What’s the difference between a stakeholder and a supplier?
I was asked this question recently and I thought it was quite simple to answer. It turns out, as I started to formulate my response, that it is a lot harder to pin down than I anticipated.
Partly, I think, that’s due to the “flexible” nature of project management jargon. What’s a stakeholder for me might not be so defined by the methodology you use, or the common terminology used by your PMO.
I think the difference is easier to explain if we look at what each of them is. The comparisons, similarities and differences then become more transparent.
What is a Stakeholder?
For me, a stakeholder is anyone who has an interest in the project.
Primary stakeholders are those who do the process. They agree what will and won’t be in scope of the project. They know how much they are prepared to invest, both in terms of time and money. This group is going to shape the project and includes your project sponsor and the people who sit on your Project Board.
Secondary stakeholders have less of a vote in the way the project is run and the outputs it will achieve. They may shape and define the result, and you’ll listen to them as they are affected. The project might be quite challenging for them, and you’ll want to involve them, but they aren’t key decision makers. This group would come to meetings, maybe take part in a workstream and do smaller tasks.
Interested stakeholders are curious. They might feel like they want a say but they have no managerial interest in how the process is performed, they are not a supplier, and they are not involved in delivering the project or process. These are people you meet at the water cooler or coffee machine. They have a view, but you may or may not want to listen to it. It would depend on their level of influence over the opinion of people you do rate on the project.
Stakeholders can be internal or external. Internal suppliers work within your organiation, so your peers, managers, colleagues. They are people on the payroll of your business.
External stakeholders are the opposite: they are people outside your organisation, and that includes suppliers.
What is a Supplier?
When most people think of suppliers we think of organisations from whom we buy goods and services for our project. This would include:
Hiring equipment e.g. cement mixers, venue hire, kit of a any kind
Providing a service e.g. contract developers, subject matter experts brought into the project for a particular purpose such as specialist lawyers, trainers. Contract staff members joining the project team would fall into this category, even if they were on staff for the duration of the project and work as if they are a member of the in-house team.
Providing goods e.g. vendors from whom we purchase equipment or products for the project like computer chips, raw materials, steel etc.
These organisations or individuals are normally external. You can’t source the goods or services in-house so you go externally to procure them.
The other thing they have in common is that we typically pay for them.
However, suppliers could be internal, if your internal labour market is set up that way. IT, for example, could be a supplier of development resource to your Sales project, and they could charge you for the time and effort of the team involved. In this respect they would be a supplier and would act like one. You’d probably have a formal statement of work, estimates drawn up and so on.
I’ve only worked in one organisation like this but it is perhaps more common than you think, especially in the biggest organisations and the public sector. Personally I’m not convinced of the value of this kind of internal economy, but I mention it because there might be times where a supplier (in terms of your project) is actually someone who sits down the corridor from you and works for the same entity.
Managing Suppliers as Stakeholders
I think we can conclude that suppliers are a subset of your stakeholder group. They should be managed and engaged as any other stakeholder group. That means including them in your stakeholder analysis.
It’s important when working with people who are strategically important to the success of your product e.g. package software provider, to think about their involvement in the project and to do what you can to set them up for success. In other words, you could involve them in project communications. They might need slightly different versions of your communications because you might not be able to share company confidential information with them, but broadly you should treat them as per your stakeholder analysis suggests.
To conclude, suppliers have a distinct role to play but they appear in my stakeholder management plan. I would put suppliers as a sub-group of my stakeholders. I would classify them as external primary stakeholders. In other words, they have a core role to play and are influential in both shaping and delivering the project, but they aren’t employees.
How would you state the difference between a supplier and a stakeholder? Perhaps you can do it in fewer words than me! Let me know in the comments section below.
When Lotterywest, Western Australia’s state lottery, embarked on a large rebranding exercise, project manager and head of the shopfit team Keith O’Shea, an Australian project manager with 20 years experience in various industries including construction, manufacturing and computing,knew that the stakeholders would be key to the success of the project. His main group of stakeholders were the retailers who would be adopting the new aqua and yellow brand. To keep them engaged for the duration, O’Shea and his project team looked at what would interest those involved and realized that they wanted a few straightforward things: help to cover the costs of the rebranding, help with marketing and to be regularly informed of what was going on.
‘We had to be especially thoughtful in how we motivated retailers to move to the new brand,’ O’Shea explains. ‘It was the outlets themselves who had to find the money to pay for the change.’
