Who are the Stakeholders?

By Martin Alaimo

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One of the most common anti-patterns I've seen in Agile Product Managers is the belief that the job is to please Stakeholders. This assertion should be a problem, except that, in most cases, they refer to Internal Stakeholders. This is far from what you see in successful Product people. Let's dive deep into the topic.

The first step is identifying who we refer to when discussing our stakeholders. So, let's review a definition that helped me understand it for several years:

"A Stakeholder is any individual or organization whose interest might be positively or negatively affected by the process of developing a product or the resulting product." This is based on the traditional definition of project stakeholder that can serve as a starting point, so let's double-click on it.

In our product world, one first practical approach would be to split the stakeholder group into two big ones:

• External: any stakeholder outside the producer company.
• Internal: any stakeholder inside the producer company.

Once the stakeholders are divided into these two big groups, we can move forward and divide each into sub-groups:

• External Stakeholders:

  • Users: people that use your product and get value by doing so.
  • Customers: people that pay you so that they, or others, can access and use the product.
  • Regulators: people that establish and enforce rules for the industry/activity in which your product operates.

• Internal Stakeholders:

  • Developers
  • Executive & Leadership Team (CEO, CTO, COO, etc)
  • Sales
  • Marketing
  • Finance
  • Legal
  • Business Development
  • Compliance
  • etc.

Now, to look for simplicity, we'll reorganize the groups into four different ones, following these criteria:

• Developers: All the people working on turning opportunities into working product features. This includes Product Designers, UI & UX Designers, Programmers, Testers, etc.
• Users: people that use your product and get value by getting their problems solved or needs satisfied.
• Customers: people who pay so that the users can use your product. Sometimes, especially in B2C markets, the Users are the same as the Customers.
• Stakeholders (Internal or External): Interested parties that can influence the product's decisions and success.

The risk of blindly pleasing Internal Stakeholders

In many companies, especially the ones that used to operate in a project-oriented approach, there's a heavy emphasis on pleasing internal stakeholders or, very similarly, building what stakeholders ask for.

Several difficulties might arise from concentrating only on the requirements of internal stakeholders, such as the company's executives, marketing team, sales team, or other staff not including users and customers:

• Misalignment with Market demands: Internal stakeholders may not fully comprehend end users' or customers' needs, problems, or preferences. If their opinions dominate how the product is developed, it could result in features that are not in line with what the market needs or desires.

• Limited View: Internal stakeholders may have a biased or constrained perspective based on the organization's short-term objectives or specific business position. This could make it difficult to spot novel opportunities or comprehend broader industry trends.

• Neglect of Revenue Considerations: By concentrating solely on internal objectives and viewpoints, the product may fail to deliver features that customers value and are willing to pay for. This negligence may impact the profitability and viability of the product.

• Overemphasis on Internal Efficiency: There may be a propensity to prioritize features or modifications that simplify the work of internal teams, even though they may not necessarily enhance user experience or satisfy customer needs.

Based on the list above, negative evaluations and damage to the company's reputation may result if the product falls short of user or customer expectations because it is overly centered on internal needs or biased viewpoints. This doesn't mean the product development team should ignore internal stakeholders; their viewpoints are critical for understanding organizational capabilities and goals. Still, it is equally important to balance these with users' and customers' demands and perspectives to ensure market success.