The Mendelow Matrix is an important tool for the aspiring entrepreneur. Stakeholders include anyone who might have an interest in or influence on your business. Stakeholder mapping provides a useful project management tool for understanding these relationships. The aim is to make the best possible use of them to further our business aims. As you enter the world of business the actions you take affect different kinds of people.
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The Mendelow Matrix is an important tool for the aspiring entrepreneur. Stakeholders include anyone who might have an interest in or influence on your business. Stakeholder mapping provides a useful project management tool for understanding these relationships.
The aim is to make the best possible use of them to further our business aims. As you enter the world of business the actions you take affect different kinds of people. These people can can influence your business too. They can become fans of your business or have a negative impact.
Keeping track of stakeholders and creating a strategy to deal with them offers you the best chance of success for your venture. Stakeholder management helps you to shape your start up project in a way that it is most likely to gain support from stakeholders. Profit versus value Research suggests that to focus solely on profit is not always the quickest path to profitability.
This might seem non-sensical at first until you think about the impact that stakeholder interests can have on the success of your venture in the long term. Logic suggests that developing priorities for different interest groups can influence your bottom-line in a big way. Try to think of your business as an eco-system, one where everything needs to be in balance. Charge you customers too much and they will stop buying, alienate certain stakeholders and they might influence others to stop supporting your venture.
How then to get the right balance? If there is too much imbalance or if one group of stakeholders has too much power their influence this can impact your fortunes negatively. The trick is to ensure that value is shared fairly between stakeholders and that your efforts are concentrated on those that can influence the long-terms prospects of your business.
Think about a typical freemium business model. Giving your product away might not make much economic sense to start with but what if those who benefit from your give-away become advocates or champions for your venture over time?
This could lead to long-term profits without having to spend huge amounts on advertising later. Once you have worked out who your different stakeholders are you will need to create different value offers for each interest group. The value you create for employees will differ hugely from the value you create for shareholders or suppliers.
Some will respond to emotional value while others will be more interested in profit or return on investment. The trade off you need to focus on is what your business will gain in exchange for delivering value to these interest groups. Training and investing in skills development might help with employees but is unlikely to float the boat of shareholders.
The Mendelow Matrix will help you to picture and prioritise these somethings conflicting interests. Try to create KPIs to measure the success or impact you can have on each interest group. Thinking about stakeholder management allows you to anticipate stakeholder interest in your business and to find ways of increasing the influence you can exert on them.
When you start a business time and money will be scarce. The Mendelow matrix helps analyse stakeholder interest and influence so that we can be more focussed in our sales, marketing and business dealings. A Stakeholder Mapping Tool Mendelow came up with the idea that our analysis of stakeholder management should be based on their power and ability to influence our business.
In other words- all stakeholders by definitions have an interest in our business to a greater or lesser degree, also that some are much more powerful than others. Think of this in terms of individual stakeholders. An examples is a CEO or senior Director of a company that we wish to sell to is likely to have far greater power than a junior colleague.
The first step is to map stakeholders into the interest matrix. Those with both the highest power and highest influence are the relationships to focus on. The aim is to keep these high value stakeholders on side and fully engaged.
In contrast, those with low power and low interest are not worth exerting a lot of energy on. We should keep them sweet using a minimum effort. According to these principles one identifies stakeholder value according to their power, influence and interest in the organisation your business.
The next step is to place stakeholders within one of the four quadrants of the matrix. Those with both power and interest go into the upper right quadrant of the grid. In this manner we can devise a strategy for stakeholder management that keeps individual stakeholders engaged and satisfied without wasting too much effort.
Category B: High interest, low power: These guys can become a distraction. Their low interest levels mean that they could quickly becomes bored with you or your business.
Category D: High Power, high interest: These stakeholders deserve the most attention. Your aim is to keep these guys fully engaged- your business success depends on them! In all cases you should monitor stakeholders to see if their power or interest levels rise or fall. Adjust your strategy accordingly. Allocate appropriate effort depening on which quadrant you place stakeholders in.
Creating this kind of power interest grid will enable you to focus on the key players and develop strategies in line with their levels of interest and power.
Remember that while stakeholder mapping can be quite subjective you should really try to use hard data to ascribe value to specific stakeholder groups. Remember that stakeholders can move from one quadrant of the grid to another so make sure you conduct a refresh of your mapping exercise from time to time.
How to determine their level of interest. The best way of determining interest levels is by asking yourself how likely a stakeholder is to take some kind of action like buying or recommending your product or service. Not all of them will have the time or inclination to do something about their interest in your product so make sure you take a carefully considered view. Think about what kinds of alternatives they have to using your product.
Social media influencers who communicate with your target audience might rank high in interest and power without buying themselves. The key here is whether they are likely to write about or refer to your service favourably.
If your bank manager has the power to reduce your overdraft and damage your business as a consequence then map your bank as a stakeholders accordingly. The same goes for landlords, trade associations or any other kind of stakeholder you can think of. Consider government legislation too- if taxes are raised or import duties are placed on your product is this likely to impact on your business?
If the anwser is yes then by all means include them in your stakeholder mapping exercise. You might not be able to do much to influence them but at least you will have a grip on potential risks. Types of Stakeholders Stakeholders can be internal colleagues , External customers or similar. The trick is to make sure your keep your finger on the pulse of stakeholders and that by using this matrix effectively you can allocate resources according to which quadrant they occupy.
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This is the traditional or stockholder view , but a more considerate approach states that companies should not have a limited view; rather they should have an extended view with regard to the whole society. The stakeholder view states that that as an organization is so powerful, socially, politically and economically, unrestrained and injudicious use of their power will eventually lead to the infringement of the rights of other people. The stakeholder theory thus proposes corporate accountability , not just to the shareholders, but to the stakeholders of the company as well. But, there is considerable dispute about who should be considered to be a stakeholder, and thus, have a legitimate claim on the company and its activities. The way an organization deals with stakeholders, and their stakeholder perspective the legitimacy of stakeholder claims depends on the moral, ethical and political standpoint of the organization and on the level of influence and power a stakeholder has on the organization.
Stakeholder Analysis – Mendelow’s Matrix
Remember, all stakeholders may seem to have lots of power or we hope they would have lots of interest, but relatively speaking, some stakeholders will hold more Power than others, and some stakeholders will have more Interest. For example, a director is likely to have high Power and high Interest in the organisation, whereas the Government would have high Power to impact strategy via regulation, but potentially less Interest — the same with a large competitor. How To Use the Tool Creating a Grid Map of Stakeholders This is based on Power and Interest allows us to identify which stakeholders are incredibly important, with High Power and High Interest which we would need to manage closely, investing a lot of time and resource. For example, your boss is likely to have how Power to influence your work and also high interest in it being successful, or a technical external agency.
Moses Manuel In business it pays to know each of the various key players or stakeholders. By stakeholders I mean people who can affect or be affected by the business. The point is we need to know more about such persons especially in terms of their power and interest in the organization. In case of your stakeholders this means their ability to influence the organization or, looking at it from a purchasing and supplies point of view, their ability to influence procurement activities Example Customers could stop buying your products, suppliers could stop to supplying although the question of the effect would depend on how big the suppliers are. Government policies could affect your business etc.
What are stakeholders? A stakeholder is anyone, as an individual or a collective such as organisation that has an interest or is concerned with the actions of a business to the extent they are affected by or they can influence it. A business is likely to have numerous stakeholders including directors, shareholders, employees, customers, creditors, the government and the community in which it sits. A business will frequently find that different stakeholders have different priorities, this often leads to conflict. For example, an employee would like to be paid more.