Stakeholder
A stakeholder is any individual, group, or organization who can affect or be affected by the outcome of a project, business, or system. They have an interest, or 'stake,' in its success or failure, which can be financial or non-financial.
1960s
2
Definitions
General Business and Project Management
In a general business and project management context, a stakeholder is any individual, group, or organization that can affect, be affected by, or perceive itself to be affected by a decision, activity, or outcome of a project, program, or portfolio. This is a broad definition that encompasses a wide range of interests.
Stakeholders are often categorized to better manage their expectations and influence:
- Internal Stakeholders: Individuals or groups within the organization, such as employees, managers, and executives. For example, the development team, the marketing department, and the CEO are all internal stakeholders.
- External Stakeholders: Individuals or groups outside the organization. This includes customers, suppliers, government agencies, creditors, and the community.
- Primary Stakeholders: Those who are directly affected, either positively or negatively, by the organization's actions. Examples include employees, customers, and suppliers.
- Secondary Stakeholders: Those who are indirectly affected by the organization's actions. This could include the local community or media organizations.
Effective stakeholder management involves identifying all stakeholders, understanding their interests and influence, and developing strategies to engage them throughout the project lifecycle. This is crucial for gathering requirements, managing risks, and ensuring the project's success.
Software Development (Agile/Scrum)
In the context of software development, particularly within Agile and Scrum frameworks, a stakeholder is anyone with a vested interest in the product being developed. While this includes traditional roles like customers and users, it also emphasizes a collaborative relationship with the development team.
Key stakeholders in an Agile environment include:
- The Product Owner: Represents the interests of all stakeholders to the development team and is responsible for managing the product backlog.
- Users/Customers: The individuals who will use the final product. Their feedback is critical and is often gathered continuously through demos, reviews, and user testing.
- Sponsors: The individuals or groups who provide the financial resources for the project.
- The Development Team: The team members themselves are stakeholders as their work is directly tied to the project's outcome and success.
- Managers and Executives: Individuals within the organization who have an interest in the project's alignment with strategic business goals.
In Agile, stakeholders are expected to be actively involved, providing regular feedback during sprint reviews and planning sessions. This continuous engagement helps ensure the final product delivers maximum value and meets user needs effectively.
Origin & History
Etymology
The term is a compound of 'stake' and 'holder'. The word 'stake' historically refers to a post driven into the ground to mark a claim. In a business context, it metaphorically represents a share, interest, or claim in an enterprise. A 'stakeholder' is therefore someone who holds such a claim or interest.
Historical Context
The term **stakeholder** in its modern business sense was developed in a 1963 internal memorandum at the Stanford Research Institute. It was intended as a deliberate play on the word 'stockholder' to argue that there are other parties who have a 'stake' in an enterprise beyond just the financial shareholders. The concept was further developed and popularized by R. Edward Freeman in his 1984 book, "Strategic Management: A Stakeholder Approach." Freeman's 'Stakeholder Theory' posits that a firm should create value for all stakeholders, not just shareholders. This was a significant departure from the prevailing view that the primary duty of managers was to maximize shareholder wealth. Since the 1980s, the concept has become a cornerstone of business ethics, corporate governance, and project management. It is now widely accepted that identifying and managing the needs and expectations of all **interested parties** is essential for the long-term success and sustainability of any organization or project.
Usage Examples
The project manager scheduled a meeting with every key stakeholder to gather initial requirements and align on the project goals.
As an interested party, the local community board provided valuable input on the environmental impact of the new development.
Identifying all stakeholders early is crucial for the success of any complex initiative, as their support or opposition can significantly influence the outcome.
The product owner acts as the voice of the stakeholder to the development team, ensuring the final product delivers the expected value.
Frequently Asked Questions
What is the main difference between a stakeholder and a shareholder?
A shareholder owns a part of a public company through shares of stock (a financial stake), making them a specific type of stakeholder. A stakeholder is a broader term for anyone with an interest in the project or company, which can be financial or non-financial. All shareholders are stakeholders, but not all stakeholders are shareholders. For example, employees, customers, and local communities are stakeholders but not necessarily shareholders.
Why is it important to identify stakeholders at the beginning of a project?
Identifying stakeholders early helps ensure that all requirements are gathered, expectations are managed, and potential risks are identified. It facilitates better communication, reduces the chance of scope creep, and increases the likelihood of project success by aligning the project's goals with the interests of those it will affect. Failing to identify a key stakeholder can lead to project delays or failure.
Can a stakeholder have a negative impact on a project?
Yes. A stakeholder is anyone affected by the project, and their interest can be positive or negative. For example, a community group opposing a new construction project is a stakeholder. Their opposition can introduce risks, delays, or even cause the project to fail if their concerns are not managed properly. Similarly, a competitor could be considered a stakeholder with a negative interest in your project's success.