What is Stakeholder Analysis and why should you care?

In any large organization (and most small ones) your success doesn’t come from just serving one customer. It comes from serving customers well while also working well with relevant stakeholders. 

For instance, it doesn’t help a restaurant for a waiter to give exceptional customer service yet be feuding with the bus staff and cooks and making their jobs harder. 

Nor is it safe to plan a systemic change to your business by looking only at the impact on the immediate customer. It’s easy to make naive changes that look like they’ll delight customers, but the changes fail because of the collateral damage to other stakeholders in the system.

We need our systems to work smoothly in service to our internal and external customers and stakeholders. And a key to working more smoothly is understanding, deeply, how all the stakeholders co-create that customer experience. 

Whether you're the business owner or a senior manager, you have to understand how stakeholders' interests come together, sometimes reinforcing each other and sometimes conflicting, and you have to balance and navigate those interests.

This Toolkit will help you understand stakeholders' interests deeply, and will support you to analyze a situation or a potential change across the full range of your stakeholder ecosystem.

How to use the Stakeholder Analysis Toolkit

The basic unit of this analysis is the individual Role that performs work. For a given Target Role, ask the questions shown. The answers will help you to better understand that Role's stakeholders and their needs and interests. I recommend delegating the first-draft analysis to your best person in each Role that's relevant, then taking in their work to inform yours. 

So for your restaurant, whether you're debugging a problem (a feud between wait staff and cooks) or planning a big change (adding curb service), have your best cook, best waiter, and best busboy all take their own best shot at filling out the Toolkit, and have them share it with you.

Who are the stakeholder groups?

Pick your Target Role, and for it, ask:

1. Who are all of this role’s internal customers and suppliers?
2. Who are all of this role’s external customers and suppliers?
3. Who are the role’s other stakeholders? (think of anyone not already listed who cares about -- or is affected by -- the work of this role)
4. Who else should be considered?

For each group you think of, don’t worry too much about which category they fit into. Some people might be simultaneously both clients and suppliers; some might be long-term contractors who sit on the border between ‘internal’ and ‘external.’  Your goal here is simply to surface all the groups.

For example, take the Target Role of a paralegal at a law firm. 

1. Internal customers are the people inside the organization who receive value from the work of the paralegal -- this would include attorneys, the firm’s owners, and so on. Internal suppliers are those inside the organization who give value to the work of the paralegal -- the attorneys again, perhaps legal clerks, front desk staff, administrative staff, and so forth.
2. External customers are outside the firm and receive value: the firm’s clients, certainly. Possibly other people come to mind. External suppliers provide value to the work the paralegal is trying to accomplish: process servers, investigators, clerks at other firms who provide needed documents, etc. 
3. Other stakeholders are those who are in some way affected by the work of the paralegal but might not obviously be in a ‘customer’ or ‘supplier’ relationship. For the paralegal, these might include judges and court staff. 
4. When you ask, ‘Who else should be considered?’ you might think of the state Bar, which is interested in seeing paralegals do a good job and wants to protect the profession's reputation.

Once we’ve surfaced all the groups, we focus on the relationships between their roles.

What does each identified group want?

If you're working on a specific problem, confine the analysis to that problem (i.e. the feud between waiters and cooks). If you're planning a change, confine the analysis to that scope. At other times, such as when you're trying to understand a new division you've taken over, leave the scope open. 

In a spreadsheet (one sheet per role), create one row for each group identified as a possible stakeholder. Write the group name in column A. Then in columns B-D, answer:

• What does this group need from our selected role?
• What does this group give to our role?
• What does our role need from this group, but doesn’t yet receive?

For example, looking at our paralegal role, we could start to fill the grid out as follows:

Feel free to write much more detailed entries. 

What are some existing complaints?

In column E of the spreadsheet, write any known complaints that the group has toward your role. (If there are significant complaints between stakeholder groups towards each other, but not directly including your role, note them elsewhere or omit them for now.) Notice that your role’s complaints about a stakeholder group should be in ‘D’ stated as an ‘unmet need.’ 

What are some systemic problems?

Where do stakeholders’ needs, preferences, desires, and complaints…

• Overlap?
• Contradict each other?
• Create special difficulties for your role?

Write these out in greater detail a second document and discuss them with your leadership. See if you can engage the stakeholder groups in constructive dialog about any of these. 

For example, a paralegal’s attorney may push for work speed at the expense of not filling out ‘unimportant’ case details in the case management system, or skipping the use of the file naming convention. 

But the firm’s owners might push paralegals to take the time to fill out all case details and to use the file naming convention every time, even at the expense of work speed. 

This sort of tension risks crushing the paralegal between competing priorities and subjecting them to criticism from one group if they honor the preferences of the other. That sort of tension can be profoundly corrosive to morale, and is an unfair burden to the paralegal. The first step to resolving it is to document it. Then, management needs to resolve it permanently, in a way that protects the workers. 

What are some unsolvable tensions?

Of the systemic problems, which ones are “unsolvable”? 

For example, with regard to the health of research monkeys, one group of professionals is primarily focused on the emotional-social health and stability of the monkey colony, while another group is primarily focused on the medical-physical health of individual monkeys. 

When an aging alpha monkey needs medical care, it’s not uncommon for the medical-focused staff to emphasize the importance of removing that alpha from the colony for treatment, while the colony-focused staff may resist, over legitimate concerns that removal of the alpha would destabilize the colony and lead to a violent power struggle, resulting in other monkeys becoming injured. 

Since optimizing for either concern will always sub-optimize the other concern, and since each group has a primary focus on their own perspective, these two groups can be expected to be in disagreement and even conflict on an ongoing or recurring basis. 

These sorts of conflict patterns are inherently unsolvable. If you are caught up in one, or are caught between two such groups, be aware that no stable solution is possible -- there is only a situation to be managed. 

Again, these must be documented and elevated to the level above the two conflicting groups.