Environmental Scanning

byJames L. Morrison

http://horizon.unc.edu/courses/papers/enviroscan/

Issues

Successful management of colleges and universities depends upon the ability of the senior leaders to adapt to rapidly changing external
environment. Unfortunately, the lead time once enjoyed by decision makers to analyze and respond to these and other changes is decreasing.
Traditional long-range planning models, with their inward focus and reliance on historical data, do not encourage decision makers to anticipate
environmental changes and assess their impact on the organization (Cope, 1981). The underlying assumption of such models is that any future
change is a continuation of the direction and rate of present trends among a limited number of social, technological, economic, and political
variables. Thus, the future for the institution is assumed to reflect the past and present or, in essence, to be "surprise-free." However, we know
that this is not true, and the further we plan into the future, the less it will be true.

What is needed is a method that enables decision makers both to understand the external environment and the interconnections of its various
sectors and to translate this understanding into the institution's planning and decision making processes. Environmental scanning is a method of
accomplishing this.

Brown and Weiner (1985) define environmental scanning as "a kind of radar to scan the world systematically and signal the new, the unexpected,
the major and the minor" (p. ix). Aguilar (1967), in his study of the information gathering practices of managers, defined scanning as the systematic
collection of external information in order to (1) lessen the randomness of information flowing into the organization and (2) provide early warnings
for managers of changing external conditions. More specifically, Coates (1985) identified the following objectives of an environmental scanning
system:

 detecting scientific, technical, economic, social, and political trends and events important to the institution,

 defining the potential threats, opportunities, or changes for the institution implied by those trends and events,

 promoting a future orientation in the thinking of management and staff, and

 alerting management and staff to trends that are converging, diverging, speeding up, slowing down, or interacting.

Fahey and Naravanan (1986) suggest that an effective environmental scanning program should enable decision makers to understand current and
potential changes taking place in their institutions' external environments. Scanning provides strategic intelligence useful in determining
organizational strategies. The consequences of this activity include fostering an understanding of the effects of change on organizations, aiding in
forecasting, and bringing expectations of change to bear on decision making.

A number of writers on educational planning encourage college and university decision makers to use environmental scanning as part of their
strategic planning models. This chapter reviews several environmental scanning models and discusses how environmental scanning is used in
higher education. Also included are suggestions on establishing an environmental scanning process at your institution and a listing of useful
scanning resources.

Background
Environmental scanning is one of four activities comprising external analysis. As illustrated in Figure 1, external analysis is the broader activity of
understanding the changing external environment that may impact the organization. In describing external analysis, Fahey and Narayanan (1986)
suggest that organizations scan the environment to identify changing trends and patterns, monitor specific trends and patterns, forecast the future
direction of these changes and patterns, and assess their organizational impact. Merged with internal analysis of the organization's vision, mission,
strengths, and weaknesses, external analysis assists decision makers in formulating strategic directions and strategic plans.

The goal of environmental scanning is to alert decision makers to potentially significant external changes before they crystallize so that decision
makers have sufficient lead time to react to the change. Consequently, the scope of environmental scanning is broad.

Defining Environment

When we scan, it is useful to view the environment in a mariner that organizes our scanning efforts. Fahey and Narayanan (1986) help by
identifying three levels of environment for scanning. The task environment is the institution's set of customers. In higher education, this may
include students and potential students, parents of students and of potential students, political leaders, and employers and potential employers of
students. The task environment relates to a particular institution. Although the task environments of a community college and a research university
within 20 miles of each other may overlap, they also differ.

The industry environment comprises all enterprises associated with an organization in society. For higher education, factors such as public
confidence in higher education or student aid legislation are industry factors affecting all institutions.

At the broadest level is the macroenvironment, where changes in the social, technological, economic, environmental, and political (STEEP) sectors
affect organizations directly and indirectly. For example, a national or global recession increases the probability of budget cuts in state government
and, consequently, budget reductions in publicly supported colleges and universities.
Marjorie A. Bucio BUSN 403B-AT44 December 7, 2017

Strategic Planning: Laying the Foundation with a Solid Environmental Scan

By Ray Gagnon

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!

Source: https://www.huffingtonpost.com/ray-gagnon/strategic-planning-laying_b_1923937.html