Environmental Scanning: what it is and how to do it

Australia. Thank you for attending this webinar on environmental scanning, what it is, and how to do it. My name is Marie Conway. I'm a strategic foresight practitioner at Thinking Futures and a founding partner of the Center for Australian Foresight. The presentation today will take about 40 minutes, and there'll be time for questions at the end. If you have a question during the webinar, though, put the question—uh, put it in the questions pane on your control panel—and I'll answer it during the webinar if I can. The webinar will be recorded, and I'll send you the link to the recording and the slides shortly afterwards.

Okay, let's get started. I was introduced to Future's work in 1999 by the then vice chancellor of Swinburne University of Technology here in Melbourne when he asked me to do foresight, and I had absolutely no idea what he was talking about. My commitment to this field grew over the next eight years to the degree where in 2007 I left Victoria University, where I was then working, to start my own strategic foresight practice. I work with people in organizations to help them do strategic foresight in practice, to explore possible futures and use the insights gained in organizationally useful ways today. And that all starts with high-quality environmental scanning.

Today we'll talk about what is environmental scanning and why you should do it; where environmental scanning fits in the strategy cycle; how to get started with scanning; and going back to work after the webinar. In an hour, I can only give you an overview, but we will cover all the main points, and please get in touch with me afterwards if questions occur to you or you need more information about something.

Here's my definition of environmental scanning. Note the word systematically. To scan systematically, we need to set up overt processes and work to build scanning as an organizational capacity. Environmental scanning explores new, strange, and weird ideas as well as persistent challenges and trends today. And in my view, scanning is the foundation for high-quality strategic thinking that informs the development of futures-ready strategy for an organization. Futures-ready strategy is flexible and it allows an organization to be ready to respond to the challenges of the future. It lets an organization act proactively, not reactively. It focuses on exploration, not prediction. I think we should ban that term. Um, it allows wise decisions to be made, not bet-the-farm gambles. It can strengthen the quality of the thinking that goes into your strategy development. It can deepen that thinking to create a long-term context for today's decision-making, and it integrates the past, present, and the future.

So why do we need a scanning system? It helps you identify strategic implications for your organization—both opportunities and challenges. It gives you enough time to prepare and be proactive, and it gives you a competitive edge, particularly if you're looking for things at the periphery, at the edge.

So let's talk a little now about scanning and where it fits in the strategy development cycle. Strategy development is not strategic planning. And as this diagram shows, there are four levels to work through when you craft strategy. They're not separate; they're interdependent. But for the purposes of this diagram, I've made them separate blocks. Environmental scanning is the first. It's the bedrock of futures-ready strategy. I'll explain this framework in a bit more detail shortly, but right now we are pretty confused about strategy development. We talk about strategy, but we are usually referring to planning. We focus on producing a plan as the end product rather than on the processes that create the preferred future and the quality of thinking that informs decisions about how to get to your organization's preferred future. These sorts of diagrams are bound when we look at strategic planning. They look great, but the energy that goes into these plans and frameworks distracts us from focusing on the quality of our strategic thinking.

Now, my issues with current planning processes are that they develop a single default future, which is usually a linear extrapolation of today. Because they're fixed, plans often lack the flexibility to deal with unexpected changes in the external environment. They usually don't include any processes for systematically exploring options in the long-term future of the organization. And they tend to rely heavily on quantitative data, suggesting that single outcome, and they dismiss the validity of qualitative data. Quantitative data suggests certainty, and qualitative data requires discussion to understand and interpret. You need to—you need both when you're crafting strategy to understand change fully. Current processes often miss potential innovation and strategic options because they don't challenge organizational assumptions and ideologies about doing business now and into the future. Groupthink often reigns, and they usually don't include any systematic process for listening to the views of staff before a plan is written. The plans are usually given to the staff as a fait accompli. Not always, but often.

