The Stakeholder Mutuality Matrix

December 18, 2012

Whilst the stakeholder community for any project or program can be a very diverse group of people and organisations, there is a key sub-set that either require goods, services or other outputs from the project, or have to supply resources, services or support to the project. These ‘logistical’ relationships need careful management as they directly affect the project’s ability to achieve its defined goals.

Altruism and charitable actions are wonderful, but it is dangerous to base the success of your project on the assumption that all of your ‘logistical’ stakeholders are automatically going to be altruistic and generous. The Stakeholder Mutuality Matrix™ described in this post provides a pragmatic framework to help craft communications and build relationships with the stakeholders that matter from a logistics management perspective, within the project’s overall stakeholder management framework.

Understanding your Stakeholder Community

Project communication takes time and effort, both of which are in limited supply. Therefore, most of your communication effort needs to be focused on stakeholders that are important to the success of your project. This requires answering two key questions about each stakeholder:
1.  Who are the most important stakeholders at this point in time?
2.  Why are they important?

Understanding who is important is fairly straightforward, based on an assessment of the stakeholder’s power and involvement in the project. The Stakeholder Circle® uses a combination of power, proximity and urgency to define the most impotent stakeholders. The amount of power held by a stakeholder and their degree of involvement with the work of the project (proximity) are fairly static. Urgency, defined as a combination of the value of the stakeholders ‘stake’ in the project and the degree of effort they are likely to use to protect that ‘stake’ changes significantly and can be influenced by the effectiveness of the project’s communications and the strength of the relationships between the project team and the stakeholder. (See more on prioritising stakeholders).

Whist this process is highly effective at defining who the most important stakeholders are ‘at this point in time’, from a logistics perspective there is a second important group that also needs attention. Care needs to be taken to ensure that lower priority stakeholders who have to provide the support and resources needed for the project’s work are not overlooked in the communication framework. Effective ‘preventative’ communication can keep this group of logistically important stakeholders happy and low on the priority listing, whereas failing to communicate effectively can lead to problems and the person rapidly moving up the prioritisation listing.

Using the Stakeholder Mutuality Matrix

Once you know who is important either from a logistical or prioritisation perspective, you also need to understand why each of these stakeholders is important to define the type of relationship you need to develop and plan your communication accordingly.

The Stakeholder Mutuality Matrix™ provides a useful framework to help in this part of your communication planning. The matrix has two primary dimensions:

  • Each stakeholder will either need something from the project to further their interests or alternatively need nothing from the project.
  • Similarly the project either needs the active support of the important stakeholders, usually in the form of assistance or resources; or alternatively requires nothing from the stakeholder.

Stakeholder Mutuality Matrix

The result is four quadrants that provide a framework for communication and within this framework each stakeholder will also be either supportive or negative towards the project (for more on supportiveness see the SHC Engagement Matrix).

All high priority stakeholders need to be considered plus any low priority stakeholders that have to supply goods, services or support to the project.

  • Project needs nothing / stakeholder needs nothing: Important stakeholders in this quadrant are almost invariably ‘protestors’ or ‘objectors’ attempting to block or change the project. Occasionally very powerful and interested stakeholders have no requirements of the project.
    • Approach for positive stakeholders: Keep informed and engaged.
    • Approach for negative stakeholders: There are two communication options:
      – You may be able to defuse the ‘protests’ by providing better information, but this only works if the protest is based on false assumptions.
      – The alternative is to choose not to communicate with the stakeholder beyond some necessary minimum.
      The only other alternative is to change the project to remove the cause of objection but this is rarely within the authority of the project team.
  • Project needs nothing / stakeholder needs something: These stakeholders are the easiest to manage from a logistical perspective; providing their requirements are part of the projects deliverables. If their requirements are outside of the project’s scope the stakeholder needs to initiate a change request.
    • Approach for positive stakeholders: All that is needed is regular reassurance that their needs will be fulfilled.
    • Approach for negative stakeholders: Provide information to clearly demonstrate your deliverables to them will be beneficial and are aligned with their core interests. These stakeholders are typically an organisational change management challenge.
  • Project needs something / stakeholder needs something: This group needs active management. Project communication needs to clearly link the provision of the required support or resources by the stakeholder to the project being able to fulfil the stakeholder’s requirements. Time needs to be spent developing robust relationships to facilitate an effective partnership that supports both parties interest.
    • Approach for positive stakeholders: A strong relationship is important to ensure a good understanding of both parties’ requirements. Including clearly defined information on what you need from them and when it’s required, linked to reassurance that their needs will be fulfilled.
    • Approach for negative stakeholders: Significant effort is required to change the dynamic of the relationship. You need their support and they need to understand that this is in their best interest if their needs are going to be fulfilled.
    • Approach for low priority stakeholders: All that is usually needed is clearly defined information on what you need from them and when it’s required, linked to reassurance that their needs will be fulfilled.
  • Project needs something / stakeholder needs nothing: This group are your major risk; it typically consists of regulatory authorities and others who have to inspect or approve the project’s work as part of their normal business. Care is needed to build a proper ‘professional’ relationship that respects the integrity of the stakeholder’s position whilst at the same time ensuring your communications are received and acted upon.
    • Approach for positive stakeholders: A good relationship is helpful; however, the key requirement is clearly defined information on what you need from them, when it’s required and why their input is important to the project.
    • Approach for negative stakeholders: Significant effort is required to change the dynamic of the relationship. They are important to you, but you are not important to them and have very little to ‘trade’. To change their attitude, you need to understand the source of the negativity and use any available option to build rapport either directly or through other supportive managers, or by appealing to some greater good.
    • Approach for low priority stakeholders: Ensure clearly defined information on what you need from them, when it’s required and why their input is important to the project is provided in adequate time to allow the stakeholder to do its work.

