How to deliver bad news to stakeholders

Project deadlines and delays are like death and taxes. Inevitable. As a manager of a product development team, there will be times when you will have to deliver bad news to your stakeholders. The most common bad news you will have to deliver is delayed projects. One might think, what is the big deal about delays? It's not like people are dying because of it!

In most cases, that is true, but the politics around projects and delivery will have a meaningful impact on your long-term trajectory in the company, including affecting future raises and promotions. To be successful as a manager, you must master the art of delivering bad news, sometimes even to the CEO. One point to note is that when I refer to projects, I am referring to large initiatives that take multiple months to finish and have multiple stakeholders. To understand the nuances, let's begin with how projects come about. Also, I will interchangeably use exec, executive, project sponsor, and executive sponsor in this chapter. They are all referring to the person who funded the initiative. 

People are the most expensive line item for any company. Most new managers don't get this, but at the core, people leaders need to think like investment managers. Where do I deploy these smart people that will result in positive revenue gain for the company and its shareholders? Every year, the leaders at the top of the company have to debate (often spiritedly) and align on where to spend the company's money, i.e., their team's time. These debates are zero-sum games because the budget available to the company is fixed. Often, an executive will fund their project at the expense of someone else's budget. This executive is now on the hook for delivering the project on a timely basis and for the revenue generated by that project. If this project fails, the executive will be in the hot seat and have to answer some tough questions, and the person they stole the budget from will make sure the tough questions are really tough. The executive on the hook will pass the pressure down to the teams responsible for delivering the project.

If you, as a manager, have been trusted to deliver a key initiative, you must build social capital with the person funding the initiative. You will need it when you have to deliver bad news to them. So here is how to build trust first.

The best way to build trust with any senior leader is transparency. Most senior leaders are hungry for information. So, include them in regular status updates. Actively track risk and mitigation steps and socialize them with the stakeholders. Do regular 1:1 meetings with all key stakeholders. Write weekly summaries of the project status, risk mitigation strategies, and any feature trade-off details and send them to the stakeholders.

Additionally, highlight where you need the senior leader's help in every weekly summary. For, e.g., resourcing, conflicts with other business units, etc. Simply put, make it easy for the sponsoring leader to report information to their bosses and clarify where they can help with the project. Pro-tip, you don't want the senior leader involved in your day-to-day unless you really need them to intervene, which is usually when you run into issues with other organizations. So, choose wisely. 

Second, build camaraderie between your team and the stakeholders. Push the executive to hang out with your team in low-pressure situations and vice versa. Lunches, dinners, drinks, etc. Major project milestone celebrations are a great way to get people to socialize in person. Make sure the exec knows most of your team by name, especially the leaders on your team. Also, make sure your team hears from the executive directly about the importance of the project they are working on. You are making sure everyone understands each other's context and humanizes everybody. It is easy to get mad at a talking head on zoom, but getting angry at someone you got lunch with is tough.

OK, so your team tells you they are going to be late. You have trimmed the scope as much as you can, but still, the project will be delayed, and now you have to tell the sponsor this bad news. 

If the project is delayed only by a few weeks, strongly consider asking your team to work extra to get the project over the finish line on time. Also, consider leaning on your peers and asking them for resourcing help to get the project over the finish line. Will getting the project out on time make a meaningful difference to the company's future? Probably not. However, it will dramatically increase the project sponsor's trust in your team and you as a leader. The more trust the company leaders have in your team, the better the opportunities that will come your team's way, which will, in turn, buoy everyone's careers. 

If a few working nights and weekends won't deliver the project on time, then it's time for a 1:1 sit down with the sponsor. As much as possible, do the meeting in person. Remote work has made this slightly challenging for many companies, but nothing breeds more trust than a face-to-face meeting where you can look into the eye of the other person, take ownership of the message, and deliver bad news. In my career, I have flown across the country to deliver bad news to my stakeholders. 