Lotterywest responded to these needs by putting several strategies in place. The company organized interest-free loans which were made available to all the 484 lottery outlets. Lotterywest and their advertising agency also ensured that all television and newspaper adverts featured the new brand, even before the first shopfit had been completed. This was done to enforce the new image in the public domain, and help convince retailers to move towards it. To help the retailers along, the project team produced a makeover ‘kit’ that was made available to the rural and remote shops. O’Shea travelled the country running workshops to engage the store managers and staff with the new image. The project team also organized a celebration for the 100th store to take up the new brand, and the ensuing party was covered in the internal magazine, which dedicated a page of each bi-monthly edition to news about the project. None of these things were a huge overhead for O’Shea’s team, but all were essential in keeping the project moving along.
‘We held a public briefing for industry, people like designers and shopfitters, to engage them in the “selling process”,’ O’Shea adds. ‘This proved to be amazingly successful as they became the main drivers in the initial uptake. It also made the retailers aware that the changes were happening for real and happening now.’
He took it upon himself to ensure he was in regular contact with all stakeholders. ‘I phoned them all regularly,’ says O’Shea. ‘The team and I visited the outlets in person explaining how easy it would be to comply with the new branding and doing some communication management – dispelling any myths that were in circulation,’ he explains. ‘We had a really good response to this approach as the shopfits were being completed at the rate of four per week and the newly branded shops were reporting extra sales.’
‘I have likened the possible stalling of our project to the stalling of a jumbo jet, very difficult to kickstart,’ concludes O’Shea. ‘We knew we had to keep up the pace firstly to get it all done, but secondly to carry the staff along with us.’
Would your stakeholders be motivated by money? Would an interest-free loan work for them, or help with the cost of adopting your project deliverables or staff overtime? If so, think about how you will build this into your project budget – and how you are going to convince your sponsor that it will be money worth spent. It could be worth getting some input from stakeholders in the form of ‘testimonials’ so that you have a bank of responses and data (maybe even through doing a questionnaire) to make your case.
If you can’t offer money, what is the closest that you can get? This could be support through using project team members as additional resources or something else that you could deliver within your budget which would add value and improve your chances of project success.
This case study first appeared in Project Management in the Real World (1st edition) by Elizabeth Harrin, BCS Books (2006). It was replaced with another one in the 2nd edition but I thought it was still worth sharing with you here.
As this month's theme is project management at the cutting edge, I thought I would share with you this extract from my new book, Customer-Centric Project Management, which gives a new take on the traditional approaches to stakeholder management and post-project reviews.
Putting customers – and by that we mean internal colleagues or third party partners who take a service from another department – at the heart of how we work is a worthy aim. Companies spend a lot of time on focus groups and surveying end customers – consumers who buy products – but not a lot of time looking at how departments within the company serve each other. There might be an annual staff satisfaction survey which is the opportunity to air views on how different teams work together, but this type of conversation is rarely routine. Once you realize that as a team, you have internal customers too, making yourself easy to do business with is the next logical step. Customer centricity is a mindset; a way of working. It is, however, very hard to measure attitudes and behaviours in any unequivocal way.
Exceed was designed to provide an unequivocal way to answer the key question that keeps senior executives in PMOs and other delivery teams awake at night: how good is my organization? To answer that, you need clarity of customer perception, a focus on customer engagement and the deliverables that matter to project customers.
We use a process called Exceed to measure customer satisfaction with the project management process. It was developed to establish the basis of real agreement about the value being provided to stakeholders, and to develop closer engagement with customers using language that everyone could relate to. Here’s how it all began.
A global financial services company successfully implemented a customer-centric approach in its IT department. The IT service delivery function was already highly efficient, having demonstrated continual successes through a number of initiatives. Rationalization, in-sourcing and outsourcing had delivered operational savings of over £1m for three consecutive years. A further project to implement a technical support centre with a 50–strong team in India within nine months of board approval reduced annual spend by a further £1.8m. This project was completed without disruption to service, on time and to budget and proved the ability of IT to successfully deliver complex technical and sensitive projects in a very short timescale.
Shortly after this latest success, the CIO found himself in a frustrating position. The head of the company’s retail division had rung him to complain that the software updates his team desperately needed had not been implemented as promised.
The CIO’s department had a record of regular cost reduction and project delivery. That very week, the retail division had benefited from a further £250,000 cost reduction, delivered directly to this manager’s bottom line as a result of a telecoms contract renegotiation carried out by IT. However, without the software updates, retail branches could not satisfy their customers. The financial results may have been good, but they did nothing to improve customer service or the perception of IT within the retail division.