Once you understand the mutuality matrix, the way you communicate with each of the important stakeholders can be adjusted to ensure both parties in the communication achieve a satisfactory outcome.

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Communication!

November 13, 2012

The recently released Sixth edition of the APM-BoK consists of four major sections: context, people, delivery and interfaces. Typical ‘hard’ project management processes such as scope, schedule, cost, resource, risk, integration and quality comes in the section focused on delivery. This is after the section concerned with people and interpersonal skills and the first area featured in the APM-BOK under the people area is communication. The APM-BoK recognises that communication is fundamental to the project management environment, and makes a very powerful statement: “None of the tools and techniques described in this body of knowledge will work without effective communication”.

To an extent the PMBOK is playing ‘catch-up’ with other key standards including the Association of Project Management (UK) Body of Knowledge (APM-BoK) 6th Edition and ISO 21500. The good news is all three standards now see identifying the important stakeholders in and around a project or program and then communicating effectively with each stakeholder as the fundamental driver of success.

The recently released Sixth edition of the APM-BoK consists of four major sections: context, people, delivery and interfaces. Typical ‘hard’ project management processes such as scope, schedule, cost, resource, risk, integration and quality comes in the section focused on delivery. This is after the section concerned with people and interpersonal skills and the first area featured in the APM-BOK under the people area is communication. The APM-BoK recognises that communication is fundamental to the project management environment, and makes a very powerful statement: “None of the tools and techniques described in this body of knowledge will work without effective communication”.

The PMBOK® Guide 5th Edition has followed PMI’s standard practice of retaining existing chapters and adding new sections at the back so the positional prominence in the APM-BoK is not possible. However understanding the changes between the 4th and 5th Editions and comparing these to ISO 21500 does show the extent of the increased focus in the PMBOK on communication and the stakeholders you communicate with.

MANAGE STAKEHOLDERS

This is a new section in the PMBOK® Guide 5th Edition (Chapter 13). It is based on two processes moved from the communication section of the 4th edition and has been expanded.

Identify stakeholders is a beefed up version of the same process in the 4th Edition, focused on understanding who the project’s stakeholders are.

Plan Stakeholder Management is a new process that describes how the stakeholder community will be are analysed, the current and desired levels of engagement defined and the interrelationships between stakeholders identified. It highlights the fact that levels of engagement may change over time.

Manage stakeholders remains basically the same as in the 4th Edition and is similarly defined in ISO 21500.

Control Stakeholder Management is a new process that ensures new stakeholders are identified, current stakeholders are reassessed and stakeholders no longer involved in the project are removed from the communication plan. The process requires the on-going monitoring of changes in stakeholder relationships the effectiveness of the engagement strategy, and when required, the adaption of the stakeholder management strategy to deal with the changed circumstances.

As with ISO 21500, the early parts of the PMBOK discussing the management or projects in organisations also has a strong emphasis on stakeholders (Chapters 1, 2 and 3).

COMMUNICATIONS MANAGEMENT

This section of the PMBOK® Guide 5th Edition has been consolidated and expanded and is very similar to ISO 21500 in its effect.

