Strategic analysis and planning basics

Peter Strempel

A set of simple, widely used analytical tools can help teams and organisations analyse their strategic environments to work out whether new challenges and opportunities require new responses or changes in systems and practices.

Conducting such analyses is often referred to as strategic planning, though the terms mostly refers to the activities of senior executives and managers.

Nevertheless, this area of analysis and planning is accessible to anyone in an organisational context, and does not require expensive resources, even if an experienced facilitator can assist in team planning or in smaller organisations. I would bring my Enterprise Architecture skills to bear on any planning I might facilitate. These skills are summarised on a separate page.

Following on from analysis, I would focus on creative problem solving to address any new challenges and opportunities, and there are a couple of useful methods to help teams innovate collaboratively.

The methods I discuss here include —

  • The basic SWOT analysis.
  • A more advanced PEST type of analysis.
  • Knowledge management triple loop learning approach to innovation.
  • Dialectics to combine the strongest elements of competing ideas.

Most people are already familiar with SWOT analyses (see Figure 1 below).  The acronym stands for strengths weaknesses, opportunities, and threats.  It is a convenient and easy tool to use.  Just draw and quarter a square and write in all the issues you can think of under each heading.

SWOT diagram showing action dimensions
FIGURE 1: A SWOT diagram showing action dimensions. Click for larger view.

In a team settings just combine the best ideas into a single SWOT diagram, and then consider how you will build on your strengths, capture your opportunities, address your weaknesses, and defend against or defeat threats.

PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal environments to consider when examining your organisation’s strategic direction (see Figure 2 below).

PESTEL diagram
FIGURE 2: A PESTEL diagram with suggested impacts or influences.

The diagram shows your organisation at the centre, surrounded by factors that affect how your organisation can operate, compete, flourish, or decline.

The first order influences include –

Political stability and policies affecting your organisation and your clients or customers.  Unstable political system always create greater uncertainty.

Economic conditions are about demand, supply, consumer confidence, and organisational budget certainties.  If the economic environment is uncertain or declining, it’s time to examine efficiencies.  If the economy is buoyant, it might be time to expand.

Social factors concern the demographics of your clients or customers: are they declining or rising; do they have spending power or not; are the demographics changing in areas like age groups?

Technological factors concern the efficiencies of industrial and process automation in your organisation and supply chain, but also among your competitors.

Legal factors concern regulations and compliance burdens such as licensing or tax costs, but also consumer legislation and international trade agreements.

Environmental factors in this context concern the natural environment, including the risks of natural disasters, changing weather patterns, carbon emissions costs, and the flow-on to insurance and the potential for more sustainable practices and products.

These are only indicative examples.  Every organisation has its own particular areas of focus, risk, and opportunity.

Around these areas of influence are more complex combinations of impacts.

Political Economy refers to an overall national and international distribution of wealth as it affects your budget, profit margins, range of products and services, and the spending priorities of your clients or customers.  Similar to, but not quite the same as a mixture of economic conditions and political policies.

Socio-economic factors concern both demographic patterns, such as the change in the composition of households, and the consequent patterns of household needs, such as appliances, utilities, goods and services (consider, for instance, the difference in demand between a childless couple that may or may not be same sex, living in a unit rather than a house, and a traditional family).  Many other factors may apply under this heading.

Socio-technological factors are about the penetration of certain types of technology into the population.  Consider for example the massive shift in technology demand, supply, and service delivery since the introduction of the first iPhone in 2007.  Who would have guessed then how much business is today transacted with portable devices like phones  and tablets?

Techno-legal factors concern the regulation of technology itself, and the kinds of transactions it enables.  Consider, for example, legal requirements for privacy policies and practices, the impost of taxation at different levels for different kinds of technology transactions, and any opportunities or risks arising from technology transactions.

Again, the above are only examples.  Each organisation will be affected differently, and fewer or more crossover categories may apply.

Common risk management matrix
FIGURE 3: The common risk management matrix, suggesting priorities by number.

When using this technique, I number every influence I can identify for the organisation I’m helping out, an then list all the issues I can identify under each heading, prioritising these in line with the common risk management matrix illustrated in Figure 3.

My next step will be to address every issue identified above with possible actions and responses.  This is often best done as a collaborative effort in workshops with the people closest to the impacts of the issues listed.

Often this exercise will suggest lists of potential courses of action some of which will appear to conflict with others, or to be mutually exclusive.  But instead of deciding on an either/or selection of responses, I want to capture all the best features of every idea mentioned.

To do that, I use a method called ‘dialectical synthesis’ which comes from various ideas in the West about scientific enquiry and philosophical debate, as illustrated in Figure 4 below.

Dialectical Synthesis
FIGURE 4: Dialectical synthesis works by combining the best features of diverse ideas to create a new set of ideas.

The diagram shows how ideas going back to the Enlightenment have focused on resolving apparent conflicts by adopting the best of the competing claims and arguments to create a new theory or practice.  The Thesis-Antithesis-Synthesis model is often attributed to the brilliant German philosopher Friedrich Hegel, but has its roots in English scientist Francis Bacon, was mentioned in those words first by German philologist Johann Fichte.

The strength of the idea is demonstrated in many ways by the adaptation of Western liberal democracy to absorb and normalise ideas that were initially regarded as threats.  For example, the threat of communist dictatorship was countered by adopting social welfare policies.

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Dialectics also works in business environments.  For example, the orthodoxy that computing is only for large organisations using mainframes and desktops was countered to produce hand-held devices with more computing power than was used to put men on the moon, giving us both massive distributed computing power and extraordinary access to that power with devices like watches and phones.

In summary, the above methods are a simple process any organisation at any size can take to discover and plan for its strategic environment.

I should emphasise that the methods and models shown on this page are not the only ones, and that any structured, disciplined approach to strategic planning will generate outcomes more significant than the sum of its components, because the people involved will push the boundaries to discover new ideas and potential not even conceived of before the effort of analysis and planning.

What I propose as my value in this process is that I’ve done it a few times, and I can lead or moderate a group in workshops or planning forums to stay on track.

Contact me to discuss how I might help out to meet your needs.

See also my pages on enterprise architecture and knowledge management.