
Prioritize your stakeholders. Once you have the list of potential stakeholders, map out the different types and develop individual communication plans. One way to do this is to create a grid with “power” on the X axis and “interest” on the Y axis. Put each stakeholder into one of four quadrants: Keep Satisfied on the upper left (for high-power, low-interest stakeholders), Manage Closely on the upper right (for high-power, high-interest stakeholders), Monitor on the lower left (for low-power, low-interest stakeholders) and Keep Informed on the lower right (for low-power, high-interest stakeholders).
Understand your stakeholder. Explore each group's motivators, such as financial or emotional interest, and create a specific communication plan for each group. Executives play a key role here in setting the communication strategy for high-interest and high-power stakeholders. Many project managers may not have the clout to communicate up the food chain. Executives should set the tone for how they want to communicate with their senior manager peers.
| The project manager is not the person to play referee. |
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| Jennifer Whitt, PMP, President, Optimo Inc., Atlanta, Ga., USA |
Shoot the Messenger?
Identifying the most important stake-holders—and their “ownership” of the results—is only half of the equation. Executives must take a leadership role in setting the communication strategy and enforcing the proper reporting chain. “What the project team thinks are the right messages to the organization are not necessarily the right messages to the key sponsors,” Ms. Manktelow says. “The executive sponsor needs to exert editorial control over the way the project team communicates about the project as a whole.”
Communicating bad news to senior executives can be fraught with political peril. The executive sponsor “should be the relayer of the message” as project managers generally do not have enough seniority to navigate those rocky waters, says Eric Woodruff, senior project consultant for the Minneapolis, Minn., USA-based Project Consulting Group and chair of PMI’s Quality in Project Management Specific Interest Group (SIG).
Project managers often get mired down trying to give all the competing stakeholder interests equal weight. Prioritization of each group's interests is a critical job for the executive. “The project manager is not the person to play referee,” says Jennifer Whitt, PMP, president of Optimo Inc., an Atlanta, Ga., USA-based project management consulting firm.
Even before beginning the stakeholder analysis, the executive should analyze the project to ensure it is aligned with overall corporate objectives. Once you validate that the project supports a larger business purpose, the stakeholder priorities should come into focus. For example, if increasing customer retention is an overarching business goal, then the interests of the existing customer stakeholder group might be placed higher than prospective customers in a customer relationship management software implementation.
Start at the Top
The first party scrutinized in stakeholder analysis should be the executive sponsors themselves. To Tom Scott of Direct Holdings Worldwide, the executive sponsor is the person ultimately responsible for the project.
“We have run into mischief when we were not clear enough about who was filling these roles. Who is the executive sponsor and who is the project team leader and what are their roles? That really is the beginning of stakeholder analysis. If there is a lack of clarity on what role the executive sponsor is playing, there often is a question of them not doing their job,” Mr Scott says.
He has seen executive sponsors who don't understand that they are accountable for a particular project, though project managers did their best to establish their roles up front. If you don't know who ultimately is accountable for the project, it is a good bet no one else does either. This virtually guarantees the project failure.
Project management consultant Eric Woodruff of the Project Consulting Group has seen this happen. “There is nothing worse than an invisible champion,” Mr. Woodruff says.
Parsing Interests
Studying end users’ interests likely will represent a large chunk of the stakeholder analysis exercise for both project manager and executive sponsor. Break down this group into different types with different needs according to their personal agendas and attitudes. “You define users by state of mind as well as job function,” says Michael Branch, PMP, IT manager at Medtronic Inc., a $9 billion medical device company in Minneapolis, Minn., USA.
Some users, unfortunately, have personal axes to grind. “Every project will have its detractors,” Mr. Branch says. “I try to get someone like that on the project team right up front. If I can change the mind of a detractor, that is very powerful. That makes a statement to the rest of the stakeholders.”
Detractors tend to be highly vocal, so, the project communication plan should include methods and techniques for addressing this special group. Mr. Scott investigates what this contingent is likely to say, then responds directly to that objection when he presents to the entire user group. “I’ll say, ‘We've heard that some are saying this tool won't make your job easier. Here's why we don't agree with that statement,’” he says.
As part of stakeholder analysis, the executive sponsor must help the project manager spot groups that are working at cross-purposes and develop a plan to mitigate the situation. “Some groups might have little or no respect for each other,” Ms. Whitt says. One way to ease this phenomenon is to put common processes in place. Methodologies such as Six Sigma and the Capability Maturity Model Integration (CMMI®) can help groups avoid the pitfalls of emotion-based stakeholder behavior because they employ rigorous communication processes that everyone must follow, regardless of political standing within the group. PM
Lauren Gibbons Paul has more than 15 years of experience as a writer and editor for leading business and technology publications, including eWEEK, CIO, Managing Automation and Network World.