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Strategic Planning: Laying the Foundation with a Solid Environmental Scan

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There's no doubt that defining the future for an enterprise is one of the most important obligations of leadership. There's also little doubt that actually conducting the strategic planning process by which this takes place is one of leadership's most challenging activities.

The issues at play are many and complex, and the high-powered players typically involved often hold strong views about the business, its operating environment and each other. In many ways, these already-formed views and positions that key players bring to the process pose one of its biggest initial challenges.

Why Conduct a Scan?
The risk is that executives approach the planning process as an arena in which to "lobby" for their individual agendas and goals or for their personal "visions" for the company. The problem with this mindset is that it risks setting a tone of "debate" right from the beginning when what's needed is a calm, fact-based, assessment of your company's operating reality.

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 conducting strategic planning sessions for our clients, we've found no better way to set this thoughtful, fact-based, dispassionate foundation for strategy setting 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 all members of the planning team.

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 "lens," a fresh, complete look at current reality causes everyone to look at the whole picture, not just their version of it. Even more fundamentally, of course, confronting the reality your company faces honestly, accurately and objectively 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 won't fit into your executives' demanding schedules. We always ensure that in preparing a Scan for strategic planning our clients develop succinct, yet complete, summaries of the salient points in the following four domains:

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 yours, 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, and senior executives are busy people. But the burden isn't prohibitive. We usually "volunteer" a team of two senior executives for each of the four Scan components. So, for instance, the CEO and the R&D head prepare the "macro." The heads of manufacturing and operations prepare the "industry." The marketing and sales VPs do "competitive," and the CFO and HR VP do "internal." Or some such division of labor that makes sense in your world.

We make it clear to them that this can't be the proverbial War and Peace, but that each of the four segments must be presentable in approximately one half-hour's time, for a total of about two hours for the entire Environmental Scan. Time and time again, we've seen this initial, rational, collaborative step calm the jitters that often accompany the start-up of a strategic planning process, while providing content that's conducive to setting the right tone for the entire process right from the start.

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!