Plan Communications remains basically unchanged, the key input is the stakeholder analysis.

Manage Communications is a new process that amalgamate the 4th Edition processes of Distribute Information and Report Performance, and in doing so removes a lot of unnecessary confusion. This new process goes beyond the distribution of relevant information and seeks to ensure that the information being communicated to project stakeholders has been received and understood, and also provides opportunities for stakeholders to make further information requests. ISO 21500 has an interesting additional function (not in the PMBOK) which is the management of the distribution of information from stakeholders to the project in order to provide inputs to other processes such as risk management.

Control Communications is a new process that identifies and resolves communications issues, and ensures communication needs are satisfied. The outputs are accurate and timely information (resolved communications issues) and change requests, primarily to the communication plan.

Summary

Communication is the means by which information or instructions are exchanged! Communication is the underpinning skill needed to gather the information needed to make project decisions and to disseminate the results from all of the traditional ‘hard skills’ including cost, time, scope, quality and risk management. Good communication makes these processes effective, whereas poor communication leads to misunderstood requirements, unclear goals, the alienation of stakeholders, ineffective plans and many other factors leading to failure

The common theme across all three standards is that communicating the right information to the right stakeholders in the right way (and remembering communication is a two-way process) is fundamental to success. The basic requirement is to deal effectively and fairly with people, their needs, expectations, wants, preferences and ultimately their values – projects are done by people for people and the only way to influence people is through effective communication.

Project communication skills include expectation management, building trust, gaining user acceptance, stakeholder and relationship management, influencing, negotiation, conflict resolution, delegation, and escalation.

What’s really pleasing to me is how similar these ‘standard’ requirements are to the ideas embedded in my Stakeholder Circle® methodology, books, blogs, White Papers and tools. I have no idea how much influence my writings have had on the various standards development teams but it is pleasing to see a very common set of ‘best practices’ emerging around the world. Now all we need is the management will to implement the processes to improve project and program outcomes.


The value of stakeholder management

August 13, 2012

One of the questions I’m regularly asked is to outline the business case for using stakeholder management in a business or project. This is a difficult question to answer accurately because no-one measures the cost of problems that don’t occur and very few organisations measure the cost of failure.

The problem is not unique; it is very difficult to value the benefits of an effective PMO, of improving project delivery methods (eg, improving the skills of your schedulers), of investing in effective communication (the focus of my September column in PMI’s PM Network magazine) or of better managing risk. The costs of investing in the improvement are easily defined, but the pay-back is far more difficult to measure.

There are two reasons why investing in effective stakeholder analytics is likely to deliver a valuable return on investment (ROI).

  • The first is by knowing who the important stakeholders are at any point in time, the expenditure on other processes such as communication can be focused where it is needed most, generating efficiencies and a ‘bigger bang for your buck’.
  • The second is stakeholders are a major factor in the risk profile of the work, their attitudes and actions can have significant positive or negative consequences and understanding the overall community provides valuable input to a range of processes including risk identification, requirements definition and schedule management.

At the most fundamental level, improving the management of stakeholders is directly linked to improving the quality of the organisation’s interaction with the stakeholders and as a consequence, the quality of the goods or services delivered to the end users or client (ie, stakeholders) as a result of being better informed whilst undertaking the work.

Quality was defined by Joseph Juran as fit for purpose, this elegant definition applies equally to the quality of your management processes as it does to your production processes and to the deliverables produced. And the three elements are interlinked; you need good management systems and information to allow an effective production system to create quality outputs for delivery to the client. A failure at any point in the chain will result in a quality failure and the production on deliverables that do not meet client requirements.

Placing stakeholder management within the context of quality allows access to some reasonably well researched data that can be interpolated to provide a reasonable basis for assessing the ‘return’ likely to be generated from an investment in stakeholder management.

Philip B. Crosby invented the concept of the ‘cost of quality’ and his book, Quality Is Free set out four major principles:

  1. the definition of quality is conformance to requirements (requirements meaning both the product and the customer’s requirements)
  2. the system of quality is prevention
  3. the performance standard is zero defects (relative to requirements)
  4. the measurement of quality is the price of nonconformance

His belief was that an organization that established a quality program will see savings returns that more than pay off the cost of the quality program: “quality is free”. The challenge is knowing you fully understand who the ‘customers’ actually are, and precisely what their various requirements and expectations are, and having ways to manage mutually exclusive or conflicting expectations. Knowing ‘who’s who and who’s important’ is a critical first step.

