On Monday we began a week-long series on how to plan through this current pandemic. We identified four steps that every organization should be taking within the context of three planning horizons. Today we are looking at Situation Analysis.
Yesterday we talked about the scenario planning for three planning periods: “right now”, “restart” and “new reality”. Scenario planning will give you four different named scenarios for each period. The remaining planning steps will be performed for each of the scenarios. I know that sounds like a lot of work when you’re already overwhelmed — developing 12 different sets of plans — but there’s likely lots of overlap in plans across scenarios and deeply understanding the differences will be critical to being prepared in this time of very high uncertainty.
In Luke 14 Jesus warns us to understand our situation before charging forward, saying “For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?… Or what king, going out to encounter another king in war, will not sit down first and deliberate whether he is able with ten thousand to meet him who comes against him with twenty thousand?”
In business, Situation Analysis is traditionally captured as a SWOT – strengths, weaknesses, opportunities, and threats. I’ve found it helpful to start with the external environment — opportunities and threats. Two frameworks that can help think through these external factors are six segment analysis (demographic, sociocultural, political/legal, economic, technological, and global) and Porter’s five forces (buyers, suppliers, substitute products, new entrants, and competitors). For each of these eleven sectors or forces you will document the current situation, known trends, and uncertainties and then evaluate how those realities, trends, and uncertainties all translate into opportunities and threats for your business.
The internal environment (strengths and weaknesses) is evaluated within the context of the external environment and relative to current and future competitors. A tool I like to use in developing the internal environment is the Blue Ocean Strategy Canvas.
In their book Blue Ocean Strategy W. Chan Kim and Renée Mauborgne introduced the Strategy Canvas which plots performance of different competitors against key factors upon which the industry currently does or could compete. Creating a Strategy Canvas for your industry will make clear where your organization underperforms or outperforms competitors. Focus on those areas that matter the most to customers and where there’s a significant difference in performance.
The resulting Situation Analysis provides a critical perspective for continuing your planning. As I’ve said before, it’s important to do this 12 times – once for each of the four scenarios in each of the three planning periods.
Top Photo Credit: S O C I A L . C U T