Two Tools for Describing Strategic Context (Strategic Thinking Part 3)

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Each organization has a unique external context. Given that context, it develops strategy to provide an appropriate direction.

Even if strategic initiative leader is not involved in strategy formulation, he/she needs to understand the strategic context.  This article explains two tools that can help you gain strategic perspective. You will also pick up a tip for creating your program documentation and will deepen your capacity for strategic thinking.

The PESTLE Tool for Classifying Six Types of Strategic Context

Strategic program managers invest time looking outward to understand the external drivers (and constrainers) that affect their organization’s business model.  The acronym PESTLE gives you a tool for classifying six different kinds of strategic context:

  • Political Environment – Strategic initiatives are often international in scope, and they can be affected by local politics. For example, recent turmoil in the Ivory Coast problems made travel to the country impossible for the program manager. CSX Railroad’s Director of Strategic Initiatives has an important responsibility to interacting with local politicians as the company makes capital improvement investments in new rail terminals. Of course, controls over resources are internal political factors that the initiative leader must consider.
  • Economic Environment– Here we would look at macroeconomic factors such as GDP, inflation, and industry growth rates. As I pointed out in my previous post on Growth as a Strategic Initiative, current economic conditions are making it more likely that companies will launch strategic initiatives focused on growth.
  • Social Environment– There are differences in generations (millenials vs baby boomers, for example) that have far-ranging affects upon the organization and its strategy.  This contextual factor might affect HR strategic initiatives or marketing strategic initiatives.
  • Technical Environment– The technical environment gives us constraints, as well as new tools and capabilities. For example, many companies have launched initiatives involving social networking and mobile computing.
  • Legal Environment – The legal environment is closely associated with the political environment when we are considering the impact of new regulations or mergers and acquisitions. It also overlaps with the legal environment when we consider litigation.
  • Earth – Climate, earthquakes, are just a few of the concerns that can affect an organization’s strategy, hence its strategic initiatives. PepsiCo is an example of a company with a declared strategic initiative around environmental sustainability (I’ll be describing more about it in the future).

Many program management document templates have a section titled “strategic environment summary” that introduces the context for the program.  Environment means “external to the organization.”  Use the PESTLE as your guideline for writing the text.

The “Walk the Fence Line” Technique

Another useful technique to get a strategic perspective is called “walk the fence line.”  With it we are going to explore boundaries (the fence line) literally as well as figuratively.

A useful practice is to “walk around the fringes of the business;” to “look in and look out.”

As warm up activity, I have people around the fence line of their homes. They should pause periodically to look outward: what do you see on your neighbor’s house or property?  Then, they pivot and look at their own property: how does your neighbor see you? (In my own first-time use of this technique I found that I had let weeds grow behind my backyard storage shed. They were out of my line of sight, but I’m sure that my neighbors noticed. This exercise reinforced the point I might smugly believe that I am a good property owner and not realize that my neighbors might see me as a slob.) Human limitations cause us to mentally frame things in ways that are self limiting.

Next, with that critical, objective spirit in mind, examine your own organization’s “fence line.”  For example, you could look at your web site with fresh eyes. One team found that the company plastered on its home page a “commitment to extraordinary products and services.”  However, there seemed to be some hypocrisy as the web site was confusing and boring. It describes the products features neither the applications nor the customer benefits. If web site is boring, the statement of extraordinary experience seems hypocritical.

By walking the fringes of the organization, you gain new perspectives on stakeholders like customers, suppliers, regulators, and new hires. Some of those perspectives give you some excellent insights.

Context and Strategic Thinking

Strategic thinking is about coping with ambiguity. A strategic thinker has the ability to adopt different perspective and use empathy.  From this they can develop insights about the organization’s business model. The job of the leader is sense-making: to pick the signals from the noise and arrange them with some logic that appeals to stakeholders.

Do you agree that a tolerance of ambiguity and curiosity about context are hallmarks of the strategic thinker?

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About Greg Githens

Thought leader who helps others think strategically, make strategy, and turn vision into action. Coach, advisor, board member, and hands-on leader. Seminar leader and speaker of popular offerings "How to Think Strategically & Apply Business Acumen" and "Leading Strategic Initiatives (Program Management)." Experience in driving change in Fortune 500 and mid-size companies through strategic initiatives and business transformation.
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12 Responses to Two Tools for Describing Strategic Context (Strategic Thinking Part 3)

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  12. Natah says:

    i just love the idea of context of strategy. it help

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