Managing Stakeholders

Managing Stakeholders

Without a doubt managing stakeholders is a top headache for Product Managers and Product Owners.

As a Product Manager you cannot build a product on your own. You need a team and you must consider contributions and expectations from a whole bunch of other people in and outside your organization.

Stakeholder management is a hot topic in product conferences, meetups and coaching. There exist workshops and trainings only to teach Product Owners and Product Managers how to effectively manage stakeholders.

However, we are trying to fix a symptom rather than the root cause. Conventional approaches, even from key opinion leaders in this industry, emphasize this sub-optimal approach of managing stakeholders, instead of looking at the real root cause. Which is a wrong organizational design.

Improving communication and implementing feedback loops won’t fix something that is broken by design.

The Problem

The problem is failure to understand value and to organize to deliver that value. Many product people boast that they are organizing in real cross-functional end-to-end product teams, but then they need to manage stakeholders. Meh!

When you really understand what value is and how to organize to make value flow, you realize that a product team is not the best approach as it is currently implemented in most companies. And, the main sign you are doing something wrong is actually product managers complaining about having to manage stakeholders and the amount of time and energy spent on such a wasteful task.

In a truly Lean organization there are only three stakeholders: Board/Executive Team, Partners, Customers. Everything else is a misunderstanding of Lean and its actual implementation.

Organizing around Value

The basic organizational structure in a Lean Organization is the Value Stream. 

What you have to do first is understand and define value (needless to say, always from the eyes of the beholder), second you need to organize in value streams and third enable flow.

Even the most modern and cool companies make a mistake as they grow: they organize around silos. There is only one way you can sustainably grow, which is growing value generation as you grow in size, and you cannot do that if you organize in silos. You will end up with a bunch of product teams, but you still have departments such as Sales and Marketing with their own goals and priorities.

Analyze value from the eyes of the customer. The customer doesn’t care if you need Sales or Marketing to deliver your product. Sales and Marketing are non-value adding activities by definition, although they are fundamental business value adding functions.

Now, think about Sales and Marketing as enabling functions to your customer value stream. Does this change anything?

Enabling Functions

When you see Sales and Marketing as enabling functions, they only exist with the goal of supporting the value stream to achieve their business goals, and then you can think “well, perhaps they should be part of the value stream themselves”.

You can do that by including Sales and Marketing people into your value stream or by just making sure they understand they exist to enable the value stream to achieve their goals. Then they are no longer stakeholders, but team members or suppliers.

Enabling functions must work based on demands from the Value Stream Manager and the Value Stream members. They still fulfil their key function of reaching out to customers, understanding customer needs, sensing market opportunities and selling. But, they are not longer requesting features, deliveries or anything like that.

I chose Sales and Marketing because they are usually the most significant, but the same approach works for Finance, HR, Research, Operations, Purchasing or Customer Support.

A Lean Organization understands that everything the company is doing must maximize value delivered while reducing waste in order to implement business strategy and achieve goals. So, all parts of the organization must work in alignment to support Value Streams in their achieving their mission.

What is a Value Stream?

A value stream can be as small as a team or as big as a team of teams, with one person only accountable for its results: the Value Stream Manager reporting directly to CEO, who is managing a product or a value stream, not managing people. This person can also be known as Product Manager.

The role of the Product Manager is making sure all pieces are in place and working properly to maximize value delivered to market and value captured back. What changes dramatically is that everybody else understands they are working for the value stream. So, no more stakeholders, apart from Board/Executive Team, Partners and Customers.

In the end a Value Stream is just another small company inside the big organization. This is what I refer to as growing lean.

No More Stakeholders to Manage

Problem solved. No stakeholders, no more stakeholders to manage! Well, as I said, there are still three stakeholders to consider. First, and most important the customer. Customer is stakeholder number one, they can decide to put their money somewhere else if you don’t treat them well. Second, partners, which allow you to deliver on your business model. And third, the Executive Team and/or Board of Directors.

These are the only people in the organization who can request anything from you, everyone else is working with or for you.

How do we do it?

Either if you want to grow lean or you already grew too big and sluggish, take a look at our programs in Lean Organization and Digital Product Management.