The sustainability and responsiveness of a business strategy has a strong correlation to the quality of environmental scanning. Factual and academic details on the process of environmental scanning are discussed in my previous post “Drawing strategic value from environmental scanning and analysis”

Why the resistance to scanning?

When a new strategy is being developed it has neither shape nor form. As such the team members soon get fatigued collecting information and data in the absence a definite objective. People may start working at cross-purpose. The team is under pressure and inter-personal conflicts and low morale prevails. People get impatient more when the strategy is to implemented soon after.

Leadership and vision revisited

Amazing leadership

Amazing leadership

(Picture courtesy Tundra swans from tundra swanparadise.com)

It is here that the CEO’s or project leader’s strategic leadership come into play. He drives and leads the scanning effort with enthusiasm and vigor. A tempo of excitement    must be created so that the team interest remains high.  A true vision inspires and   energizes the team and provides a direction to the scanning effort. It is the shared vision   that generates synergy.

Analyze the data

Scanning by itself may not be enough to make sense. The information has to be analyzed in the context of the strategic objectives which may still be in the nascent stages. Good indexing and referencing is important to draw value out of the vast data. Use of statistical techniques is useful to enhance the value of sample surveys. The way to avoid information overload is by canalizing the scanning effort towards the critical success factors (CSFs). This was discussed in the previous post.

Use strategic models and creative processes

Various tools such as PEST analysis, Porters Five Forces model, and value chain analysis may be used for analysis. Brain storm to generate ideas – even outlandish ones must be welcomed. Cross fertilization of ideas will then enable creation of great strategies that are unique and have distinctive competitive advantage.

Conclusion

This article highlights the importance of a vision, leadership and team spirit in the environmental scanning process. The scanning capabilities must be imaginatively structured into the organization so that the strategy remains dynamic and responsive to the changes in the environment.

Your comments and questions are always welcome!

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About dilipnaidu

An open mind! Love to share my thoughts and a keenness to learn. An engineer and a MBA I had a wonderful innings in the Army and later moved to consultancy and teaching. My current interests are reading, music, growing culinary herbs, playing golf and yoga. I am serious on "Living life less seriously". A warm welcome to you be well and be cheerful always.

6 responses »

  1. Dilip says:

    Hi Supriya,

    You have correctly highlighted the importance of scanning the environment as the resultant capability of an organization to change its strategic direction. This will surely minimize the possibility of being ‘blind-sided’- I like this term.

    Yes an MNC competencies in scanning the global environment will definitely help them to factor-in the cross border arbitrage much more effectively.

    Great response. I am so glad that you have taking interest in global strategic issues as it will help you in discussions and in writing papers very well.

    Thanks and regards,

    Dilip Naidu

    Like

  2. supriya dhende says:

    Dear sir,

    First, the literature on MNCs has noted various differences between the home and the host country environments, such as: culture, political system, economic system, and business practices. Because of these differences, MNCs strategies for their foreign operations are likely to incorporate a higher level of assumptions than their strategies for the domestic market. Second, because of MNCs ability for, and advantage in, cross-geographic arbitrage, they can be expected to recognize and respond to emerging opportunities and threats more actively.Perceived environmental change refers to the alteration in the pattern of events and relationships occurring in the company’s outside environment, as perceived by managers, which may lead the company to adjust to the new conditions. Strategic change refers to the alteration of the company’s course of action in order to create new conditions or adapt to new conditions. The perceived environmental change-strategic change connection translates the decisive role of top managers perceptions of environmental change upon their decisions to change their companies course of action.
    Environmental scanning is the acquisition and use of information about events, trends, and relationships in an organization’s external environment, the knowledge of which would assist management in planning the organization’s future course of action (Aguilar 1967, Choo and Auster 1993, Choo 1998a). Organizations scan the environment in order to understand external forces of change so that they may develop effective responses which secure or improve their position in the future. To the extent that an organization’s ability to adapt to its outside environment depends on knowing and interpreting the external changes that are taking place, environmental scanning constitutes a primary mode of organizational learning.
    Environmental scanning is something of an art form; guidelines on how to scan are necessarily few. There are no hard and fast rules to lead to a “correct” interpretation of information, Be careful to structure your scanning process to minimize the possibility of being “blind-sided” by a change in the environment that you should have seen coming. Finally, the environmental scanning is only one component of external analysis. It is the starting point, however, from which you and your colleagues can identify trends and events in the environment worthy of monitoring. More importantly, it provides a basis for discerning the strategic direction of your institution from which you may plan far more effectively.

    Regards,
    Supriya Dhende

    Like

  3. Sashi says:

    Hi Sir,

    Wish you a happy new year 2010……….

    Just Be…

    Be a leader when you see

    A Path Others Have Missed.

    Be A Follower When You Are

    Shrouded In The Midst Of Uncertainty.

    Like

  4. dilipnaidu says:

    I wish to share with all my blog friends some awesome responses received for the above post in LinkedIn. These are global insights coming from experts who wish to share their knowledge and experience. The diversity of views highlight the importance and challenge of environmental scanning to strategy. So lets all learn, participate and enjoy.

    1.
    Raghuram Natesan
    Program Manager at Cognizant Technology Solutions

    Dear Dilip:

    Most of us look at the outside from our perspective i.e. our experiences. If we want to scan the environment around us, we need to shed our beliefs and look at the outside in a totally open manner without any predispositions. I believe that this is where most of the organizations fail.

    One thought in terms of enhancing the output of business environment scanning is that it might provide a greater view if the organizations inlcude in their environmental scanning not just businesses in their area of focus, but also include related businesses (those that provide upstream/ downstream services).

