In this series, we’re talking about strategic planning. If you haven’t yet had a chance to check the first two installments, you really should. That’s where we first figured out how to set your north star, what your organization’s most important purpose is, and how to set strategic goals. Then, I explained the difference between strategic goals and operational goals. It’s important to get those right, because the next questions will only work if you’ve answered those first.
Let’s take the next step, which is to set our eyes on the horizon and understand the environment in which your organization operates.
Understand Your Environment
In this phase, you really want to be thinking in very broad terms. When I do this with a team, I often impose a $5 fine if anyone mentions their own company during our discussion, because we’re trying to keep the conversation external, focused on the long term, and outside the organization. You can try that if you want.
Consider macro trends. Think about societal shifts, demographic changes, immigration trends, and major social issues. Think about political, economic, and regulatory factors. What about evolving customer needs or industry changes such as consolidation or emerging disruptors? Don’t forget to consider technological advances, both in your core space and in areas such as sales, customer interaction, billing, and the impact of AI.
These questions should help you generate a substantial list of trends—ideally 200 to 300—that cover all of those categories. Don’t edit yourself as you go, don’t look at your colleague and say, “Why are you even mentioning that? How is that relevant?” Get it all in there! Sometimes, the most insightful trends are things you’ve never even thought about before, things that might seem irrelevant to your organization but might be exactly what you’re trying to unlock. This step is crucial for identifying opportunities and threats.
Put External Considerations First
At around this point, you might be noticing that instead of following the traditional SWOT sequence—first your strengths, then your weaknesses, then your opportunities, then your threats—we’re focusing on opportunities and threats first. When you look at what you’re good at and what you’re bad at, and then you look at the world through that lens, you can miss a lot of what’s really going on in the world.
That’s why we always want to put the opportunities and threats, that external conversation, first. That’s really, really valuable, because it will get you to pay attention to MORE things, to a broader and more diverse set of trends that will improve the quality of your strategic planning.
Find Your Strengths and Weaknesses
Only after you’ve mapped the external factors should you turn your attention to your organization’s strengths and weaknesses. Now you can get rid of that $5 fine and let people talk about how your company’s capabilities align with these external opportunities and threats. What strengths do you have that can capitalize on opportunities or mitigate threats? Conversely, what weaknesses could prevent you from capitalizing on opportunities or exacerbate external threats—particularly, what are the weaknesses that make it harder for us than for our competitors and that make us more vulnerable than anyone else?
Get the Full View of the Business
Putting together what I call an OTSW analysis—and yes, I know that isn’t as catchy as SWOT—is a much more intellectually pure way of having this conversation. This sequence allows you to start with a complete view of the external factors before evaluating them in relation to your internal strengths and weaknesses, and getting this process right sets the stage for the most important step: creating strategic insights.
Make sure that you create your OTSW analysis by thinking as broadly as possible and then bring that together with what you know about your organization today. In the next part, we’ll look at how to synthesize this into actionable insights for your organization.
Strategic Planning Series
Tips for Setting Strategic Goals
How Does Strategic Planning Benefit Companies
Your Strategy Should Serve Two Purposes
Video: You Aren’t Strategic Enough