However, before walking into the meeting, here are a few discussion points that will come up in the conversation that you should be prepared for

• The number one question to expect from your project sponsor is, 'Why did this happen? What caused this?'. Be prepared with the root cause (incorrect estimation, customer feedback, etc.), but DO NOT pin the blame on any person. Put the blame on yourself and take accountability. Own the failure. 

• Be prepared to answer what you will do differently next time around. If incorrect estimations caused the delay, lean on others to validate your team's assumptions. If late customer feedback caused the delay, consider socializing smaller changes more often with customers and getting feedback. Or your team may need engineers with different skills, for example, backend vs. front-end. The bottom line is to be prepared with clear next steps on what drastic changes you will make to salvage the project?

• Come prepared with the new timeline, including milestones. Do not present just one final date. Present multiple milestones, the customer benefit at each milestone, the dates of those milestones, and your confidence level associated with each milestone. A milestone a month out should have a higher milestone than one 3 months out. DO NOT walk into the conversation without a confidence level on your dates.

• Be prepared to deal with rhetorical questions like, 'Is the team working hard enough?' or, 'Does the team know the importance of this project?' etc. This the project sponsor venting, nothing more. There are no real answers to this except saying yes and refocusing the conversation on the path forward. 

In the meeting, start by taking ownership of the delay. Then get into the bullet points above without needing to be prompted by the other person. Once you have gotten through your narrative, as much as possible, focus more on the path forward than the past, but don't try to deflect any questions. The key feeling you want to project here to the project sponsor is that the pressure they are feeling is shared equally by you and your team, and you will do your best to deliver this project on the new timeline. Additionally, offer to be in the room when the executive has to share the news about the delay with people above him, the CEO, the board, etc. The exec will most likely refuse, but the act will highlight your ownership. 

If you have built trust with your exec sponsor and have all your talking points in order, you will survive with your credibility intact if you show the right level of urgency to see this through. 

Many of you might be thinking, 'Shouldn't leaders create a safe space for failures to happen?' Broadly speaking, yes, it is true, and you, as a people leader, should create a safe space for your team to experiment and fail. However, repeated failures will never end well for anybody. Your team can't be working on failed science experiments most of the time. Most of the time, they should provide value to the customers who buy your products. As a manager, it is on you to make sure your team is contributing positively to the company's bottom line. Anybody who says, 'it's OK to fail as long as you learn from it,' hasn't worked in a real company. A more accurate version of that phrase is, 'It is OK to fail as long as, over time, you deliver value to the company.'

Another big reason for you as a manager to honor your commitments is to build trust with the people funding your project, a.k.a; the leaders at the top. Some of you are probably thinking, 'Aren't the best executives servant leaders? Shouldn't they be serving us?' Yes, all of it is true. The best executive leaders are, in fact, servant leaders. However, the hard cold reality is corporations are capitalist institutions, including the one you, the readers, work at. They exist to return positive returns to their shareholders and add customer value. That means someone (private investors, public shareholders, etc.) is giving your company money and they expect to get an outsized return on their investment. ALL the leaders who are in executive seats deeply understand that fundamental truth. They have to tell their investors how they are working to put their investments to work. They have to share with them the projects they are spinning up, when they will be delivered, and how they will positively impact the bottom line. The more you can showcase to your bosses that you understand this reality, the more convinced they will become that you will succeed as a leader.

The last big reason teams need to consistently deliver products and features used by customers is to build their self-confidence. When customers use the features delivered by your team, it validates their work and, in fact, their existence. Teams that don't deliver for an extended period will get disillusioned over time and lose interest in their work. Lastly, those teams also become prime cost-cutting targets when the budget becomes tighter. Yeap, another cold hard reality.

A quick recap of what to keep in mind

1. Build trust with your executive leader and other stakeholders

2. When projects get delayed, own the messaging

3. Deliver the message in a face-to-face, 1:1 meeting

4. Come prepared with specifics about how you will deliver on the new timeline

5. Share and show the urgency of your project sponsor

6. Be ready to ask your team to work extra if you think it will help the team deliver on time

7. Understand that corporations are capitalist institutions

8. Teams that don't deliver value consistently will disappear over time

Disclaimer: I have changed some of the details (names, titles, locations etc.) of my personal anecdote to preserve anonymity.