There are a number of morals to this story. Delivery organizations – and project teams are delivery organizations – need to clearly understand how to fully satisfy all of their customers’ needs at all times and in every situation. There also needs to be an agreed and credible process which proves the quality of the level of service being provided. In this case the IT team was doing a good job. Or were they? Who thought so? In fact, what really defines success for an organization, project or service and how do we measure and quantify it? After all, customers and stakeholders come in all shapes and sizes. They are not only demanding – their requirements are diverse and not always feasible or realistic.
Customer-centric thinking cuts through the confusion by answering a number of key questions:
These are the questions that need answering if you are going to truly be customer-centric. Exceed is the process we use to get there.
The Exceed process in his department began with a simple vision: ‘Every customer of IT service delivery will continually rate the services we provide as Good, Very Good or Excellent’. While you might think that this vision could never be achieved, the team achieved rapid results from the first few weeks and they fully achieved this vision in less than six months.
There wasn’t anything special about this particular CIO or his organization. It was just about putting the customer front and centre and working in a customer-centric way.
And that’s how we started to work with project teams and sponsors in a customer-centric way.
This is an edited extract from Customer-Centric Project Managementby Elizabeth Harrin and Phil Peplow (Gower, 2012).
“Influencing stakeholders is something we do from birth,” said Guy Giffin, speaking at the latest APM Women in Project Management conference. “As soon as you are dealing with more than a couple of stakeholders, you’re dealing with a number of conflicting views and interests.”
Giffin explained that “the same old things” keep turning up on the list of challenges for projects and that they nearly all have some link back to the humans involved in running the project. “It’s hard to give you a recipe for success,” he said. “Some analysis is scientific but building relationships is more art. Charm certainly comes into it.”
Giffin shared his 4 step process for managing stakeholders with the audience. “Some people get hung up about ‘engaging’ instead of ‘managing’,” he said. Whatever you call it, you need to go further than just plotting names on a chart and analysing impact and influence. Here are his 4 steps to better stakeholder management.
“Some appropriate questions asked in the right way can get you some good information,” Giffin said. The pool of stakeholders is probably wider than you first thought, so asking individuals for their view on who should be involved is a good way to identify your full stakeholder group.
The more you know about them, the easier it is to manage them. Giffin recommended finding out all you can about the stakeholders you have identified. Do this via their LinkedIn profiles, the company annual report (for the C-suite executives), a Google search or just by asking around.
This step is about defining their role in the project. They may be the budget holder, or a representative of a group that needs to be kept informed. Determine what their role is and then you can judge the best compromises to use.
Giffin recommends using “all your weapons” to sell the project to the stakeholders. He talked about using allies on the project – those key stakeholders who strongly support the project’s aims. Get them involved in the sales activity on the project and encourage them to spread the word about the initiative and the changes that are coming. Use public relations activity – get your PR team involved and do as much communication as possible. Use internal newsletters, a wiki or an intranet site for this.
Project managers need to become experts in managing relationships. We need to understand EQ – the emotional equivalent of IQ. We need to be skilled in political science to be able to navigate through the boundaries of organisational politics. We need to understand social psychology. Good stakeholder managers are experts in communication and listening. They are great at consulting and they show deep empathy with the people they are working with, and working for. “It’s a bit of science, a bit of art, and a bit of luck,” Giffin said.
How to sell when you have no money
One of the questions from the audience was about how you can win over stakeholders when you have no budget for entertaining or ‘schmoozing’. “Asking good questions is a good start,” Giffin replied. There is a lot of mileage to be had in making sure that you have a proper, full understanding of the challenges facing stakeholders and the concerns they have about the project. Spend time with them understanding their world, and asking intelligent questions.
Once you have done that (and this is the bit that Giffin didn’t really cover) you need to follow up on your discussion sessions. It’s no good asking questions if you cannot resolve any issues that are raised. Even if there is nothing you can do, go back to the stakeholder in question, thank them for their input and explain why you cannot make the change they requested. This is an easy, free way to build a good relationship with stakeholders when your project budget does not stretch to corporate hospitality.
Just a note on hospitality: if you do decide to go down this route and host events for stakeholders or similar, be careful not to fall foul of the law in this area. In the UK, the Bribery Act sets out what you can and cannot do in a workplace setting, and I’m sure other countries have similar regulations.