Home Blog Your Stakeholders Trust You With Their Money, Right?

Your Stakeholders Trust You With Their Money, Right?

As Product People (Product Owner, Product Managers, etc.) we deal with stakeholders every day. The more these people trust in our ability to deliver, the easier our lives are.

But no matter how carefully we deal with them, or how long we have worked together, there are many different things that can undermine this trust. For example: Money. Very often – as soon as money becomes an issue – the existing trust weakens. Sometimes significantly.

Now, have you ever wondered why that is? Why does money have such a big emotional impact? And how can we deal with that?

 

Mo’ money, mo’ problems..

In Western civilization, money is still a decisive aspect in our value system. As long as everything is fine – financially – people are easy to get along with. But as soon as money becomes an issue, their focus changes and our job changes with it. So why is that? What happens when things get “tighter”?

Keep it together
Especially in Germany, we are trained from earliest childhood to keep an eye on our expenses. If we spend too much, we might end up in debt, which will automatically lead to poverty, and then we’ll be end up on the streets.
This sentiment guides everything – people and their private finances, companies, even the government (preaching strict saving to reach the “black zero”, even though austerity is the opposite of what a country needs to get the economy going – but I digress.)
So we always focus on keeping a tight grip on the purse strings. Unfortunately, this often inevitably means that we always have to have control over money. Should we ever lose control, who knows what could happen!

Now, when stakeholders invest into our product or project, this control reflex can kick in – and can seriously undermine the trust we have built in the months or years before. And it is especially critical when money is getting tight. The more a department’s budget is under duress, the more people will assume control over the flow of money – to make sure nothing is wasted.

Investments have to generate profit
Stakeholders investing in a project also want to see some benefits, some profit. After all, we’re doing business here.

They have made the conscious decision to trust you with their money – so now they want to see that it is applied in the best way possible. And they need to see this benefit. The more they feel left in the dark, the more critical they will become about the wisdom of their choice. And it is this doubt that – again – triggers the control mechanism.

 

Money makes the world go around…

Money is important, no doubt about that. And if money is getting tighter, people get more cautious. Understood. But what if you don’t have to deal with a budget? Well, you’re dealing with money anyway.

Budget = Money

It’s the obvious one: If a customer comes with $500,000 and wants you to build something using this – you have a budget. It rarely happens that someone hands you a briefcase full of bills; still, money is money. We have a sum the stakeholder is investing. We have sum that we can spend. If our expenses are larger than that sum, we’re in trouble.

Time = Money

If you’re building a sleigh for Santa and you release it in February, what will happen? No Christmas, no presents, lost opportunity, lost revenue. Many products are connected to marketing campaigns and special events or dates. That is one aspect where time = money. A rather obvious one.

There’s a second related aspect: In today’s world, the shorter your time-to-market, the higher the chance of success. Many stakeholders know this – and want the product shipped ASAP. If they have the feeling it’s taking too long, they will get restless. They will start worrying about the diminishing chances of success, which means less money, which means – time to take control.

Resources = Money

When we build products, we are very often “just” dealing with resources – people working on the project, hardware… But resources are also money. It is so easy to forget – these people work here anyway, right? We wouldn’t want them to be bored.

In my experience, this frequently happens in companies that have their own in-house production teams.

But every person working one project can’t really be put on another one (even though some companies try). By using these resources, we are blocking them for other projects.
Now, if we Product Owners monopolize our teams for too long on one project, our stakeholders (who usually also invest in other projects) will start questioning our decisions. Probably not as quickly as with a budget, but they will.

Can’t buy me love

Seems like we’re trapped. We will always have to deal with money and with people. The trust we try to build is constantly challenged. But we need our stakeholders‘ trust to do our job. So, what can we do?

Luckily, there are mechanisms that can help us to maintain it:

1. Work iteratively

  1. Build small increments of the product – we will be able to deliver faster
  2. Start with the increment that will generate the highest value – you will start generating revenue more quickly
  3. Deliver early – our stakeholders will see benefits faster
  4. Only build features that actually generate value (ever heard of the 80/20 rule?)

2. Be transparent

  1. Make sure that our stakeholders have insight into how we’re spending the budget: what we spend it on and how much is left
  2. Make sure to talk to them early if you think the budget or the timeline is in danger
  3. Involve them in finding a solution which in turn means involve them in understanding your problem
  4. Involve them on a regular basis

If both strategies don’t seem to work and people are still trying to assume control, we need to have a sit down with them and find out what the real problem is.

3. Figure out the real problem

  1. What is their real goal with the project?
  2. Do they have more than one project financed with their budget? How are those other projects doing?
  3. Are there patterns in the way we work that make them suspicious?
  4. Can they understand our decisions? Do they know our decision making process?
  5. Our way to communicate – does that work for them? Do they feel like they are getting the right information at the right time?

Cash money and in-house resources will remain a key part of any product development, but there are ways to reduce potential conflicts. Value-guided goal setting and solid communication at every stage can help avoid budget-based conflicts and increase your project’s chance of success.


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