Why Environmental - Amy Caby

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					EXECUTIVE SUMMARY (4th submission)

Why Environmental Scanning Works Except When You Need It by Brian J. Huffman

This article effectively argues the reasons why environmental scanning is not effective, when it comes to
strategic inflection points. Environmental scanners are tools that CEO’s and owners use daily to monitor
the climate of their industries. This system is responsible for “alerting” the organization when there is a
massive crisis coming. It is the author’s point of view, that the only crisis these scanners in reality pick
up, are the minor ones. Major crisis are often undetectable until the organization is faced with it. These
major crisis are called strategic inflection points. Its major comprehensive impact challenges an
organization to change the way it functions or else, goes under.

Huffman states that the environmental scanners are like officers on the Titanic that are on the look-out
for possible dangers, but their perceived “possible dangers” are only as good or as accurate as their
personal perceptions. There is so much that puts an organization at risk, a change in perception, a
change in environment, even changes in employees. There are typically six forces that are being scanned
constantly: existing competitors, customers, suppliers, new entrants and substitutes. The parameters for
the scanners usually evolve around six focused questions that address the economic features,
competitive and driving forces, market positions, strategy and key factors that would make for an
attractive and profitable organization.

These elements might deliver a threat and because it is characteristically a predictable threat that can
be interpreted and synthesized, there is probably a formula that could guide top management in
achieving predictable results with the contingency plan that was devised ahead of time since the
scenario has been evaluated already. Inflection points, however, are unpredictable, partially due to the
difference in various perceptions and intuitions, but they are normally caused by parties that had either
no involvement, are amateurish or simply have nothing else to lose. Huffman’s point is: There is no
accurate way of synthesizing random pieces of information that would provide a possible scenario of

Most commonly, competitors are the cause of strategic inflection points, and usually it is too late to take
corrective action after an asymmetric attack. An asymmetric attack results when opponents deliberately
change ways of operating to optimize advantage and exploit vulnerabilities. Attacks like this usually have
a one-time only occurrence, which will render this impossible to forecast. Intuition plays a major role in
the prediction of these occurrences. It is Huffman’s opinion, that top management is often blind to the
environmental clues; it is usually the front-line managers that are able to predict strategic inflection
points. Massive changes in the environment is not what will bring these challenges along, but gradual
moves that are not obvious, almost like a frog that is sitting in water, while it is slowly brought to boiling
point. The author begs the question that the possibility of an accurate detection of a strategic inflection
point is unlikely and action is more unlikely to be implemented if the source of detection is intuition,
especially front-line management’s.
There are three general assumptions, in regards to defense strategies that the author challenges. The
first being the assumption of detachment: which asks of top-management to think “like” somebody that
is not in operations, which is quite impossible. Then a good strategy would make front-line managers
likely candidates for doing a better job, given their skill in the industry and unawareness in other areas.
The second is the assumption of formalization : analytical systems cannot be built to imitate human
intuition, there is not a formula that can effectively synthesize environmental changes that are dynamic
and unpredictable. The last is the assumption of predetermination: it is extremely unlikely for any
system to accurately predict a strategic inflection point. It is also not likely that it would predict the
exact scenario or the conditions of the environment once the crisis strikes. This is an ever-evolving
environment that is not predictable from moment to moment.

The main argument of the article is that strategic inflection points are often not the direct result of a
planned event. It could also occur without planning by an opponent or any human or industry. The
dilemma lies in that top management is too close to the “situation” to accurately predict a course of
action or recognize the imposing strategic inflection point. The front-line managers or workers in the
trenches that feel these changes abruptly and has the skills to accurately predict a challenge and offer
solutions on how to minimize impact throughout the company, probably does not have enough
authority to make these calls or even call attention to the issue.

Huffman provides some pointers regarding the defense of strategic inflection points making clear that if
there was an accurate way of predicting any one disaster – then it would have been avoided.

       Think weeks – forums where focus is on issues such as this
       Focused intelligence – various areas of organization focus on interesting bits of information
       Synthesis in intuitive and human manner
       REACT on synthesis – otherwise what is the point and don’t procrastinate on action
       Reduce vulnerability: keep moving and diversify interests
       Upper-management might be in denial – be prepared
       Do not expect too much from “think weeks” or “workshops” aimed to get employees involved
       Bring line-managers on board, they will be most-skilled in identifying challenges
       Flexibility, agility will help any organization adapt to change and challenges
       Short and effective decision-making process
       Do not be confident in your position in market


Why Environmental Scanning Works Except When You Need It by Brian J. Huffman

I think the author did a really good job of addressing all the points of argument around environmental
scanning and the impossibility of predicting, or at least having a system, that synthesizes scenarios in
which these strategic inflection points could be conquered. I also greatly appreciated all the examples
he used to prove his point, since some of the material tends to be abstract if you are not familiar with
organizational environments.
The author gives a few solid points of advice on how to involve human-intuition and skill into the
process, which refers to “lower-level workers.” I am a major supporter of moving away from a vertical
organizational-model. It is limiting in many ways, but here again, the benefits of involving front-line
managers and the employees in the trenches into the heart of an organization comes to light. A
horizontal organizational-model provides a lot of freedom for communication and information channels
that could be instrumental in the success of a company. The terms “top-management” and “front-line-
management” are also terms that I think are problematic because it creates unnecessary
communication barriers in an organization that wants to be strong and competitive in a singular
industry. This statement is supported in Huffman’s article where he admits that there is a line of division
and the implications of that division in simple terms is: exposure to risk. It seems slightly risky to consult
only one “part of the brain” in an organization, while another part of the body of the organization is not
consulted at all.

Why divide your organization from within when it is already facing harsh environments?

Huffman, throughout the entire article, supports a proactive approach on strategic inflection points. He
also stresses, time and again, how unpredictable they are. If I was a small business owner, that wasn’t
planning on hosting “think weeks” or “focused intelligence meetings,” I would appreciate a simpler
answer. I am specifically referring to Crisis Management. If you cannot foresee a specific scenario of
crisis, that will invariably change your organization and the way you do business, you MUST still have a
contingency plan.

Through risk analysis a lot of useful information can be gathered, and while this is a reactive approach, it
seems that it will be the only option if the strategic inflection point was undetectable. The small
business owner should evaluate vulnerabilities in natural, economic, social, product and work-
environment disasters. The organizational goal is to be well prepared with existing contingency plans for
possible scenarios that pertain to these areas. Managing the crisis effectively when it strikes will
minimize the ripple effects of adversity in any organization.

Huffman, B. (2009). Why environmental scann ing works except when you need it. In F Maidment (Ed.), Annual
Editions:Management, fifteenth edition (pp. 35-43). New York: McGraw Hill.

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