Are you ready for some Serious Shift this week? Better buckle-up.

Last week I outlined a map of the overall Strategic Planning Process. In that blog, I also provided a road map to Step 1: Establishing Vision & Objectives for Success. Now that a vision and objectives have been given clarity and focus, it is time to consider the Environment in which you will be competing, playing and working. This step is often missed by business owners in their rush to start working towards their goals. Sadly, by not taking into account the Environment around you, the precious resources of time, energy and money will be squandered and misused.

Consider that you were planning a backpacking trip into the wilderness and could only take with you what you could carry. You would, of course, pay attention to the obvious things like the weight of your load, the logistics of travelling to the trail head, having enough fuel for cooking, adequate shelter and ample food. Oh, and don’t forget toilet paper (unless you are really hardcore). BUT, you would also be wise to check in on the weather for the greater area, the smaller area and check a map to view the topography. You might even want to go new school and see if there are some GPS coordinates to download. Another consideration would be to check in with yourself and assess your fitness, experience and knowledge of the area you are heading into. In other words, you would want details to get as clear a picture of what you are getting yourself into beyond just having a pack full of stuff and a vision of where you are heading.

Now, back to your business. It is critical to understand where you are headed and what it might take to get there. But understanding the details of where you are headed and your surroundings are just as important to ensure that you deploy your critical and scarce resources of time, energy and money to get the best result.

Why Scan Your Environment?

The answer is simple: to create awareness and understanding. To plan and execute, you need a calm, fact-based assessment of your company’s operating reality. Could you imagine planning a military campaign without a clear understanding about every aspect of the Environment you were going to be operating in?

Before you begin strategizing and defining initiatives, it’s vital first to understand the “playing field,” and develop a shared agreement on “where we are now” and “how things stand” as a critical context for deciding “what we should do.” In the more than twenty years we’ve spent doing strategic planning, we’ve found no better way to set this thoughtful, fact-based, dispassionate foundation for strategy than by conducting an Environmental Scan.

Setting the Right Tone and Changing the Game

The purpose of a good Environmental Scan is to create a fresh, concise yet comprehensive, “take” on a company’s business environment – internal and external – that is witnessed and validated simultaneously by everyone involved in the planning process.

We’ve experienced many times the change in tone and climate that results from conducting a good Scan at the beginning of a strategic planning process. While individuals may have entered the planning session looking at reality through their individual perspectives, a fresh, complete look at current reality causes everyone to look at the whole picture, not just their version of it. Even more fundamentally, confronting the reality your company faces with honesty, accuracy and objectiveness is the best way to ensure that your strategic plan addresses that current reality vs. what that reality used to be or what you wish it still were.

The Essential Ingredients

So here’s a tried and true recipe for conducting an Environmental Scan that has stood us in good stead for many years. It’s complete enough to do the job without being so extensive that it will be overkill and be irrelevant and of little use. Your objective is to develop succinct and complete summaries of the salient points in the following four areas:

Macro-environment: Here we mean current and emerging macro trends relevant to your company such as social, economic, technological, legal/regulatory, scientific events, realities or projections. For instance, if you are a purveyor of outdoor gear, you need to deal with the fact that time spent outdoors by contemporary youth is trending downward. If you manufacture or sell formal men’s clothing, you’ll need to address the increasing prevalence of “business casual” in the workplace.

Industry environment: This refers to the most significant current/emerging trends in your company’s “industry” or industries that are/may become relevant to it. For instance, if you sell heavy equipment to the coal-mining industry, you need to confront the current energy-use trend away from coal toward natural gas.

Competitive environment: This part of the Scan should overview your company’s “competitive frame” by defining key competitors, assessing their performance, being clear-eyed about their competitive advantages and realistic about your own, and also attempting to anticipate your competitors’ likely moves over the time-frame applicable to your strategic plan.

Internal environment: Last is a comprehensive overview of the company’s recent financial performance and organizational health: revenues, profitability, products, ratings, awards, etc., etc.; organization, culture, employee morale, retention/turnover, development capability, and so on. In other words, an assessment of how “healthy” your company is as you prepare to face the challenges and opportunities you see in your future.

Making It Happen

Preparing a good Environmental Scan takes time. It is the classic chance to measure twice before you cut once. Without doing this critical step, you run the risk of cutting twice before you decide to measure. Imagine all the wasted resources.

Pick your advisors/team members wisely as you enter into this process. Consider focusing 30 minutes on each of the four Environment Scan areas. Be focused and clear, and don’t get sidetracked by making this a huge work of literature (probably more like fiction). My experience is the long and more rambling the Environmental Scan, the less effective and relevant it is.

As individuals present and discuss facts and data vs. positions, you can literally feel knee-jerk opinions and personal agendas evaporate as fact-based implications slowly begin to become obvious. Once everyone begins to see and accept the same operating reality, it’s amazing how rational, objective and productive – vs. contentious – your strategic planning sessions can become!

 

 

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