Environmental & Political Analysis

Strategic Analysis of Organisation in their Environment

Over the years, I have undertaken numerous diagnostics for organisations.  The reasons for which have varied widely.  For some, it was examining Customer satisfaction with core customers and assessing Quality Improvement.  In others, it involved examining the Culture of the business for an Internal Health Check.

 Organisations lack Strategic Integrity

About 50% of the time,  analysis from the diagnostics has some key issues with Customer Satisfaction, Quality Improvement, and Cultural Issues

What is revealing is that the diagnostics have picked up a much bigger issue related closely to the focus, direction and strategy of the business.  I can honestly say that, in many cases, another more important issue – usually linked to corporate strategy, overtakes the initial problem under investigation.

Strategic direction: Focus, Energy & Alignment

Three factors are important, ‘Focus’, ‘Energy’ and ‘Alignment’.  I’ll deal with each in turn.  Focus is critical because it indicates direction and progress.  Without an objective, a ‘raison d’etre’, an organisation will be in chaos – people will be confused over which direction to follow. 

Strategic Direction & Organisational Change

Clarity of thought has to be articulated and shared with others to focus the thoughts and motivations of all in the business.  This is an important issue for all businesses. Yet we have  often  witnessed even large scale businesses having failed to address their directional focus and commercial priorities. 

Key Strategic Issues for all Organisations

Unsettling questions that we may want to ask about our business or organisations.

• Does the organisation know where it is currently and what it wants to achieve in the future?  Is there real clarity and transparency?
• Does the organisation have the capability to achieve its objective or aims? 
• Does it have the competence to galvanise the energy and resources, to mobilise and motivate all functions, processes and people towards the overall mission or focus of the business? 
• If we focus our direction and mobilise the energy, can we ensure that that all functions and people are pointing in the same direction? 
• Can we be certain that everyone has bought into the process and fully understands how their contribution fits in the grander ‘scheme of things’ and how it will be valued and measured?

The Triad – Focus, Energy & Alignment

We need all three elements to make the strategic process work.  Having ‘Focus’ without energising people to achieve objectives, is no more than ‘theorising’ and ‘gazing into the future’. 

Having the ‘Energy’ and motivation to achieve is likely to create lots of interest and momentum but without  direction, the people in the organisation are no more than busy fools!  There is much activity and enthusiasm, but no one is sure whether what they are doing is of value or makes a difference.  It is also pointless having ‘Alignment’, without direction or focus and little energy to achieve it. 

A system geared to alignment will be no more than a bureaucratic formality waiting for the key two building blocks to be put in place as a critical step.

Clearly, the three elements of the strategic triad are imperative – although most organisations can achieve a good thrust by relying on ‘Focus’ and ‘Energy’. 

Nevertheless, to gain momentum, put all the visioning, and energy into action requires a firm commitment to ‘Alignment’ through an action or implementation plan – usually identified as a business plan.

I find it extremely valuable, and providing a huge ROI, to focus on these particular aspects of strategic analysis.

Organisational Analysis

• Cultural Review & Audit

• SWOT

• Vulnerability Analysis

Competitor Analysis

• Benchmarking services

• Market Analysis

• Product Portfolio

Industry & Situational Analysis

• Market Share

• Technological Change

• M&A activity

• Regulatory & Legislative bodies

Supplier Relationship

• Supplier Development

Customer Satisfaction & Consumer Reaction

• Customer Retention

• Prospect Conversion & Acquisition

• Changes in Customer Trends and Habits

• Customer Profiling

• Mystery Shopping

Environmental Scanning

• Wider Economic Analysis

• Political Situational Analysis

• International Trends

Stakeholder/Investor Relations

• Media Perception

• Reputation Management

• Brand

There are a variety of tools that have evolved over the years, which are extremely powerful for review for strategic analysis for most organisations.  The tools and techniques can sometimes be industry specific but generally, they can be tailored to a specific organisation in order to converge into a complex model. 

The model then can be used as a powerful process for assessing the actions necessary to compete, or to provide a customer or consumer focused service in any given market.  The process need not be tortuous and can be easily woven into a potential business plan, that can unfold and impact positively on the organisation in the immediate and longer term.

	Without Focus any Path Will Do

Strategy Review: Avoiding the Rudderless Business

Today in 2008, as change impacts upon activities daily and forces us to consider our strategy and tactics, the average organisation has to be fairly adept at adapting to change. 

However, in some organisations the opposite occurs.  For instance, where the intensity of change has actually slowed down the capacity of the organisation to react swiftly thus leaving the business virtually rudderless. 

Speed is a Competitive Differentiator

Speed and accuracy of decision making is critical for any business and as soon as this process is allowed to slow down, confidence in the whole business is diminished. 

The capacity to make informed or even intuitive decisions is the cornerstone and characteristic of a lively enterprise.  If an organisation cannot influence its future, it is merely a twig swept along by the swell or tide of events. 

