Stakeholder Management

Supply Chained is a free weekly newsletter discussing trends, tools, and principles of Supply Chain Management and Engineering. 

Supply chain professionals often depend on cross-functional teams to implement changes, so this week we're going to look at managing project stakeholders.

Have you ever watched one of your projects die? I have. It's painful, and it's something that gives many project managers nightmares.

One time, it happened just as I was getting a project ready for kick off. I'd flown around the country for meetings, written a detailed proposal, and given presentations to dozens of managers and engineers. Our team had developed clear goals, created a solid plan, and our budget was tentatively approved. All that was left was one meeting - a teleconference to brief the participating departments, and answer a few last-minute questions. It was a formality, we thought, but a necessary one. Then, a senior engineer from the product management team spoke up. Right before the meeting, his boss had told him that our project was not a priority for their department, and he would not be permitted to work on it. We were all stunned. Without the support of that one stakeholder there was simply no way the rest of us could move forward. Of course, we tried several times to change the product manager's mind, but he'd made his decision and wasn't interested in talking with us any more. Our project was dead, just when it was supposed to begin.

"The single biggest problem in communication is the illusion that it has taken place.” ~ George Bernard Shaw

Last Friday, I sat down with LinkedIn Learning instructor Natasha Kasimtseva. Her course about stakeholder management walks through a process for identifying our stakeholders and developing an engagement plan. (I've unlocked her course, below) It turns out that she has a lot of supply chain experience, too, because she's worked as a project manager for global ERP implementations.

Natasha believes that stakeholder management is often the single most important factor in the success of a project. Learning how to do it well can help you, and your teams, stand out. One of her tips is to engage stakeholders early and often through a process that she calls "co-creation." Here's a quick video where she explains how she applies co-creation in projects:

Projects are Special

When we talk about supply chains, we often think about processes. For example, the SCOR Model is a "process framework". We want our processes to be resilient, efficient, and sustainable. We try to make supply chains better through continuous process improvement.

Projects are different because they are temporary endeavors. They have a well-defined beginning and ending. I often say that projects are the tools we use to implement changes, so they are strategically necessary for adaptation and evolution. But the time spent planning and executing a project is generally short compared to the long-term (and sometimes irreversible) impacts they have on our supply chain processes. And while a process might be able to absorb shocks and delays, these same disruptions can often kill a project.

Projects are intended to generate benefits for the permanent organizations that invest in them. Projects also have side effects; some positive, some neutral, and some negative. All of the people who make contributions to a project, who receive benefits, or who are impacted by the side effects, are stakeholders.

A few years ago, PMI's Project Management Journal published a special issue about project stakeholder management. The introduction, written by Pernille Eskerod, Martina Huemann, and Grant Savage, summarizes the academic research that has been done around stakeholder management, and highlights many of the challenges that project managers must deal with.

Our projects have always had a lot of stakeholders, and they have always been relevant, but I'd argue that social media has significantly amplified every stakeholder's importance. Why? Because projects are now the subject of discussions on internal social media tools, like Slack or Teams. And on public sites like LinkedIn, Twitter, and Glassdoor. Since it is so easy for our stakeholders to communicate information about our projects, and negative (or inaccurate) information can spread and go viral quickly, we need to ensure that we are proactively engaged in those conversations.

Academic Theories

In their paper, Eskerod, Huemann, and Savage explain that when we focus on the role of stakeholders, we are actually using a theoretical lens to analyze the nature of companies and projects. They describe the Stakeholder View as having evolved from the Production View and the Managerial View.

Production View: The Production View looks at how a company buys things from suppliers, converts them into something more valuable, and then sells those things to customers. When we use this view, we are most interested in understanding the production processes and how to maximize profits.

Managerial View: The Managerial View looks at how we manage the people inside of an organization. Using this approach, we might argue that the key to making a company successful is to have the right people, with the right skills, and we often look for ways to give them the proper organizational structure, resources, and incentives.

