Strategic digital product management: stakeholders

Photo by Andre Hunter on Unsplash
Photo by Andre Hunter on Unsplash

After having discussed principles, activities and scopes, we’re now moving on to the different viewpoints product management needs to consider. The coming posts will explore these. Specifically, we’re going to focus on stakeholders, technology and exploration.

Stakeholders, as the name implies, are parties that have a stake in whatever is going on. In our context, they’re typically concerned with planning the content of the next release as well as changes to make to everything around the offering. This includes the business model, the go-to-market strategy, the brand and the customer experience.

Product management involves a wide variety of stakeholders, both inside and outside the company. Inside the company, this ranges from the R&D teams to the sales organization and from customer support to the C-suite – everyone has questions, opinions and dependencies on the products in the portfolio. Outside the company, partners, suppliers, customers and competitors may all need to be managed as stakeholders.

Stakeholders all represent their perspective as well as their interests. The very nature of this process is that these interests aren’t aligned and often conflicting. They can be conflicting because different people want different solutions for the same problem, which is the hardest type of conflict. However, the primary conflict typically is one of resource contention: we simply can’t do everything stakeholders ask for and we need to prioritize. Managing and trading off all the needs, wishes and priorities is a critical task of product management.

In my experience, there are at least three main pitfalls product managers fall into: mixing needs and wants, failing to identify critical stakeholders and missing strategic opportunities.

When my kids were young, they often asked for candy. Once we’ve got the taste of something sweet and the sensory explosion that comes from consuming candy, it’s hard to not ask for more. As adults, we all know that sweets are bad for us and we limit our intake. Instead, we eat broccoli and Brussels sprouts. Many customers act similarly: they focus on what feels good, their wants, and fail to identify that this might collide with their real needs. One task of a product manager is to distinguish between the wants of customers and their needs.

As an example, one of the startups I was involved in prided itself on being exceptionally customer-focused. This had translated itself into a culture where every whim of any customer immediately led to an R&D activity being fired off. The result was a heavily overloaded R&D organization that only built small ‘nice-to-haves’ for customers, but as a whole, the offering was rapidly commoditizing as we failed to build the truly differentiating functionality and features that would meet the ‘must-haves’ for customers.

The real risk is that when failing to distinguish between wants and needs, we easily lose the competitiveness and differentiation of our products and, as a consequence, customers vote with their feet and leave. As the saying goes, the road to hell is paved with good intentions. Many organizations have good intentions, but the result of acting on them is failure.

The second problem I see product managers struggle with is the failure to identify the critical stakeholders. Not all stakeholders are created equal and we need to treat their input with different priorities based on their relevance. Many companies fall into the ‘loudest customer’ trap – going for the one making the most noise. The individual who threatens to call the CEO, or even actually calls the CEO to complain, often gets prioritized.

As a product manager, we need to identify who our critical stakeholders are. In practice, they’re the ones providing the revenue to the company. This may be customers who sign the contracts that generate the revenue or stakeholders who indirectly drive revenue, e.g. influencers in B2C companies.

Especially highly data-driven companies tend to focus on user KPIs. The implicit belief is that by serving users well, the customers will automatically follow. This is undoubtedly true in B2C companies where the user and the customer typically are the same individual. However, in B2B companies, the customer is very different from the user. As the customers pay the invoices, they’re the critical stakeholders. Not the users, who are still important but not critical.

As an illustrative example, one of the big ERP companies is infamous for having a horrific user interface. At the same time, it has nine golf courses around the town where it’s headquartered. Early on, the leadership in the company realized that it was the CEO, CIO, CTO or any other C-suite individual who signs the contract and that they need to be romanced. Users will have to live with whatever experience the company decides to offer.

The third problem is that product managers only receive input from existing stakeholders. Potential stakeholders, such as new customers, strategic partners or markets, don’t have a voice yet and hence their input is missing. The challenge for many product managers is to identify and act on new, unrealized opportunities at the expense of not meeting the immediate requests of some existing stakeholders.

As an example, a company I worked with realized, after several years of catering to a specific function and department in its customer organizations, that the neighboring department could be served with the very same data, had a much larger budget and was open to engage on the use case that we were offering. Identifying these opportunities and acting on them is of course critically important, but it does take away from meeting the needs of some existing stakeholders.

Some companies distinguish between roadmap development and customer-driven development and allocate budgets to each bucket. Although that may work for you, it’s my view that product managers need to prioritize all development such that the return on R&D investment is maximized. This may mean putting all resources on a new type of customer as part of a high-risk, high-return prioritization.

Product management is also concerned about the various viewpoints that we need to investigate. These viewpoints are typically provided by stakeholders and are, by their very nature, conflicting, if only because of resource constraints. Product managers need to clearly separate the needs from the wants of stakeholders, identify the critical stakeholders and deprioritize less important ones, and act on strategic opportunities even if no stakeholders are advocating for these. As the late Steven Covey so beautifully said, “The key isn’t to prioritize what’s on your schedule but to schedule your priorities.”

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