Feigenbaum’s categorization of the cost of quality has two main components; the cost of conformance (to achieve ‘good’ quality) and the cost of poor quality (or the cost of non-conformance).

Derived from: Feigenbaum, Armand V. (1991), Total Quality Control (3 ed.), New York, New York: McGraw-Hill, p. 109, ISBN 978-0-07-112612-0.

The cost of achieving the required level of quality is the investment made in the prevention of non-conformance to requirements plus the cost of testing and inspections to be comfortable the required quality levels have been achieved.

The cost of poor quality resulting from failing to meet requirements has both internal and external components. The internal costs are associated with defects, rework and lost opportunities caused by tying people up on rectification work. External failure costs can be much higher with major damage to an organisation’s brand and image as well as the direct costs associated with fixing the quality failure.

The management challenge is balancing the investment in quality against the cost of quality failure to hit the ‘sweet spot’ where your investment is sufficient to achieve the required quality level to be fit for purpose; overkill is wasted $$$$. But first you and ‘right stakeholders’ need to agree on precisely what fit for purpose actually means.

Also, the level of investment needed to achieve the optimum cost of quality is not fixed. The better the organisation’s quality systems, the lower the net cost. Six sigma proponents have assessed the total cost of quality as a percentage of sales based on the organisations sigma rating.

This table demonstrates that as the quality capability of the organisation improves, the overall cost of quality reduces offering a major competitive advantage to higher rating organisations. Most organisations are rated at 3 Sigma so the opportunity for improvement is significant.

Within this overall framework, the costs and risks associated with poor stakeholder engagement are significant and follow the typical pattern where most of the costs of poor quality are hidden. Using the quality ‘iceberg metaphor’ some of the consequences of poor stakeholder engagement and communication are set out below:

 

Effective stakeholder analysis and management directly contributes to achieving the required quality levels for the organisation’s outputs to be fit for purpose whilst at the same time reducing the overall expenditure on the cost of quality needed to achieve this objective. The key components are:

  • Effective analysis of the stakeholder community will help you identify and understand all of the key stakeholders that need to be consulted to determine the relevant aspects of fit for purpose.
  • Understanding the structure of your stakeholder community facilitates the implementation of an effective two-way communication strategy to fully understand and manage the expectations of key stakeholders.
  • Effective communication builds trust and understanding within a robust relationship.
    o Trust reduces the cost of doing business.
    o Understanding the full set of requirements needed for the work to be successful reduces the risk of failure.
    o Robust relationships with key stakeholders also contribute to more effective problem solving and issue management.
  • Maintaining the stakeholder engagement effort generates enhanced information that will mitigate risks and issues across all aspects of the work.

Calculating the Return on Investment:

Effective stakeholder management is a facilitating process that reduces the cost, and increases the efficiency of an organisations quality and risk management processes. Based on observations of similar process improvement initiatives such as CMMI, the reduction in the cost of quality facilitated by improved stakeholder engagement and management is likely to be in the order of 10% to 20%.

Based on the typical ‘Level 3’ organisation outlined above, a conservative estimate of the efficiency dividend per $1million in sales is likely to be:

     Total cost of quality = $1,000,000 x 25% = $250,000
     Efficiency dividend = $250,000 x 10% = $25,000 per $1 million in sales.

Given the basic costs of establishing an effective stakeholder management system for a $5million business, using the Stakeholder Circle®, (See: http://www.stakeholder-management.com) including software and training will be between $30,000 and $50,000 the efficiency dividend will be:

      ($25,000 x 5) – 50,000 = $75,000
      (or more depending on the actual costs and savings).

The element not included above is the staff costs associated firstly with maintaining the ‘culture change’ associated with introducing an effective stakeholder engagement process and secondly with actually performing the stakeholder analysis and engagement. These costs are embedded in the cost of quality already being outlaid by the organisation and are inversely proportional to the effectiveness of the current situation:

  • If current expenditures on stakeholder engagement are relatively low, the additional costs of engagement will be relatively high, but the payback in reduced failures and unexpected risk events will be greater. The overall ROI is likely to be significant.
  • If the current expenditures on stakeholder engagement are relatively high, the additional costs will be minimal (implementing a systemic approach may even save costs), however, the payback in reduced failure costs will be lower because many of the more obvious issues and opportunities are likely to have been identified under the current processes. The directly measurable ROI will be lower, offset by the other benefits of moving towards a higher ‘Sigma level’.