Be Decisive, Shape Events

For an organisation to flourish it has to determine its future, and this is based upon making decisions about how the future will be shaped rather than being shaped by events considered outside its control. 

When things are happening too fast in the marketplace for the decision-making process to keep pace let alone anticipate change, it is time to think again about whether your business is an ‘influencer’ or ‘follower’ in your market. 

If the locus of control for its future largely falls outside the organisation, it is only a matter of time before the actual existence of the business is put under threat.  This failure to make decisions and act quickly enough can be the death knell for many organisations.

Benefits of Strategic Planning

• Aligns with investors and gives confidence to the market and principal shareholders,  creating positive support from financial backers and other financial institutions
• Stakeholders are aware that the business is focused specifically on key areas and provides review for regulatory bodies
• Customers are confident that the ‘provider’ is further looking to add to customer satisfaction and committed to customer or consumer needs
• Powerful PR for potential partners, customers or prospects considering partnering with the organisation
• Reviews senior management planning and decision making in line with development of the business
• Opens up the analysis of the business, the market, competitors and suppliers, technology, regulatory bodies etc
• Tangible involvement for others in the business to become involved in the strategic process, competitor analysis, organisational review
• Creates confidence amongst staff that the organisation is committed to development, improvement and continuance

Strategy Review

There are critical incidents in an organisation’s life when a ‘wake up call’ can summon top team members to reconsider the direction for their business. 

We would like to think that this was a positive response to wanting to control more of their market, rather than a reactive strategy geared to minimising loss. 

Those who commit to take control can achieve a great deal.  General Electric currently the largest company in the world with earnings of over $130bn with consistent almost double digit profit levels has for the last 15 years at least portrayed a strategy of being either No 1 or No 2 in each of the markets in which it was competing. 

GE has always been acquisition hungry and not a day goes by without GE merging, acquiring new businesses or disposing of poor performing operations. 

Any Business School will ratify GE’s commitment to strategic domination and its powerful analysis of the market.  The learning for other organisations, (whether commercial or not for profit) is simple – if you choose to take control, analyse the market, forecast and identify trends, and build a culture to support change, then growth, certainty and rewards will follow.

How does your business compare on creating a solid strategy?

• Do you have a firm idea of the direction for the organisation and what principal markets and services it will be offering in the next 24 months?
• Have you conducted a ‘vulnerability analysis’ for your organisation analysing where you are weak and under threat?  Where are you most at risk from competitors or others that provide similar services?
• Have you reviewed the key services you offer and considered where they fit on the ‘life cycle’ within different markets with varying sophistication of customers?
• Do you have the internal capability to deliver to the expectations of key stakeholders?  Internally, where is your business most at risk in failing to deliver strategic goals?
• To what extent have you developed a robust process for reviewing and creating business strategy?
• Have you taken the necessary steps to create the culture and the infra-structure to support your strategic direction?
• How well have you created a strong and reliable communications infra-structure to support the transmission and dissemination of information that supports, builds and expresses your strategic intent?
• Do you have confidence in your first line managers or team leaders ability to articulate the strategic thrust of the business and understand how their tactical actions contribute to the larger scheme of thing?.

Strategic Review – Take Good Look in the Mirror

The key issues are ‘push’ and ‘pull’ factors.  Are you being pushed into reviewing your ability to achieve your mission, or is there a compelling reason to structure up on strategy? 

As stated before, GE have a very firm quantifiable objective in mind about being No 1 or 2.  All the time they focus their energies on shareholder value.  That is sometimes their key over-riding objective.  But not all organisations are the same and they may want to assess their success differently. 

Some organisations may provide services or seek to meet a social need, but they still have to capture the attention and win the support of those who are consumers, end users or customers of their service or product.  How will you be assessed and how does that assessment affect your longevity as a business? 

One issue important for those who operate in the ‘not for profit sector’ is that the resources they are allocated are fixed.  These organisations cannot frequently go back to those who fund them and ask for additional investment. 

It is even more important that these organisations commit to the strategy process for the benefits that accrue to the organisation, its consumers and its people.  Only by utilising their resources, thinking smarter and thinking strategically can they maximise their output and use their resources more efficiently.

A key activity is awakening the organisation to the benefits of strategic thinking.  This means taking a good, self critical look in the mirror and asking the question – “How are we doing?” 

It requires not only self analysis but also a review of the perceptions of key customers and stakeholders.  If the organisation does not have customers in the traditional sense then focus on ‘end users’ or ‘consumers’.  Strategic analysis requires a commitment to quantify the response of stakeholders, and its impact on the organisation’s future.

	Focus, Energy & Alignment

Strategy - Planning to fail or Failing to Plan

Philip Atkinson published this article when he created a Management Game simply called 'Strategy' in 2003.  He has used the management game with a variety of businesses and sold it as an external tool to help organisations work on major Strategic issues or focus on smaller business units working on their Strategic objectives in a smaller arena or geography.

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