Part 2 – The Internal Environment
Editor’s Note: See Part 1 HERE
From the perspective of developing a strategic plan, understanding the internal environment is as important – if not more important – than understanding the external one. And while we consider some areas below that may appear external, the way in which we think about them and understand them is based on our organization’s leadership, culture and capabilities – and we have far more control over our internal situation than we have over the external environment. Indeed, developing a flexible, agile, resilient organization, with creative and imaginative people who are encouraged to contribute their ideas, can often be one of the critical elements in success.
We spoke about reframing in the previous article – Part 1 – and here we use it again in this example. One of our clients – a military organization – already had a vision and strategic plan and wanted to know what capabilities its people needed for the future in order to achieve the vision. Typically in such projects, the organization thinks about what it’s going to do in the future, what its operating environment might be like, what new technologies might be developed, and so on. This client’s operating environment was so uncertain that the typical approach could result in so many possibilities and confusion that we advised against it. Instead, we suggested that they develop capabilities that would be of use to them in any future environment or circumstance. So we reframed their capabilities into the following three categories; the characteristics under each of the categories are just a few examples of what they came up with.
- Physical fitness, stamina, and endurance
- Understands and uses technology, but doesn’t depend on it
- Performs in multiple physical environments
- Good communication skills
- Ability to think critically
- Ability to operate in ambiguous environments
- Ability to synthesize as well as analyze
- Ability to engage with others.
- Awareness of their own strengths and limitations.
Altogether, they identified 10 to 15 capabilities or characteristics under each of the three headings, and then they identified ways in which those might be taught or developed. Obviously this was a different situation than most encounter in the commercial world, but the same ideas about reframing apply. So let’s take a look at one typical way to think about the internal environment using an analysis of strengths, weaknesses, opportunities and threats (SWOT.)
Strengths, Weaknesses, Opportunities, Threats (SWOT) Analysis
Conducting a SWOT analysis is very useful, although we do not recommend spending a lot of time on it when we are concerned about strategy. This analysis tends to focus on micro-level issues, and for strategy we are more concerned with macro-level issues. Generally the leadership and management know what valid future SWOT concerns or issues (internal and external) they have. If they do have concerns, then a useful question to ask is: Are these underlying “root” concerns, or are they only symptoms of something deeper—and if so, what? The Socratic method of questioning can be useful to get at the deeper problem. Socratic questioning is a systematic, disciplined, and deep form of questioning of those who are knowledgeable about the subject, and it usually focuses on fundamental concepts, principles, theories, issues, or problems. However, if it seems difficult to think in these terms, here are some topics to get you started.
Analysis of strengths can be done by examining your own organization, and asking yourself what you and the rest of the leadership think it is particularly good at. Generally we do not suggest a formal analysis process, but rather a discussion among the leadership. You can also analyze your strengths against those of your competitors. This can be done by discussion, or by using the results of analyses and commentary from Wall Street or other analysts. Examples of strengths are:
- Good financial position
- Strong loyalty
- Belief in the organization’s products or services
- Creative, innovative people
- Technological capabilities