So our current approach just doesn't seem to be working anymore. And while the need for planning is not going to go away, the relevance of most conventional planning systems is increasingly marginal. We're trying to avoid this situation. Current planning processes often seem like busy work, and the conventional view of planning tends to result in more of the same rather than an innovative plan focused on dealing with the future. We have to remember that no plan survives contact with the future unless the future drives the plan. What we have now, um, is strategy processes that live in the pragmatic futures realm. This is where we're working within the existing paradigm, making it better, but we're not challenging it. And that's what we call strategic planning. We need to move into the progressive futures realm where we challenge the current paradigm, where we reinterpret it for how we do business to meet the challenges of the future, and it generates new planning. It's people-focused, collaborative, and futures-ready.

Moving from the pragmatic to the progressive realm does require, um, a focus on the quality of information that informs our strategic thinking. Otherwise, how do we generate new ideas and ways of working? And high-quality thinking needs high-quality scanning. This is an important point. It's critical to recognize that the planning—that the planning process and the characteristics I just showed you appear when planning is equated to strategy. It's not the same thing. Planning is about doing things today. Strategy is about setting a future destination and identifying the strategic decisions you need to make to get there. This isn't just words; language matters. It can set up a whole lot of unconscious assumptions about what you are doing. As I said earlier, strategic planning in its conventional forms assumes a linear future. But the external environment is very, very messy. You have to dive into the chaos to make sense of what's there, not stand on the edges and hope order will form somehow someday. And in chaotic environments, you have to look for change actively and work to understand its implications. They are usually not immediately obvious. And when you dive into the chaos, this four-level framework will help you deal with it.

Scanning is the first step. It provides you with information about what's happening in the external environment and—and what's changing and about what you need to pay attention to on a continuing basis. This scanning information feeds into the strategic thinking stage, which has a focus on generating strategic options for your organization to consider and to identify options that aren't business as usual—that let you see the possible opportunities and challenges ahead of you. You need to have access to a robust knowledge base about external change drivers. You also need to understand the internal issues facing your organization and the beliefs and views about potential futures that are held in the minds and hearts of your staff. But today's presentation focuses on the external scan. If organizations are going to be successful and sustainable into the future, they must find space for their people to think strategically. It's a critical coping skill in today's complex and ever-changing environment. It needs to be part of everyone's job description. And once again, scanning feeds that thinking process.

In a simplified version, it's about seeing, thinking, and doing. Seeing is about identifying and understanding the change shaping your organization. Thinking is about spending time on conversations about what the change means for your organization and how you will respond, as well as where the opportunities are and the risks. Doing is about execution, planning to implement strategic decisions and aligning the organization with those decisions. It's the thinking space that is the most neglected in organizations. Steven Miller, a US futurist, says that operations in many companies and organizations are maybe 95% day-to-day work and just 5%—5% strategic. Yet the 5% is vital to set strategic context for operations. It doesn't matter how good your scanning system is if you don't spend the time interpreting it for your organization. Going straight from seeing to doing is a linear future approach and will result in superficial strategy, not the robust and futures-ready strategy you need to be successful in the future. And what results then is this sort of expression when the future arrives on your doorstep. So this is the look we're trying to avoid by doing environmental scanning.

Okay, let's talk about getting started with environmental scanning—how we actually do it—fundamentally by thinking big, deep, and long. So here's your organization. It exists in a much bigger environment—industry environment, global environment. So we need to think deep, and we need to think long. Big is the helicopter view. How do we understand how we connect and interact with other organizations and the external environment? Do we think in systems or silos? The big picture is critical if you're going to improve the quality of your information about the external environment. Escape the confines and constraints of day-to-day thinking. Go beyond your industry and country to take a much more holistic view of what's going on.