    Regards
    Raghu

    2.
    Don Ortner
    President and Chief Solutions Officer at Q-Leadership

    Motivation is rarely lacking at top corporate levels — so I think you can eliminate that as a factor. I might add that most executives in my experience are reasonably intelligent individuals. So stupidity normally plays no roll.

    Commonly, executives assume that they already have a thorough understanding of their business. In general, there was a time when this was true. With time, however, and a continuous focus on urgent priorities these executive lose perspective on changes outside their organizations. They have delegated customer visits, trade meetings, technical developments etcetera to others. They begin to make decisions based on old points of reference that have grown stale.

    These executive have created a mental map of their environment. The failure to scan their environment is the result of an underlying assumption that the environment has remained the same and that their time is better spent addressing more concrete and immediate concerns.

    To persuade them to re-evaluate their environment — to scan it — they need to see a specific example where the current reality has changed relative to their mental map. This requires that the presenter first understands the executives point of reference. They then can pick a specific example to demonstrate the need for a re-scan. Only then will the executive give full consideration to a systematic environmental scan.

    Note: the best of us will scan continuously. Even so, the best will get bogged down on occasion in the work of the immediate crisis.

    Hope this helps.
    Don
    Clarification added:
    A good reference book germane to this topic is “Deep Survival” by Laurence Gonzales. He takes the reader the the process of building mental maps, what happens when the mental map does not match reality and how to successfully adjust your mental map to the new reality. He does this through the context of case studies of those who have survived very difficult situations ranging from plane crashes to falling in a crevasse.

    While not specifically a business book, I find that I draw on Gonzales regularly in business environments.
    Don

    3.
    FRANK FEATHER
    —►CEO NorthStar —►Strategic Futurist ex-Banker ►Keynote Speaker

    You cannot do effective environmental scanning
    from inside the organization.

    Of necessity, you must be an outside observer.

    To have an objective view of both the internal and
    external environment, executives must mentally
    and intentionally step outside the organization.

    Or they must hire an outsider to do the scanning
    for them — and be prepared to accept the scans
    presented, even if they do not match preconceived
    notions.
    Ajay Prakash Mishra
    Lead Business Consultants
    Just a thought ..what kind of business environmental scanning could have predicted the recent economic slowdown or 9/11 attack.. events which surprised almost everyone….but still I agree that understanding environment would help organisations to know at least few possible future possibilites (may be 2 or 3 in numbers) ….my bet is less on environment scanning and more on how ready is the business to handle the situations which are invsible

    4.
    Dwight Long
    Lecturer, University of Texas at Arlington College of Business and Chairman of the Board, Resource One Credit Union

    The vision of the CEO is certainly key. The firm’s mission will be shaped by external trends and a re-evaluation of internal strengths and weaknesses. Establishing resources to monitor, data-mine and accurately report on the general business environment are essential to long term survival. The elephants in the room are the potential impacts of government regulation and deficit spending which, I would argue, has the very real potential for future inflation, increased interest rates and increased taxes with a correspondingly long term impact on economic activity. How should strategic managers shape the future of their firms? What are the implications for existing products, services, human capital and long term capital investment given the diametrically opposed national views on the role of capitalism? What are the major economic implications at stake on the outcome of this controversy? How do we trend those outcomes? What of on-going demographic shifts, technology changes or emerging market trends? Is “smaller is better” a trend or a aberration? Is “live your life on a cash basis” a more likely outcome of this economic upheaval? If so, what are the implications to buying trends, savings rates, long-term personal debt trends, the strength of the dollar in domestic and international markets, etc., etc? What actions are competitor’s undertaking to reduce cost, capture additional market share or improve net profitability? The general business environment is further complicated by the uncertainty of the upcoming 2010 elections.

    I would argue those companies who continue to move down the cost experience curve, retain a well trained and effective work force, possess flexible production facilities and responsive distribution channels will be best positioned to survive.

    5.
    Edward Kim, MD, MBA
    Experienced Healthcare Leader, Teacher, and Researcher

    Companies that are serious about understanding the landscape must build the capacity to take a step back from their own pre-conceptions. However, leadership is frequently prevented from doing so because of the fact that their assumptions are what got them promoted. The world may have changed, but they make decisions as if it were still 1995.

    Recognizing this vulnerability, many will simply hire consultants to tell them what is going on outside the palace walls. This is insulting to the thousands of front line employees are spend all of their time in the real world. Integrating those many customer/environment-facing data points can provide unique insights to corporations willing to build this capacity.

    Of course, it’s always more expedient to buy an expensive slide deck from a top 5 consultancy. At least you’ll be as misinformed as the other competitors who bought the same deck (with a different color scheme and logo)

    Like

  5. Ashish says:

    I agree, Scanning helps to understand the context of an organisations preferred future – where to go. Thus, leadership becomes critical here, since the leader would have identify, think and understand the present and the future environment for their organisation. The big challenge in my opinion here would be to understand that “We can not solve problems by using the same kind of thinking we used when we created them” (anonymous), thus a use of different approach would be required. I believe good qualities of a leader here should be open minded, curious, systematic thinker, one who appreciates suggestions from every one but is yet care full on information overload and finally he must be an out of the box thinker.

    Sir I am not trying to exaggerate here I believe you have most of these qualities.

    Regards
    Ashish Mahto

    Like

    • dilipnaidu says:

      Hey Ashish,

      I like your spirited response. The essence of learning is in discussion and expressing one’s views.

      Way to go! 🙂

      Thanks,

      Dilip

      Like

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