The External Environment Scan
The purpose of an external environment scan is to help an organisation understand the external forces that may shape their future and impact strategic priorities.
A PESTLE approach is commonly used as a structured way of thinking about future external forces and put simply includes the following:
- Political Government policies, tax rules, trade regulations, political
- Economic Productivity, inflation, interest rates, wages, spending
- Social Demographics, cultural norms, lifestyle trends, health
- Technological Innovation, automation, digital tools, emerging tech
- Legal Laws, regulations, compliance
- Environment Sustainability, climate change, resource availability
A PESTLE has advantages including it is straightforward, stimulates strategic thinking and can show up opportunities. The main disadvantage is that it’s not a crystal ball and you only know what you know now. Did anyone have Covid on their previous external environment scan?
It’s important to listen for future signals as these may change strategic priorities. It’s also important to keep listening and balance change with risk. Who remembers when meat alternatives were going to be the next big thing and now it’s not that easy to find them in the supermarket.
So how do you get the most out of an external environmental scan?
Run a formal process with your Board (your strategic thinkers) at least annually supported by good information and possibly subject matter speakers. Consider different scenarios for your organisation and consider how this impacts your strategic priorities.
Is this what your organisation does?
If you’d like help running an external environment scan with your board, I’d be happy to talk it through. The first conversation is free.
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