Thinking deep is about understanding your worldview, your way of seeing the world, your assumptions about how business happens today and will happen in the future. And trying to understand—or at least accept—the worldview of others. Challenging assumptions is critical. Our minds are habitual pattern-recognition machines, and we make decisions based on our assumptions about how the world operates. But what our assumptions often do is lock us in the past and prevent us from seeing the need to change and from seeing new options available to us. As scanners, we need to be aware of what assumptions underpin our thinking. And perhaps more importantly, we need to work to understand the assumptions underpinning the thinking of the people who will read your scanning reports. What being aware of your worldview and how you make meaning from the world allows you to do is to recognize your blind spots in a scanning sense. We must understand how we filter information, what we accept and what we reject before we can claim to be able to interpret that information for our organizations with any credibility. I'm not going to go through these one by one or expect you to read them. Now the point is that we all have subconscious biases that influence how we see and interact with the world. We have to recognize those biases to be able to explore the future with an open mind. It sounds easy, but it's not. You are challenging your deeply held ways of seeing the world, and that's always uncomfortable. So you may think you're being entirely rational in your—in your decisions when in fact you probably aren't. More likely you're pattern-matching with what you've seen before. And this is why we have to think big, deep, and long when we scan.

Long is about how far into the future are we looking. Do we understand the shape of alternative futures for our organization? Are you just assuming that the future will be more of the present? Have you engaged with the complexity and uncertainty that surrounds the future, or are you trying to ignore it? This and the next couple of slides demonstrate the importance of thinking long. Our usual planning time frame is 3 to 5 years. We look at trends and then plan for what is called that linear future—the one we assume to be true based on how we view the world today. Thinking long lets us recognize the range of possible futures to explore. When we think beyond 3 to 5 years, we recognize that trends have many possible outcomes and that assuming a—a linear pathway is a flawed approach. And we must always remember wild cards—low-probability, high-impact events that have the potential to change the world overnight. They can totally derail those trend pathways. It's worth building in wild cards to your scanning system so that you've explored potential discontinuities to your organization and its work. We live in uncertain times and face an unknown future. Understanding what's coming—or what might be coming—is critical to making wise strategic decisions today. So thinking big, deep, and long when you scan allows you to understand the possible impacts of change in the external environment, to explore them, and to determine ways to respond before change arrives on your doorstep.

Okay, let's move on to getting started. Before you start scanning, you need to work out what matters for your organization. Otherwise, you are doing undirected scanning, which is fun but pointless in a strategy sense. You need to identify your purpose. Why are you scanning? What are you going to do with the output, and where will scanning fit in your strategy cycle? And this is important: Don't start scanning until you've done this, or you'll end up with a lot of really good information that you don't know what to do with—and worse—that nobody's interested in.

Then work out who is going to do your scanning. Scanning is not a solitary activity. We all scan the environment every day as individuals, particularly in a professional sense. We keep up with what's going on in our work and our industry. We do the same with our personal lives. For scanning to be organizationally useful, however, it needs to be done collectively. A small scanning team is probably optimal, but you can also work towards—um—establishing a system where all your staff have the opportunity to contribute to organizational scanning. Everybody can be involved if they are informed and given the opportunity. This is not only to help build an organizational capability in scanning but also to expand the perspectives and possible interpretations of the scanning hits you find. The wider you go in your thinking, the stronger your ultimate strategy will be. These are a set of characteristics of good scanners that you need to build into your scanning team and develop in your scanners. I'm not going to go through these now. I'll provide a link to the document when I send you the webinar recording and slides. But just in summary, the characteristics are: open to new ideas; a systems thinker; curious; accept diversity; think outside the box; think outrageously at times; challenge assumptions; aware of own worldview; they are resilient and comfortable with technology since that's how much scanning—uh—takes place these days; they can make sense of disparate information; and they know how to present the weird and the wacky to the world. And most importantly, they trust and value their own expertise and knowledge.

