Organizations are beginning to focus on the future again. During the recent recession it was often hard to justify the time, energy or resources to mount a visioning or planning session. How can we take the time away from pressing client needs or financial challenges to invest in a dialog about what might happen in the future?
However, as we know, to be successful, long term organizations, teams and individuals must think about the future and plan for their desired outcomes.We can either thoughtfully set a course of action or be forced to respond, come what may. Over the last 30 days, I have spoken with staff at 20 different organizations who are all currently engaged in some form of planning. Some are updating an existing strategic plan; others are crafting their annual operating objectives or working with the Board on an entirely new strategy. It is striking how few of these organizations have incorporated external environmental scanning into their planning process. Regardless of how you get your news, it is an understatement to say we live in a dynamic and fast changing world. There is an abundance of information delivered to our screens all day and every day. It may be this very deluge of information that makes it more difficult to conceive of a process that would help a planning team as it sifts data regarding the external environment.
What Is An External Environmental Scan?
All nonprofit organizations are founded to serve a societal need. The closer any organization matches the needs of its society, the greater its potential for sustained success. As society evolves, all organizations risk losing touch with those key trends that signal major changes ahead for the organization. An External Environmental Scan represents a quick check by a planning team of trends in key areas of the external environment.
An effective External Environmental Scan:
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provides a framework for thinking about the external environment.
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identifies how key trends could affect the organization in the future.
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suggests possible responses to the most important trends.
How to Prepare an External Environmental Scan
Successful scans identify the most important trends in the environment for a specific organization. Once the trends are identified, what are your assumptions regarding this trend? Over the next one to five years, will this trend continue? Get better? Get worse?
How will these key trends impact your client, customers, donors or stakeholders? How will their needs or expectations change in response to this trend?
Finally, what will or might be the most promising responses by your organization to the evolving needs you have identified?
How do we start?
Let’s assume your planning team is comprised of Board and staff members for a mid sized nonprofit that are beginning work on a new strategic plan. Which external trends should we focus on as we plan for the future? How do we begin thinking about this aspect of our plan?
The following trends and related questions suggest some of the areas you might want to research and then discuss. The overarching question is how will this trend impact our capacity to deliver on the mission of our organization? Key trends might include:
The Economy
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What is the real or perceived threat of either recession or inflation? What impact would this threat have on our organization, our clients and our partners? Will this impact be short term or long term?
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What trends do indicators of future economic activity reveal?
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What other factors unique to the mission of our organization are likely to be affected by economic trends?
Competition
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What organizations or companies have recently entered or reentered the market served by our programs, products or services? Are these nonprofit organizations or corporations? Domestic or international?
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Who is growing/declining among organizations offering related or similar programs, products or services? What is causing the change? How might the change affect those we serve?
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Which organizations or agencies are competing for our donor base? Which organization is perceived by donors to offer the best value (quality for price) for similar services or programs in our market?
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What changes in strategy have been reported/observed among those offering related or similar products or services? Are such changes evolutionary or revolutionary?
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Are there any recent changes in the financial condition of those offering related or similar products and services? Have they recently ceased operations or merged? Stopped certain program or product offering? Changed strategy?
Technology
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Which technologies will most impact our sector? How can we improve service, enhance effectiveness or reduce costs using technology?
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What does technology bring to the development of future programs, products and services? Could/will it bring new competitors? Is a new technology likely to make one of your existing products or services obsolete in the future?
Political/Regulatory
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What is the mood of government and the populace toward regulation? More or less? How might this affect your organization?
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What are the “green” issues affecting your organization or industry?
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What trends in federal, state and local budgets will likely affect your organization or market? When will the impact be felt?
Social/Demographic/Psychographic
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What population shifts or changes in behaviors are most likely to impact your markets, clients, constituencies and/or stakeholders? Urban/rural? Young/aging?
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How are people’s expectations or lifestyle patterns changing? What will be the impact on populations you serve? What opportunities does this suggest?
The progression from a broad external scan to identifying the key trends for your organization will then make it clear which strategic drivers require attention during the planning process. By the time your plan is complete, rivers of information are now sorted by how they may impact the nonprofit’s structure, staffing or fundraising in future years.
Keep the Conversation Going
Beyond improving the planning process and outcome, it’s important to keep the conversation going regarding the external environment. Every board meeting would ideally include time for discussions regarding the external trends that may have the greatest impact on your organization’s mission or mission delivery.
