From innovation to sustainable business value: The importance of managing stakeholders

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What is that makes some innovations "stick" and others disappear into the ether, never to be seen again?

In a high-technology industry, it is tempting to say that the technology simply wasn’t right, or the timing was wrong. However, history suggests that this is probably not the case. Much of the time, several companies are working on similar technology at the same time. Why does one succeed and another fail?

We could take artificial intelligence as a good example of this. There are plenty of companies working on AI and have been for many years. Why, then, are only some of them launching successful products or services?

The answer lies in people rather than technology. Stakeholder management is an important feature of any project. It may, however, be even more crucial in innovation projects. Innovation projects tend to result in radical change. Whole organisations can shift on the back of a disruptive innovation project. Business models alter or disappear, with new models emerging, and organisational structures may also need to change radically. This, unsurprisingly, is very threatening to those affected.

Internal stakeholders: From stakeholder management to stakeholder development

There are two main types of stakeholder: those inside and those outside the organisation. They need very different management approaches. Some  have argued that internal stakeholders do not need to be managed so much as developed. Christopher Waldner, a serial entrepreneur and now "intrapreneur" – creating innovation from within an organisation – argues that project leaders need to find and cultivate several different types of stakeholders within the organisation.

Each of these has different concerns and needs different treatment. Some are necessary to the project, such as the high-level project sponsors and champions, and those who have invested in the project. Investment may include managers who give their team members time to work on the project, or IT staff responsible for creating a system to support the project.

Other important stakeholders can provide useful information or help you navigate the organisation by always knowing someone who can help. Those who put their heads down and help you with the work are critical. You need to find and cultivate all these stakeholders. They help you to get the project done, and without their help, it is far more likely to fail.

Some stakeholders are not necessary but pop up regardless. You should consider the people affected by the project's outcomes. They may not seem to have much power, but consider the disruption of nonadoption. Inevitably, there are those who criticise and challenge the project, seeing only problems and obstacles. They may sound like a nuisance, but many of their criticisms will be valid and will help you to move the project forward successfully.

External stakeholders: Co-creating value 

External stakeholders include suppliers and customers. They need a very different approach to their management. External stakeholders need to be closely involved in innovation. You should enable them to share ideas, add input on innovation processes, and help to co-create value. After all, what better way to create an innovation that customers really want than to involve them in its creation?

There is, of course, a reason why every company is not already engaged in innovation co-creation: It is challenging. Customers and suppliers do not always want to innovate with you. You also need a strong process in place to protect commercially sensitive information and to make sure that value is genuinely shared by all those involved – and in a way that all agree is fair. Without this, a co-creation process will not last long. Financial incentives do not necessarily compensate for the time required.

Research has shown that perhaps the most important aspect of a successful co-creation process is building long-term relationships with those involved. In other words, co-creation is not a one-off, and should not be seen as such. Instead, investment in building relationships will pay off over time.

Research has shown that perhaps the most important aspect of a successful co-creation process is building long-term relationships with those involved. Co-creation is not a one-off, and should not be seen as such. Click To Tweet

Managing stakeholders means building relationships

The bottom line is that people matter in innovation projects. It does not matter whether the project is technology-based, futuristic or simply about improving efficiency. If you do not put time and effort into managing relationships both within and beyond the organisation, any innovation project is likely to fail.

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About Author

Puni Rajah

Analyst, Consultant and Coach

Guest Contributor. Puni built her reputation for fact-based decision support as a business analyst. Since then, she has conducted IT consumption, management and sales research in the European and Asia/Pacific markets. She is expert at understanding enterprise software and services use and buying behaviour, and has coached CIOs’ teams, and technology marketing and sales executives.

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