Conclusion:

The introduction of an effective stakeholder management system is likely to generate a significant ROI for most organisations. The larger part of the ‘return’ being a reduction in the hidden costs associated with poor stakeholder engagement. These costs affect reputation and future business opportunities to a far greater extent than their direct costs on current work. For this reason, we feel implementing a system such as the Stakeholder Circle is best undertaken as a strategic organisational initiative rather than on an ad hoc project or individual workplace basis.

The path to organisational Stakeholder Relationship Management Maturity (SRMM®) is discussed at: http://www.stakeholdermapping.com/srmm-maturity-model


Stakeholder Circle in the ‘cloud’

May 27, 2012

The Stakeholder Circle® methodology and tools have been in use for several years. However, many potential business users found accessing the system difficult, with company policies preventing the installation of the necessary software.

By moving to ‘the cloud’ and transitioning to a standard Microsoft operating environment these issues should be in the past. Anyone on any computer platform can access the tool running on our secure servers and larger corporations can elect to install the system on their own intranets. The flexibility of ‘the cloud’ has also allowed us to offer an increased range of options to suite organisations of all sizes.

As part of the overall system upgrade, we have also enhanced our websites:

  • Our Stakeholder Relationship Management website has been overhauled and is being progressively developed into the world’s leading resource for stakeholder management information. See: http://www.stakeholdermapping.com
     
  • The Stakeholder Circle website has been simplified and now focuses on the Stakeholder Circle® tools, methodology and a comprehensive help system, see: http://www.stakeholder-management.com

We have set up a separate server to allow interested people to try out the new ‘cloud’ version of the Stakeholder Circle® register on-line at http://www.stakeholdermapping.com/free-trial and your access information will be emailed to you within a few minutes.


Defining Complex Projects

October 8, 2011

There has been a lot written about ‘complex project management’ over the last few years much of which as confused projects with programs, complexity with big and complexity with complicated technology. For an overview of complexity theory see: A Simple View of ‘Complexity’ in Project Management.

A sentence in the paper ‘Translation and Convergence in Projects: An Organisational Perspective on Project Success’ (Project Management Journal, Sept.2011) triggered this post and sums up project complexity nicely: “The key difficulty with complex projects is that those managing them will often be ‘feeling their way’ towards a solution rather then following a reliable blueprint or project plan”.

Our view has consistently been that complexity is a function of complexity theory and it is a dimension of every project and program. This means every project has a degree of complexity in the same way that it has a defined size, a degree of technical difficulty and a degree of uncertainty, and all 4 dimensions interact and affect each other.  These four dimensions are discussed in the White Paper at: http://www.mosaicprojects.com.au/WhitePapers/WP1072_Project_Size.pdf.

What the thought from the paper above highlighted is the very close linkage between complexity which we see as being primarily a function of the project’s stakeholder community and the degree of uncertainty associated with the project outcome. The blog post, Projects aren’t projects – Typology outlines one way of measuring uncertainty based on a model by Eddie Obeng.

I’m not sure how to measure this empirically yet, but I do have a feeling there is a need to define a measurement system that incorporates the type of uncertainty within the overall matrix of stakeholder engagement and supportiveness already embedded in the Stakeholder Circle® methodology  – any thoughts will be appreciated.


Google+ uses Circles to manage communication

July 23, 2011

The idea of stakeholder circles is spreading! Google has begun beta testing a new social networking system that uses the concept of circles to manage friends.

Not in same way as our Stakeholder Circle®, but the Google + Project now lets you put your social contacts into different circles. The Google circles makes it easy to put your friends in one circle, your family in another, and your work colleagues in another; then manage what you share with each group.

Not to be outdone, Facebook engineers have already ported the circle concept to Facebook! The engineers wanted to be able to organise their Facebook friends in the same way you can organise them using Google+. Since it took a bit of hacking to develop, the team of four has called their tool Circle Hack and described it as “A one-night experiment with JavaScript (not affiliated with Facebook).”

Just for the record, we invented the Stakeholder Circle® in 2003, and the name is a Registered Trademark. Neither of the two developments above conflict with our mark, and naturally, we thoroughly support the idea of using circles to manage your communication with groups of significant people, friends or stakeholders.


New European Partner – Germany

June 20, 2011

Beratung-X has joined the Stakeholder Circle partnership to offer clients in Germany training and consultancy based on the Stakeholder Circle® methodology. Beratung-X is an independent management consultancy lead by Stephan Kasperczyk.

To contact Stephan go to: http://www.beratung-x.de