Personal Anecdote

By 2019 I was firmly in middle-management. Our offices were in an old, chilly brownstone right next to Chinatown in Boston. Back then, I was managing a team of about fifty and I also had managers reporting to me. Additionally, I was in line for a promotion into an executive role. I had also recently ditched my LL bean shirts for Bonobos. I was moving up the corporate ladder and life was great. However, to prove that I can actually do the job, I was put in-charge of a large project that was one of the key goals for the COO who worked out of the Seattle office. To get a seat at the executive table, almost everyone currently at the table will have to say ‘yes’ to your promotion packet, so it was important for this C-level executive to have faith in me. 

One thing to point out about COOs is that they are driven by numbers. In general, COOs, CFOs, and CROs and their teams are highly predictable. You add X number of salespeople, you get Y revenue out of it. Conversely, Product and Engineering organizations are not highly predictable because there is a fair bit of creativity involved in creating features, designing them and shipping them. It’s hard to put a precise timebox around a creative endeavor for a brand new product. 

The beginning of the project was great. Everybody involved in the project was energized by the prospect of working on a critical company project. As the project kicked off, everybody at the top wanted to know when the project would be delivered. As a team we had done some rough estimation of the timelines, just for internal planning purposes and I shared that number with the COO and caveated it heavily. The date made its way into a deck that was presented to the CEO and in that meeting that rough estimate became a firm date. This was mistake number 1. What I should have done is broken the large project into smaller customer-facing milestones and shared the dates for only the early milestones that we as a team had confidence in.

Rough dates, when shared with more than ten people have a magical way of becoming firm dates.

About three months, it was clear that my team would not be able to hit the deadline that we committed to. They told me that they would need six more months. I got on a call with the COO, and let them know that we are going to be late and committed to coming up with a new plan in a week. I remember eating breakfast, lunch and dinner with my team that week. At the end of the week, we got a new plan and I decided to walk through the plan in person with the COO.

I remember stepping out of SeaTac into a downpour, which was slightly different than the usual Seattle drizzle. Normally, I would fly into Seattle on a Sunday, relax overnight and then head to the mothership bright and early the next Monday. However, this time around I couldn’t find any Sunday night flights, because of the short notice. So I walked out of SeaTac, got into an uber and headed straight for the headquarters. 

My nerves were fine for the trip to the office, but as soon as I stepped into the shiny Seattle building, my heart started thumping a tad bit faster. By this time in my career, I had delivered project delays to numerous stakeholders many times, but this was the first time I had to deliver bad news to an executive. Not just any executive, but an executive who can as easily fire me on the spot. By the time I got to the right floor, my heart was triphammering, my mouth was dry and there was a general sense of dread. It was like going to the principal's office, but worse. Delivering bad news is one of those things that only marginally gets easier over time. Like, slightly easier.

As soon as I stepped into his office, I could tell the COO was not in a great mood. He sat hunched forward in his desk, hands clasped together and glared at me as I sat down. The first thing I said after I sat down was, “This is my fault. I take ownership of the delay”. Those were the magic words. Actually, those are THE magic words for anybody reading. As soon as I said those words, his demeanor changed instantly. He relaxed his body, leaned forward and asked me, “How do we set this right?”. He didn’t ask me how I was going to fix it, instead he offered to help me get this train back on the right track. Showing accountability and ownership are critically important to build your credibility as a leader.

I walked him through the various milestones of the project and how I planned to add more people on the team to make sure the project doesn’t slip again. I also convinced him to spend more time with the Boston team and help rally the team, which he did, and the team loved him for doing that. By the time the project shipped, the team had built a personal connection with the COO and understood his motivations. The COO understood the complexity of the project and also was able to appreciate the hard work the team was putting into the project. 

The project did slip a couple of times but the team was able to get it back on track with a combination of cutting scope a bit and good old elbow grease. In the end the project shipped on the date we committed to. Oh, and remember the promotion I mentioned, yeah, that didn’t happen. What did you all think this was, a Hallmark movie?