So you have your purpose. You know who is scanning. Now it's time to go out there and start. Out there is the external environment that has a number of elements to think about. This diagram is based on Keith Vander Hayden's transactional and contextual environments, which are labeled here as industry and social environments. Our organizations exist in an industry environment with the broader drivers in the external environment pushing in on the organization. You are interested in what's coming when you are doing future scanning. Scanning at the industry level typically takes the form of competitor or competitive analysis, market analysis, benchmarking, etc. You can get this information quite readily. Future scanning is more strategic. It requires you to explore at a much broader level of change, and it's this level that shapes the industry trends you know well. What you are looking for are high-level, longer-lasting, stronger patterns of change. The societal or global level of scanning is very broad, and there's much information out there. Understanding how to source—excuse me—and filter information and then use it in meaningful ways to generate knowledge in this digital era is a 21st-century skill. Your existing strategic plan can help you decide this focus. What do you need to monitor to know how you are being successful or not? What's going to have an impact on your strategy over time? Or you might have a particular strategic question you need to answer, but set the framework for your scanning first to help you decide what you need to pay attention to and what you can put aside for now. Note, I said put aside because you never dismiss or ignore anything. It might just be important into the future.

When you go out to scan, you'll find things happening. You'll find trends—which are groupings of things that are happening—and you'll find change forces, and as it says here, they move trends in certain directions. They're broad in scope and long-term in nature. So when you start, you will find lots of things happening, and you'll feel like this: too much information. How do I know it's useful? This is just too hard. Don't stop. Gradually, you'll be able to group similar hits into broader categories, which are called trends. And we are all very familiar with trends. But to do this, you need to scan continuously to build up your scanning database and to begin to see the links. It might still feel like this, though—a bit of a maze. Don't stop. Eventually, you'll start to identify the meta-change forces that are shaping the trends. Trends do not exist in isolation. You can do that linear extrapolation of a trend into the future, and predictive analytics is starting to do this. But when you do this, you are looking for certainty that doesn't exist. You need to be trying to develop an understanding of the trend ecosystem and how trends collide, intersect, connect, and derail each other. At the change forces level, you are looking for patterns across often disparate trends. So systems diagrams can be a good tool here.

So where do you look? Lots of companies make a lot of money to do the—to do scanning for you. That's fine. But remember what conditions their view of what you need to know about and how money plays a part in that. And they tend to focus on the mainstream and trends that are already formed that we already see. That's needed for operations today. But it doesn't help much with understanding what's coming. So we need to look at the fringe, at the periphery, at the edge—where there are weak signals of change—where the seeds of the future in the present are embedded—where you will look for—where you will look will differ depending on what you are looking for and what your worldview tells you is real. So you have to remember your biases and blind spots, um, particularly when you're scanning at the edge and don't immediately—um—dismiss the voice in the wilderness on the fringe. Remember that all trends start somewhere.

So where to look? This is a list from a company called Shaping Tomorrow, and it shows the scope of sources you can explore in your scanning. There are lots and lots of sources to choose from. It will depend on what you need and what your organization will tolerate. These are meta-scanning sites. They identify trends and leave it up to you to interpret for your context. They provide some interpretation, but they don't pretend to tell you what's going to happen for your organization. They don't predict. I've used Shaping Tomorrow since 2005, um, and I'll talk a little bit more about my scanning site there in a minute.

So, you need to ask yourself these questions when you scan: What's happening? What are other people saying? Are they credible? And how relevant is it to your strategic decision or issue? You really want to identify the trend in time to work out how to respond and to see if you can even shape the evolution of that trend. And as you scan, ask yourself these broad questions. They will help you seek out sources that aren't mainstream. And the fourth one is important because it's really easy—uh—to find lots about dystopian futures, but there's a lot of positive futures out there as well. If you have a "that's rubbish" moment, you've hit what I call an assumption wall in your thinking. You need to stop and identify that assumption and see if you can find disconfirming evidence. Always take the opportunity to challenge your assumptions. The key point here is that you need to escape conventional thinking and conventional thinking sources so that you can begin to understand in a much deeper way the change forces that are shaping your organization's future.

