Friday, 13 August 2010

Who's a Stakeholder?

I've just finished a two-day course on managing stakeholders run by The Bank - another of its non-prescriptive what-does-it-mean-to-you exercises. The idea of "stakeholders" was introduced in 1963 by the Stanford Research Institute and defined to be "those groups without whom the organisation would cease to exist". It's one of those ideas that works as long as you don't get too close to it. What it can't mean is "anyone who has an interest in what the organisation does", because if the organisation is big enough, that's just about everybody and the idea becomes just about empty.

I'm going to jump to my conclusion here: a stakeholder is anyone who has a legal, economic or other substantial relationship with you or your project and stands to have their life made worse if your project fails. Take the idea of "worse" seriously here. Employees are stakeholders because if the firm fails, they lose their jobs. Customers are sometimes stakeholders, such as when they are holidaymakers with a tour operator (what happens when the operator goes broke?), and sometimes not, if all they buy is a chocolate bar. Not being able to have your favourite chocolate bar does not make your life worse, though it may make it a little less sweet. Some patients in a hospital are stakeholders (if they are in for life-saving operations) and sometimes not (if they are in for cosmetic surgery). We are all, however, stakeholders in the Water and Sewage company - you want to think about how much worse your life is going to get without potable running water and with blocked sewers? Some things don't have any stakeholders at all - like the local car boot sale or the next episode of some cheap reality TV show.

Within a company, who are your stakeholders? Your Line Manager, who will get their ass kicked if you screw up. Maybe their boss as well. How about the people who do the work? If your project fails, what happens to them? Not much, unless they were hired specifically to work on the project and are fired if it's not there anymore. The full-timers still have jobs: failed projects make work for the working man to do as much as successful ones. There may be people waiting for you to finish your project so they can do theirs, but if you fail, they will find another way of getting started. Their lives are a little more difficult, but "more difficult" does not mean "worse". So not them. The suppliers are happy-ish because they still got paid for all that stuff that no-one is going to use now. They may have to find another customer to replace the business the successful project would have given them, but having to find new business doesn't make their life worse, just a little more difficult. If the project was going to provide many new jobs to the area, those people who now won't have those jobs and can't find others, they turn our to be stakeholders.

So what are all the other people who are working on the project and / or looking forward to its success, but whose lives won't end if it fails? In the loose parlance of modern business, these are "stakeholders", but they have nothing at stake, so they aren't. They are what they always were: suppliers, contractors and employees, doing their job. You need to "manage" them: you need them to give you time and perhaps money; you need them to do the work to schedule; you need them to not obstruct you; you need to keep them informed and keep informed by them. You need to stroke egos and keep the high muck-a-mucks informed. You need to do all that stuff, but that's not "managing stakeholders", it's "dealing with the people you need to work with." Or, work, as it's otherwise known.

Does it matter? Yes. Because once you know this is really about "managing the people you need to make your project work", it all gets much more specific and, well, you could almost be prescriptive. It's also because it creates the illusion that everyone depends on everyone else - "we are all stakeholders" - when in fact your project could die a wheezing death and nobody would notice, care or be one jot worse off. Which is what actually happens.

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