Make stakeholder management a project priority (two case studies plus insights from IMD professors)

Stakeholder management is critical to the success of any corporate project – it’s probably something you heard on day one of your first undergraduate business class. But too many business managers only pay lip service to the concept of stakeholder management.

The classic way to integrate stakeholder management into a business project plan is fairly straightforward, typically some version of: identify, prioritize, communicate, engage, deliver, repeat. Of course, if you completely ignore all stakeholders, you face a high risk of failure (unless nobody particularly cares about your project), but you can sink your project by ignoring even a single one of these stakeholder management steps.

Need proof? Let’s look closer at 2 big stakeholder management fails:

Stakeholder Management
UK National Health Service IT project

“One of the worst and most expensive contracting fiascos,”[i] said MP Richard Bacon, not mincing words on the British National Health Service’s National Programme for Information Technology (NPfIT). The rollout of this electronic Care Records Service was rife with stakeholder mismanagement. It was dramatic in cost ($24B in taxpayer money – more than 5 times the expected cost) and in number of stakeholders, considering that the NHS is a public health service. In other words it affected everyone in the country, both in their pockets and in their healthcare.

 

Good idea, bad implementation

The NPfIT was supposed to centralize patient health records from across the UK electronically. Sounds good, right? It could create multiple benefits to healthcare provision, research and operations (appointments, bed usage, etc.). Unfortunately, somebody should have told those responsible that internal end-user groups are key stakeholders. And while they were at it, maybe that person should have mentioned that patients – i.e. every citizen – were also stakeholders who would want to know, for one thing, how record confidentiality would be handled (seriously, I do not want you to know what happened to my big toe in May 2003).

The program was launched in 2002 and the ultimate sad last stand was in 2011. The approach was top-down, and tons of money was invested from the get-go. As the mismanagement mounted, as the implementation time went up and up, good money was thrown after bad and it cost even more than tons ($24B and still counting).  

Stakeholder ManagementUnfortunately, looking from the top down, they didn’t consider that hospitals and health trusts vary greatly in terms of size, the populations they serve and the resources they have, including IT infrastructure, financial and human resources – and therefore would have different needs at the technology use level. As stakeholders, these users needed a vehicle for two-way communication with the project leaders, in order to identify and manage their real needs.

 

Missed stakeholder 1: Internal users

When the government imposed this system, they forgot to talk to the internal end-users. (Or were too arrogant?) This has been identified as a major reason for the program’s failure. In “The Blunders of our Governments,”[ii] Anthony King and Ivor Crewe explain: “Largely because the intended end-users of the scheme had been so little consulted, the various IT suppliers often had no clear idea of what they were supposed to be supplying – and in some cases merely sold the NHS whatever they happened to have on hand.” (Note that this also raises the spectre of another under-managed stakeholder, the suppliers. Let’s just say things got pretty messy on that side too.)

There was little consideration about what would be involved for integration into or replacement of the existing system in hospitals. Buy-in from internal end-users was not prioritized they became clearly “hostile” to the project. [iii] Hospital systems are complex and the stakes (human life!) are high. With requirements like that, medical professionals expect their IT systems to work. When they don’t, the users just won’t use them. Not only were the users undertrained, the systems that were installed were slow, complicated, crashed constantly and often couldn’t connect with the systems they were supposed to connect with. Not a great advertisement for connected systems.[iv][v] 

Target’s entry into the Canadian market

Target’s quest to launch big-time in Canada, the chain’s first expansion outside of the US, should have been a cinch. The big box retailer was a successful competitor to Walmart in the US and the brand was already known to Canadians – enthusiastic cross-border shoppers.[ix] Fanfare abounded with the opening in 2013… and two years later all 133 stores were closed, 17,600 employees were out of work, and approximately $5.4B in losses racked up as they were wrapping up shop in Q4 2014.[x] What happened? They did not prioritize stakeholders, engage or – especially – deliver.

Stakeholder ManagementMissed stakeholder 1: Customers

Target Canada customers expected to find lots of stuff at low prices when the stores opened. This perception was based on what the brand had communicated ahead of launch – it’s even in their slogan: “Expect more. Pay less”.[xi] What was delivered was in fact the opposite of both.

On the “pay less” side of the equation, the prices were frequently not lower than competitors. Canadians who’d been shopping at Target in the US expected the same level of discount, but pretty quickly saw that this was not the case. It is different to set up shop in Canada versus the US; the currency exchange impacts the cost of business, as do supply-chain costs. Smarter retailers adapt. J. Crew for example, reduced prices and implemented flat-fee shipping for internet shopping in order to win over Canada.

The “expect more” part of the slogan went even worse. The store was truly made a laughing stock by rounds of internet photos of empty shelves[xii]  (and what was there was not the basics that bring people into stores –bread, milk – it was things like a stack of fashion-backward shirts in sizes XXXL and XS only). As the Economist pointed out, when you communicate something so explicitly that it’s your slogan, you better be ready to deliver. They compare it to the Walmart slogan: “Save money. Live better.” Similar message but vague enough to be easier to deliver on.[xiii]

 

References

[i] http://www.bbc.com/news/uk-politics-24130684

[ii] King, A. & Crewe, I.: “The Blunders of our Governments.” Oneworld Publications, 2014

[iii] http://www.computerweekly.com/opinion/Six-reasons-why-the-NHS-National-Programme-for-IT-failed

[iv] http://www.computerweekly.com/news/2240078426/Major-incidents-hit-NHS-national-systems

[v] http://www.bmj.com/content/341/bmj.c4564

[vi] http://webarchive.nationalarchives.gov.uk/20120503230023/http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/documents/digitalasset/dh_4067112.pdf

[vii] https://www.centreforpublicimpact.org/case-study/electronic-health-records-system-uk/

[viii] https://www.theguardian.com/society/2013/sep/18/nhs-records-system-10bn

[ix] https://www.economist.com/blogs/schumpeter/2014/05/retail-canada

[x] https://www.theglobeandmail.com/report-on-business/international-business/us-business/target-killing-canadian-operations/article22458161/

[xi] https://www.visioncritical.com/target-canada/

[xii] http://www.slate.com/blogs/moneybox/2015/01/15/target_closing_in_canada_these_pictures_show_why_it_failed.html

[xiii] https://www.economist.com/blogs/schumpeter/2014/05/retail-canada

[xiv] http://gawker.com/why-was-target-canada-such-a-disaster-1579554288

[xv] http://business.financialpost.com/news/retail-marketing/target-corps-spectacular-canada-flop-a-gold-standard-case-study-for-what-retailers-shouldnt-do

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