Okay, you found some—um—scanning hits. How do you classify them? The classification system you use will depend on your organization's needs. STEEP is a very common framework and works well to cover the trends and drivers out there in the external world. Adding in values includes the human factor into the process. It introduces that—uh—notion of agency and how people react or respond to trends. You need to categorize your hits in a way that allows you to group similar hits and similar trends and also allows you to search and retrieve when you need to. So it's about whatever scheme suits your organization. VERGE is a different way to categorize scanning hits. It looks for points of impact across people and human systems rather than a type of…

Change. So there's five categories: Define, which is how we define the world around us. Relate, which is um the social structures and relationships that define people and organizations. Connect, which are the technologies that connect people, places, and things. Create, which is the processes and technology we use to produce goods and services, and consume. How do we acquire and use those goods and services that we've created? It's a different, but I think very useful way to approach scanning. For me, it's more people-focused, and um and that's really at the core of my work.

So, when is a hit useful? Lots of noise out there. So, how do you separate the signals from your noise from the [Music] noise? Does it help you understand your issue? Are you seeing new things? It's not descriptive. It actually helps you explore trends, identifies possible future threats and opportunities, and challenges those existing assumptions. Ultimately though, you need to trust your intuition. Your expertise, your knowledge and insight is the best gauge of usefulness. But always remember your blind spots. There's no checklist that you can use to tick off to tell you, oh, this trend's useful. You have to take a whole-brain approach and merge qualitative and quantitative stories with the data, intuition with the facts.

Okay. So, how do you record and share your hits? You're generally scanning for a purpose. So, you need to record them somewhere and then share them. There's no point keeping your scanning to yourself. This is the minimum amount of information that you need to record for that information to be useful. I have a scanning site on shaping tomorrow where I keep all my scanning hits. I started using this site in 2005 as a paying user, and I now have the functionality, which is again paid, to send out a monthly newsletter. I also do some occasional work for them, uh writing scanning reports, but the site itself is free, and you can enter your insights or hits there for free. It's only if you want to keep your insights private that you need to pay something. So this slide shows the amount of information stored. The best thing about this site for me is that it's partially automated. It doesn't take long to enter a hit and finalize it. For me, I write my own implications rather than rely on the artificial intelligence tool behind the scenes because I'm a firm believer that a human needs to do the interpretation.

Okay. So, when you've done your scanning, you need to report your findings. And how you report your findings will depend on the purpose of the scanning. Reports can take many different formats: a snapshot, a background paper for the strategic planning cycle, regular reports, more detailed quarterly reports, quick snippets. You can get your staff involved to rate the hits. Many, many ways to do this. Your report should include some interpretation of the trends and change forces you've identified as important. And my environmental scanning guide has more information on how to do this, and you can download this from my site. I'll show the link um at the end. Your report needs to explore the implications and possible strategic responses your organization can take. It needs to be written in ways that suits the culture of your organization. There's no one-size-fits-all. And the basic question you're asking when you write the report is the last one. So, it makes good sense to include some leading questions, almost some trigger questions to get people thinking about the implications of the trends for the future of your organization.

I'm just going to show you a few examples of how reports can be done. This one is from the Institute for the Future. And as you see, it's visual. And if you click on any of these things, you'll be taken, excuse me, to more information. This is a written report done from a done for a scenario's um project. Uh has a summary here of uh the social impact. And then these are sources that have been found. So there's a summary there, some quotations and categorized by STEEP category. This one's for a university. So again, social talks about the issues. What are the implications more broadly for information uh for sorry for education? Um what's the university doing and what issues need to be considered in the future? This is a much smaller, simpler uh report. Brief summary, some wild cards, what the implications are, some questions, and the sources.

