One of the most important strategies employed by any successful leader is the analysis of the environment he is operating in. You can only affect the external world if you understand the possibilities and limitations of the environment you are working in.
Information is the most essential tool for decision making. Leaders analyze the operating environments regularly as well as at times of major upheavals using ethical means, experienced specialists and the appropriate data-collection techniques to gather information from a wide variety of sources. This gives them a clear idea of the current scenario as well as a basis for forecasting future changes and predicting market trends. future changes and predicting market trends. Thorough annual analysis, coupled with quarterly reviews can enable leaders to make long term plans and respond in a timely and appropriate manner to any changes that may impact the organization.
The main trends that a leader needs to always monitor include:
1. The External Environment
A leader must study the external environment in which his organization has to function. What are the boundaries and the components of this environment? What are the operating social, economic, political, technological and environmental issues that impact the situation? For instance, he can study trends in consumer buying patterns and make accurate market forecasts by studying the social patterns, cultural and demographic changes in the markets. These changes happen steadily over time. But there can also be discrete changes like replacement of certain services or products by a technologically advanced product. His objective must be to identify and predict all such changes in his operating environment by gathering and reviewing information from valid and reliable sources.
2. The Competition
Another factor a leader must continually monitor is his competition. He must identify the existing and potential organizations which are or can be his competitors and gather plus forecast information regarding their activities. He must know the weaknesses and strengths of his competitors. He must also evaluate the impact of new entrants on the competitive scenario. The reason for this analysis is self-evident. The market is limited and all organizations which offer the same value – product or service – will be competing for a piece of the same cake. Studying competitor activity can be vital in staying on top of the game.
3. The Stakeholders
A leader must also know that he is answerable to his stakeholders, both within the organization as well as outside the organization. Stakeholders may include managers and staff, suppliers and trade unions, clients and customers, funding partners and sponsors, shareholders, media, business partners and even local government departments. In specific sectors, there could be additional stakeholders for instance patient relatives in the hospital sector or parents of children studying in a school. He must identify all such stakeholders and their relative importance. He must understand their needs and keep them in mind while making decisions. He must communicate the values and strategies of the organization to them, so that they continue to support the same. He must also take the responsibility for conflict resolution.
4. The Organization’s Internal Condition
A leader must regularly carry out a thorough analysis of his Strengths, Weaknesses, Opportunities, and Threats. This comprehensive review must include factors such as location, building condition, vehicles, equipment, plant and machinery, funding and operational efficiency. HE must also review processes and procedures that affect the productivity of his human resources – recruitment, training and development and retention. The aim of this exercise is to build a realistic and detailed picture of the current condition of the organization and its functioning.
Based on the analysis of all the above factors, a leader must make adjustments wherever necessary:
1. Strategic Adjustments
An organization must be capable of adaptation and change in order to survive. A static organization is bound to deteriorate and eventually fail in the face of a more responsive and dynamic competition. It’s a vital part of a leader’s responsibility to monitor the need for adjustments in the overall strategic direction of the firm as well as changes required in specific strategies and objectives. The above analysis of the competition, operating environment and stakeholder needs has to be evaluated against the existing direction and strategies of the organization. If required, he must be willing to change or modify these or even replace them entirely with new strategies, of course in consultation with key stakeholders and specialists.
2. Systems and Structures Adjustments:
Once new strategies and operational objectives are decided, the next step is to evaluate whether the existing structures and systems can support the new objectives. If the quality, operational or cultural systems currently in place are not appropriate, they must be changed. All such proposed changes have to be carefully implemented in consultation with all affected stakeholders. All policies and procedures must be carefully reviewed and modified in light of the new objectives, if the new strategic direction needs to succeed.
3. Adjustments to Operational Objectives:
Changes in strategic direction will have a direct impact on the operational objectives. The operational activity cannot continue and must be brought in line with the new strategic direction and objectives of the organization. A leader must also put in place procedures to monitor, adjust and control operational objectives as required. He must also implement appropriate quality assurance systems so quality standards can be maintained.
4. Personnel Adjustments:
New objectives will require new skills and capabilities. It is important to evaluate the current and potential capabilities of key personnel and teams vis-à-vis the performance requirements as per the new strategic direction and objectives of the organization. The evaluation may make the leader conclude the areas where retraining or employee development is required or where entire teams need to be replaced. He must implement appropriate performance appraisal systems to ensure that the best individuals and teams are in charge of achieving the new objectives of the organization. People are the key to the successful implementation of any strategy.
To conclude, a leader’s most critical job is to analyze the operating environment of his organization. The most critical role is to stay informed about the current and potential challenges facing the organization. This will enable him to select and implement the most appropriate strategic direction using the most optimal resources.
Cheers to success