Tuesday, July 5, 2011

Doing a Strategic Analysis

In the beginning of big organizational changes, analysis is critical. For many, this involves people gathering as a group during an off-site retreat, slapping random thoughts down on flip chart paper and then posting them up on the wall. After talking about these ideas for numerous hours and looking at all of the dead tree material on the walls, some one says “OK; let’s do it.” And then supposedly, successful change begins.

Wiser leaders take more time and do a complete analysis which begins by separating the whole into its component parts. Here, they approach their work on multiple levels. First, they recognize that the analysis needs to focus on what is happening within the organization and at the exact same time on what is happening outside the organization. Understanding the internal and external environment is vital to short and long term success.

When beginning to asses the external macro environment, i.e. the context for change, I suggest a process called a PESTEL analysis. Here, people review the trends that are happening in the following areas which might influence the company, it’s customers and it’s products and services, namely political, economic, social, technological, environmental, and legal. This in-depth review helps us make sure we are not missing some future adaptive problem or element which might disrupt the strategy being developed.

Second, there needs to be an assessment of the internal company environment. Two areas that need close attention are an analysis of the company’s competitive advantage and an assessment of it’s current performance in regards to it’s current strategy. I have witnessed organizations do this level of analysis in many different ways so I am not going to recommend one specific way other than to say it needs to be done.

Finally, when the above work is done, a classic SWOT analysis can be helpful. Here, identify strengths, weaknesses, opportunities and threats. Then we examine strengths to pursue external opportunities, while countering weaknesses and threats (internal and external factors that undermine successful strategic execution).

For those of you who want to explore this subject in greater detail, I suggest you read the following article: “Mastering the Management System” by Robert S. Kaplan and David P. Norton, Harvard Business Review, January 2008. Here is a link: http://hbr.org/2008/01/mastering-the-management-system/ar/1.

As I stated before, analysis is critical to short and long term success. Spend more time doing this in the beginning of organizational change and you will spend less time correcting problems as you move through the process of change.

Geery Howe, M.A.Consultant, Executive Coach, Trainer inLeadership, Strategic Planning and Organizational ChangeMorning Star Associates319 - 643 - 2257

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