More than 70% of digital transformation projects fail in delivering sustained improvements and performance to the business.
Your failure to identify, understand, and adequately engaging stakeholders is going to be a costly mistake.
Have you ever had someone bringing down your project? Do you think its an individual who is undermining your effort? Or, did you made a mistake in managing or identifying a stakeholder?
Your project could have great importance for your personal and working life. Winning their buy-in is an excellent achievement as finishing the marathon. Nothing is more frustrating than to experience the death of a project caused due to resistance to change by project stakeholders.
Top Project Failure reasons linked to Stakeholder Management
44% of projects fail due to a lack of alignment between business and project objectives. (Source PMI)Tweet
80% of organizations report that they spend at least half of their time on rework. (Source Geneca)Tweet
So, who are these stakeholders? Anyone that affects or is affected by your work or decisions is a stakeholder. They can your partners, employees, regulatory bodies, internal business units, or functional groups. In your personal life, your spouse, your children, your friends, your parents, among others. These are people who will share and benefit financially, emotionally, socially, or physically from your success or failure.
A staggering 70% of digital transformation project fails, even at some of the world’s most profitable, innovative organizations like Ford, GE, and P&G. They spent $1.3 trillion on digital transformation projects, of which an estimated $900 billion went to waste. Among others, only 16% saw improvements in their performance and ability to sustain change over the long haul. Even for digital-first industries like high-tech, media, and telecom, only 26% saw success. Size does matter; smaller organizations are 2.7 times more likely successful than larger organizations in digital transformation.
The biggest reason was the failure to effectively communicate about goals, strategy, purpose, and outlook about the projects to the stakeholders. The risk that you run can doom the project, cause delays, face resistance to change, and leave long-term resistance.
In 2008, Qantas spent $40M to develop engineering parts management system called “Jet smart.” Just after the few years in operation, Qantas replaced the system with a new one. Staff refused to use it, and unions issued a threat against it. The project internally was called as “Dumbjet,” as it was so difficult to use. It turns out that failure to engage engineers who would be the eventual users of the system into the requirement and design processes resulted in a system that the engineers deemed to be unusable. Qantas and project manager of “Jet smart” failed to identify and engage the stakeholder (the engineers).
Companies learn from these mistakes and make adjustments to succeed in the future; most of the time, the failed digital transformation doesn’t mean the end of a company. Still, it is incredibly frustrating to project team morale and costly in lost money, resources, time, and credibility. Qantas replaced the system with a new one named Marlin, by learning its lesson and engaging the stakeholders, that was developed again from scratch.
In a survey by McKinsey across 263 companies across their various projects, respondents were asked which were the critical factor for success in their digital transformation projects. 7 out of the top 10 factors were related to successful stakeholder engagement.
The survey result indicated how companies achieved success in their digital transformation projects and differentiated them from the other 70%. The teams were three times more likely to succeed when they identified, communicated, and engaged the stakeholders effectively.
Ineffective stakeholder engagement will leave with consequences that result in delays in the timeline, lack of enthusiasm for the change, futile resistance, frustrations in employees, and sometimes wholly doming the project. The more substantial effects could further induce more significant stress, such as funding reduction, reduced team size, and people’s layoffs. On a personal level, the impact is devastating as well.
Three key things that you could review to improve your stakeholder engagement.
1. Identify & Classify
Brainstorm, who are your stakeholders. You cannot engage them if you don’t know who they are. Stakeholders can be both organizations or people. As the business is eventually about people, so, be sure to identify the correct people stakeholders within the stakeholder organization.
As you scan the stakeholders, identify them into a grid that is constructed using Power and Interest. It will help you to prioritize and classify them in the engagement process.
Based on their classification, you can distinguish the level of engagement required to manage them effectively. For example, with high power and high interest, you must carefully handle such stakeholders and invest your most considerable effort to satisfy them. In contrast, with low interest and high power, you want to keep your message brief yet ensure they are updated frequently.
2. Secure Early Wins
When you are running long and complex projects, wining some early wins is critical for success. Imagine if the tangible milestone in the project is too long away. Results are short of getting stakeholders buy-in, repair, rework, and re-engineering is going to be too expensive and too slow. It will be harder to convince for a second chance. An early win is an opportunity to reflect, regain, and expand the support for the project. The changes can be made swiftly, and the process ensures that the project stays on course. You can start turning more Neighs into Yays and compounding the effect. It gives you also a chance to pat on the back, keep the motivation going. You start planning more and praying less.
3. Communicate Communicate Communicate
It’s better to over-communicate than to do it less. Developing more concise—and even tailored—messages for various stakeholders in the organization, rather than lengthier communication, is critical to communicate effectively. Imagine, while the project is running, the organization is possibly going through staff changes, complex business changes, system changes. In recent times COVID19 has brought additional complexity and shift of priorities. These changes are realities of life; they will always happen. However, keeping stakeholders updated about the impact and changes is very important to reflect transparency in the engagement.
An early win can also bring fallacy of declaring victory too soon, lead towards complacency, and often stop the momentum that was built prior. Once a first win is achieved, momentum is growing, and it’s essential to sustain that momentum. The magic words are communicate, communicate, and communicate. Securing support from leadership stakeholders and having them talk in support of the project objectives and importance will create a disproportional impact. It will start building the snowball effect that will make your project most likely to succeed.
While it’s been said that change is the only constant in life, researchers have proven that our cognitive mind drives to maintain the status quo. It holds for the stakeholders too. Their resistance to change will hinder the success of your project. Not only leading to tremendous financial loss but also leading to frustrations, loss of confidence creeping in, thus impacting our personal lives.
Effective communication is foundational to successful change. You must implement the right approach and be proactive. You have better chances to come out on top of whatever challenge or opportunity comes your way.
The opinions expressed in this article are those of mine. They do not purport to reflect the opinions or views of any organization.
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