Stakeholder View: The Stakeholder View argues that there are lots of people inside and outside of the organization who all need to be considered. Either they have a role to play in doing the work, or they will be affected in some way by the outcome. There are four important roles that stakeholders play in relation to our projects:

1. Stakeholders provide the resources that a project needs
2. Stakeholders define the criteria for success
3. Stakeholder resistance can interfere with a project
4. Projects can impact stakeholders in positive and negative ways

Within the Stakeholder View, there are two common approaches to stakeholder management:

• Normative Approach: "What do your stakeholders need from the project?" The Normative Approach can be thought of as managing on behalf of stakeholders.
• Instrumental Approach: "What does your project need from your stakeholders?" The Instrumental Approach can be thought of as management of the stakeholders.

Applying this Stakeholder View can help us identify when there are competing interests, and make it easier to find solutions. For example, pretend that I'm managing a project in a manufacturing company. The VP of Sales wants to maximize profits, but our customer wants to minimize price. At first, it seems like these stakeholders have competing interests. But we could probably get both of them to support a project if we can show that it will increase efficiency and reduce both of their costs.

"Projects that make effective use of project stakeholder management tend to run smoothly and be successful because stakeholders understand and agree with the project approaches and outcomes. Projects with ineffective stakeholder management, on the other hand, frequently experience delays and cost overruns or may even be terminated." ~ Richard Sperry and Antonie Jetter)

Real-World Stakeholder Management Challenges

Stakeholder management is both art and science. We need to start by learning the basics, then we can innovate and improvise to meet the unique needs of each project.

If you're interested in learning more about project stakeholder management, Natasha's course provides a great introduction to the tools, rules, and jargon. Once you have a stakeholder management process in place, the article by Eskerod, Huemann, and Savage is useful for thinking about some of the more complex issues that we need to consider. For example, here are four challenges that I've run into, and which they touch on in their paper:

Stakeholders Change: Stakeholders come and go, and the perceptions of each stakeholder might change during the lifecycle of a project. That means we need to constantly review our stakeholder analysis and revise our communication strategies.

Projects Don't Exist in a Vacuum: Stakeholders have relationships and influences outside of the project, and these can have effects on the project. For example, our project might become a "bargaining chip" that is used in a negotiation between two executives.

Expectations Must Be Managed: Engaging stakeholders can create expectations. If these expectations are not met, then stakeholders may become dissatisfied. Or, if a stakeholder's requirements are not addressed in the project scope, they may oppose the project altogether.

Engagement Must Be Balanced: We need to determine the right level of engagement with each stakeholder. We don't want stakeholders micro-managing our project, nor do we want to annoy them by sharing too many project updates. Each stakeholder is different, and we don't want any of them to ignore us, or to feel ignored.

My take on how this affects supply chain professionals. Stakeholder management is a valuable skill that often determines the fate of our projects. We need to understand who our stakeholders are, what they need from us, and what we need from them. There are tools that can help us implement stakeholder management, and these become really powerful when we combine them with emotional intelligence and business acumen. Lots of things can change during the course of a project, so we also need to review our stakeholder management plans frequently.

What do you think? What are the best and worst examples of stakeholder management that you've seen? Are there tools or systems for stakeholder management that you find especially helpful?

Additional Resources

• Textbook: Project stakeholder management. Eskerod, P. and Jepsen, A.L., 2013.
• 'Project Stakeholder Management—Past and Present’, Project Management Journal, 46(6), pp. 6–14. Eskerod, P., Huemann, M. and Savage, G. (2015)
• Links to 254 articles and papers about stakeholder engagement from the Project Management Institute (PMI)
• A Systems Approach to Project Stakeholder Management: Fuzzy Cognitive Map Modeling. Sperry, R. C. & Jetter, A. (2019). Project Management Journal, 50, 699–715.

Who is Mr. Supply Chain?

Daniel Stanton is a supply chain industry veteran and the best-selling author of Supply Chain Management For Dummies. He is dedicated to empowering professionals through education and technology. His courses on LinkedIn Learning (formerly Lynda.com) have been viewed by students around the world, and he's a frequent speaker at educational conferences and industry events.