ENVIRONMENTAL SCANNING: RADAR FOR SUCCESS

Information Management Journal, May/Jun 2004 by Albright, Kendra S

Environmental scanning - the internal communication of external information about issues that may influence an organization's decision-making process - can identify emerging issues, situations, and potential pitfalls that may affect an organization's future

At the Core

This article

* defines environmental scanning

* explains why it is vital to an organization's strategic planning

* describes the process involved in environmental scanning

Organizations today face unprecedented challenges in maintaining commercial survival and success. This is true for organizations both large and small, for-profit and non-profit. Success requires a keen strategic understanding of external influences in order to respond in ways that will ensure the organization's survival and success. Environmental scanning is one tool in an organization's arsenal that can be used to gain this understanding.

What Is Environmental Scanning?

Environmental scanning is the internal communication of external information about issues that may potentially influence an organization's decision-making process. Environmental scanning focuses on the identification of emerging issues, situations, and potential pitfalls that may affect an organization's future. The information gathered, including the events, trends, and relationships that are external to an organization, is provided to key managers within the organization and is used to guide management in future plans. It is also used to evaluate an organization's strengths and weaknesses in response to external threats and opportunities. In essence, environmental scanning is a method for identifying, collecting, and translating information about external influences into useful plans and decisions.

Why Environmental Scanning?

There are many important reasons to do environmental scanning. Because of rapid changes in today's marketplace and new and emerging business practices, it is easy for an organization to fall behind by not keeping up in areas such as technology, regulations, and various rising trends. Environmental scanning reduces the chance of being blindsided and results in greater anticipatory management.

The relationship among markets, strategic planning, and the environment external to an organization is what defines an organization's success. As external forces are identified, organizations have the opportunity to examine their options in response to the challenge and consider their internal strengths and weaknesses to respond to these challenges.

According to John D. Stoffels' Strategic Issues Management: A Comprehensive Guide to Environmental Scanning, environmental scanning allows an organization to address external competitive, social, economic, and technical issues that may be hard to identify and are persistent. Specifically, its intent is not merely one of information gathering; rather, its purpose is to focus on future impacts on the organization rather than those centered on the present situation. Environmental scanning helps an organization learn about the potential influences from external environments and how it can respond strategically. Through understanding these two elements external influences and the organization's internal processes - the organization can respond in a more timely and effective manner.

The focus of environmental scanning is on strategic thinking and planning. Its value comes from the identification and understanding of complex issues facing the organization. Environmental scanning helps an organization form a strategic position from which it can address external forces over which it has little, if any, control. Through consistent monitoring of external influences, organizations can shape their own internal processes to reflect necessary and effective responses. The process of understanding the match between external influences and internal responses assists in adjusting organizational structure and strategic plans that are designed to be more effective and flexible to changing market forces. Thus, the successful organization is focused on learning as well as on flexibility and responsiveness.

Environmental scanning is not a stagnant process. It should be constant and ongoing in order to maintain a preparative stance as environmental influences arise. This organizational learning process is a key component to organizational success. Through constant monitoring of the environment, management has the ability to make necessary adjustments in the organization's response that can mean the difference between success and failure.

External Environments

There are several external environments that may impact an organization. These can be grouped into categories including social, regulatory, technological, political, economic, and industry. [See "External Environments Impacting the Modern Organization" on page 42]. Influences of each can negatively affect an organization, resulting in poor performance or ultimate failure. Of these environments, as Chun Wei Choo notes in Information Management for the Intelligent Organization: The Art of Scanning the Environment, the industry's environment is the most significant, with its focus on customers, suppliers, and competitors and their intricate relationships.