Abstract
The environmental scan provides a systematic overview of the external factors that are important to the organization (or sector) and indicates whether the organization can influence them or not. Scanning promotes an active response to positive (opportunities) and compliant factors and leads to insights on how to live with the “hard facts.” The more organizations utilize a systemic approach, the more likely they will avoid blind spots during a scan. Managers have instinctive attitudes and assumptions about the external environment. They pay attention to what is most immediate. They may have blind spots that ignore or overlook certain market trends. Environmental scanning and analysis aims to gather evidence and reduce uncertainty. This chapter examines environmental scanning blind spots, analysis, and emerging trends.
TopIntroduction
Many research studies indicate that when reality and conviction are at odds with each other conviction often win. Companies and nonprofit organizations are often blindsided when faced with demographic, political, environmental, technological changes and new rivals . The most talented and best prepared leaders face complex, ever-changing, and often unpredictable challenges. The more an organization utilizes a systemic approach, the more likely they will avoid blind spots. Environmental Scanning or ES, provides a view of community needs by detecting pertinent economic, social. cultural, environmental, health, technological and political trends, situations and events.
Frank Aguilar’s classic book “Scanning the Business Environment”, exemplify some of the factors involved in determining what external information is strategic or relevant. The managers studied by Aguilar were mainly interested in the news of the market, including competitors, customers, pricing, market structure and change...
To be effective in a complex and changing world, decision makers must look ahead to anticipate emerging trends, issues, opportunities, and threats. Developing and applying strategic foresight must come into play. A well conducted scan results in a new management and marketing style that is more forward thinking. Scanning has long been standard practice in the military, the intelligence community, and the business world and is a core method in futures research. In recent years, horizon scanning has been used in a growing number of fields in the public sector, such as human health (Douw and Vondeling 2006) and education (Munck and McConnell 2009).This chapter defines environmental scanning, examines Blind spots, weak signals, and effective tools used for discovering emerging trends beneficial to a company’s or organization’s strategic planning.
TopBackground
The lack of diversity in information sources may contribute to blind spots in environmental scanning. If organizations get their information from acceptable, conservative or authoritative sources, they may not see the changes taking place in their external environment. A large amount of pertinent information comes from face to face discussions, rumor, gossip and conjecture.
Moreover, it keeps the organization informed of current trends and challenges of the future.
Companies find it demanding to identify and include basic signals about their future developments and challenges in their existing, and often static strategic planning processes. Environmental scanning helps corporations, and nonprofits to understand external threats and opportunities leading to change. When an organization has undergone significant changes the knowledge discovered by an environment scan is intrinsic.
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.
Research suggests that effective scanning and planning is linked to improved organizational learning and performance (Choo 2002).
Environmental scanning practiced by different Japanese and Korean corporations share a surprisingly common pattern as observed in a 1988 study by Ghoshal). Information gathering is typically achieved through six channels and sources:
Key Terms in this Chapter
Strategic Scanning: Involves looking for what are known, as “weak signals and have little or no bearing on “here and now” and may therefore not seem useful.
Futures Approaches: The tools, methods and thinking styles used to build an organisational foresight capacity, usually interdisciplinary and inclusive rather than restricted to a particular method or philosophy.
PEST: It is an acronym that stands for Political, Economic, Social and Technological factors affecting a business decision. It is a framework used in the early phases of strategy development to describe the landscape and environment in which a firm operates.
Environmental Scanning: Defined as ‘the study and interpretation of the political, economic, social and technological events and trends which influence a business, an industry or even a total market.
Strategy: Michael Porter a strategy expert and professor at Harvard Business School, emphasizes the need for strategy to define and communicate an organization's unique position, and says that it should determine how organizational resources, skills, and competencies should be combined to create competitive advantage.
Delphi: It is essentially the polling of experts, over a number of rounds, to generate consensus about a particular topic or issue. Delphi does not survey the outlying views or the dissenting views, but is useful where a high degree of credibility is required. The key question to ask here, as with all methods, is what image of the future is generated in this scanning output? And, whose voice is not being heard? Japan has been using a Delphi approach for many years, and produces quarterly reviews on science and technology trends.
Blind Spots: Areas important information go unnoticed and thus the organization falls into one of any number of traps. These include misjudging industry boundaries, failing to identify emerging competition, falling out of touch with customers, over-emphasizing a competitor’s visible competence, and allowing corporate taboos or lack of foresight to limit their frame of reference. Any one of these mistakes will prevent organizational leaders from taking advantage of the opportunities available to them.
Foresight: Defined as the capacity to think systematically about the future to inform decision making today. It is a capacity that we need to develop as individuals, as organisations, and as a society.
Horizon Scanning: It is a term frequently applied to futures scanning. This is scanning at the periphery, at the edges of current thinking, looking for emerging issues, threats and opportunities.
Metascanning: There are many people and organizations whose job it is to scan the future. Some will let you have limited access to some of their findings for free, but most will ask you to sign up for a service. The value is that they have already done the initial work for you saving you time – and are satisfied with their approach and methods.
Paralysis by Analysis: The state of over analyzing.
Competitive Scanning: The objective is to understand competitors’ strategic positioning in terms of sustainable development but also the way in which they are evolving.
Macro Environment: Major external and uncontrollable factors that influence an organization's decision making, and affect its performance and strategies. These factors include the economic factors; demographics; legal, political, and social conditions; technological changes; and natural forces.
Strategic Scanning: Involves looking for what are known, in the foresight profession, as “weak signals.” and as a result, they may seem to have little or no bearing on “here and now” and may therefore not seem useful.