Remember this diagram. Reports are generated after you've done scanning to inform strategic thinking. Where and how you use your scanning reports really depends, as I said, on the culture of your organization and your existing strategy processes, as well as understanding how open managers and leaders are to having their assumptions about the ways in which your organization operates today challenged. The aim of scanning is to demonstrate clearly that the world is changing and that business as usual strategy approaches are past their use-by date. In my experience, one-off scanning reports done for one planning workshop are least effective. People will read them, so they're okay, but then go back to work and change nothing. And meanwhile, the world changes around them again. The best scanning output is provided to the organization on a continuing basis and in a variety of formats to suit different purposes and audiences.

Okay. So what does this mean? When you go back to work after the webinar, you'll need the support of others in your organization to set up a scanning system and do scanning. You'll probably encounter different sorts of people as you try to do this work, and you'll probably need to work with them all at some stage. So this is where you need to be alert to worldviews and assumptions and tailor your message accordingly. Now, this slide talks about foresight, but just replace that with scanning. As an aside, I worked with one of the best vultures ever once, actively undermining everything I was doing, but I just didn't see it at the time. I thought she was my colleague, but it turned out it was only when it suited her. So, watch out for them. Don't spend much energy on them, but keep an eye on them.

There's so much information out there. So, one of your biggest challenges when you do this work is information overload. In strategy terms, scanning is best done as directed scanning with a particular focus that guides what you're looking for. I've been in a discussion recently about whether having a focus actually prevents you from seeing things because you're not overtly looking for them. But unless scanning is your job, undirected scanning is probably a luxury that most of us can't afford. And besides, one of my primary rules is that you need to follow your nose. It's that curiosity that good scanners have. If something seems interesting, follow it up until you confirm that it is that it is worth exploring or not.

Scanning in a futures context will take you into a space that's challenging. The process asks you to challenge the patterns and frames of reference by which you've always seen the world and made sense of it. It it challenges you to accept something even though your brain is exerting what is called an amygdala hijack. When we're presented with evidence to the contrary or challenges to what we believe to be true about ourselves, others in the world, that is what we know to be right. And when that happens, the brain reacts as though they're physical threats and generates defensiveness or avoidance, and that suppresses rational functioning. So scanning asks you to be open to exploring those challenges, to dealing with those feelings of defensiveness or avoidance and to move beyond that amygdala hijack. If your brain isn't hurting, then you're probably not stretching it enough. Push out a bit wider.

This one's the biggie. I'm working with two clients now, and finding the time to do scanning is the biggest challenge. It's a new routine to be learned and incorporated into your day. Work out where you can fit it in. I do my scanning first thing in the morning and spend about an hour. Uh the lesson here is to find a way to scan regularly. Set a schedule that works for you. Try for 15 minutes a day in the beginning and build up over time. Most of us scan on a daily basis whether we know we're doing it or not. Particularly in a professional sense, scanning systems aim to take this individual scanning to an organizational level. The aim is to move scanning from unconscious, implicit, and solitary done by an individual to conscious, explicit, and collective, which is an organizational capability. Only then does scanning have value in the strategy process. There's no point scanning if you don't use the output to strengthen your thinking about the strategic options for the future. You think strategically because you want to make wise decisions today. Decisions that help you ensure your organization's sustainability and which do no harm to future generations. You can ignore the future, but when it bites you in the proverbial, you only have yourself to blame.

Finally, and most importantly, enjoy your scanning. Now the questions that were um raised during the live broadcast of the webinar have been provided to participants um uh in a separate document and the links available um in the email that goes out with the uh links for the recording and the slides. These are my uh downloading building strategic futures guides: Getting started with futures, environmental scanning, strategic thinking, and there's the link on my site. They're in the resources section on the site. So, you can go there and download them for free.

Okay, these are my contact details. Please do get in touch if you have any questions after after you've seen the webinar. Thank you very much for attending or for watching this webinar. When you are ready, just close the screen and uh back to work with uh a new motivation to set up scanning in your organization. Till next time, bye for now.