mendelow matrix stakeholders

Success with your startup has a lot to do with your ability to manage relationships with stakeholders. 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. In this article we explore stakeholder analysis and the power of Mendelow’s Matrix. 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.

It’s time for you to start thinking about stakeholder management. 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. It will help you to secure more resources to grow your business and build a better understanding of the key people you’ll be wanting to influence along the way.

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. Don’t forget that stakeholders can be either individuals or organisations.

When you start a business time and money will be scarce. So it’s important that you exert the right amount of energy on the relationships that are most likely to bear fruit. 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 (1991) 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.

Effective use of Mendelow’s Matrix.

Diagram of Mendelow's matrix

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.

Your actions will be determined by where in the matrix a particular stakeholder is placed:

  • Category A: Low power, low interest: Keep in touch with this quadrant from time to time but don’t go wasting too much energy on them.
  • Category B: High interest, low power: These guys can become a distraction. Keep them informed but don’t show too much attention to them or else risk their becoming a wasted effort that is unlikely to bear much by way of results.
  • Category C: High power low interest: The idea is to keep these stakeholders satisfied but don’t hassle them too much. 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.
Use Mendelow’s simple grid to target powerful stakeholders who have demonstrated a real interest in your product or service.

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.

If a stakeholder shows keen interest but doesn’t have the budget to make a purchase then they would rank as high in interest but low in power. 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.

When you are thinking about stakeholders don’t just think in terms of potential customers. 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). or any other kind of person or organisation likely to effect your business. 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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