A stakeholder is a person or group who can affect or be affected by a product.
Products revolve around people. Ultimately, your product should aim to solve a problem that people have, and you need people to get that product off the paper and into real life. It’s important to identify and cater to these people, your stakeholders, in order to carry your product from concept to deployment.
In this entry, we’ll go into what stakeholders are, why they’re important, and examples of who counts as a stakeholder.
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What is a Stakeholder?
A stakeholder is an individual or group of people who can affect or be affected by a product. Stakeholders can be grouped into two categories: “upstream” and “downstream.” This categorization will depend on when they influence a project.
Upstream stakeholders are most active before the product goes out. Their decisions affect the project during the design, building, and commercialization phases. Downstream stakeholders take over once the product is on the market. They consist of people who market, sell, and support a product, as well as the customers who buy and use the product.
Stakeholders can also be categorized into “internal” and “external” stakeholders. Internal stakeholders are people who have a direct relationship with your company and are strongly affected by its decisions, such as your investors and employees. External stakeholders are those without a direct relationship with you but are still affected by your decisions. These may include customers, suppliers, and the local community in which your operations are located.
The Significance of Stakeholders
All products rely on people, whether to build them, market them, or use them. Your stakeholders decide whether your product succeeds. Stakeholder management is, therefore, a crucial part of a product manager’s job. This means identifying the needs of your stakeholders, building relationships with them, and addressing their doubts or fears.
Supportive upstream stakeholders can make a product launch go much smoother, whether it’s by helping get your project off the ground, keeping your design process going, or just providing positive feedback.
Meanwhile, supportive downstream stakeholders will affect a product’s success later on. When your product’s finally a reality, they’ll get the word out about it and ensure that any problems are fixed. They could also be your end goal: customers whom your product needs to satisfy.
On the other hand, obstructive stakeholders on either side of the equation will make the process much harder. Dissenting internal stakeholders may call your authority or definition of success into question, making it difficult for teams to align around achieving product goals. Meanwhile, dissenting external stakeholders can also kill your chances of success, especially if they’re unhappy customers.
Know Who to Listen To and When
As a product manager, you should also consider how important a given stakeholder is at any point in the project.
A good litmus test is to check how much a stakeholder affects your product, or put another way, why they matter. This consideration may depend on how large the business is. Small startups may have just a few people filling the roles instead of teams. That means it may only be one or two individuals who can derail the process.
Further, their relevance may change depending on how far along your project is. For example, your legal department may not have any significant contributions after they determine that your product is legal and compliant. Or, during the early product development phase, before any QA is needed, you might not yet need to take your QA teams into account.
On the other hand, some stakeholders will be universally significant, no matter where you are in your project timeline. Customers are always important since they will be using your product once it comes out. No matter what, you have to keep their needs and wants in mind. Your product team is also always important because they have ownership over your product’s success at all times.
Potential Stakeholder Examples
Here we will look at some of the possible stakeholders you may encounter and why they matter. Keep in mind: This list is not exhaustive. Depending on your company, some of these may or may not be present.
- Product team: These are your people. As a manager, you rely on them to bring the product to life. Everyone else has a role to play as well but ultimately, it’s the product team that has to do the work.
- Executive team: They make all the decisions, and your product has to align with the big picture that they have in mind. They won’t do much with the product directly, but their approval can make or break your project as a whole.
- Legal team: They’ll let you know whether your product is within the bounds of the law as well as meets any relevant standards. Just like the executives, they’re not involved in the development process, but they’ll prevent you from encountering any legal trouble or fines later on.
- Suppliers: If you’re producing a physical product, they provide raw materials. If you’re making a software product, you may still need to look for tools or other software outside your company. Suppliers who are invested in your product will keep this from being a bottleneck.
- Product testers: They catch the errors that your product team’s testers don’t. Good testers will save you a lot of time and headache by catching problems early before your customers are affected.
- Customers: They are the most important segment of your downstream stakeholders.. Customer reactions make or break your product’s success.
- Customer support: When something goes wrong with the product, customers go to them. Competent, supportive, and well-informed customer support teams can keep customers satisfied with any faults while you fix them behind the scenes.
- Distributors: Along with your sales team, distributors will determine just how well your product spreads to customers.
- Marketing team: They spread the word about your product. At the end of the day, no matter how well-made your product is, it won’t do anything if people don’t know it exists
- Sales team: Finally, they get your product out into the hands of customers. Your product may be good, but you need your salespeople to make sure it’s out there for people to buy.
Again, this list is just some of the key figures involved and it does not consider every possible stakeholder you may encounter. Under the definition provided above, the government that regulates your business area also counts. You may not have a contract with them, but their regulations will affect everything that your business does.
It’s All About People
Products rely on people to think them up, design them, and make them a reality. These people are your stakeholders—at every stage of development. When your stakeholders are on your side, the development process is much easier and your product has a better likelihood of performing well when you finally go to market.