Friday, February 18, 2011

A Tool for Analyzing Your Organization's Environment


In my last eZine, I wrote about "Helping Your Organization Succeed in a Complex Environment." My point was that the business environment is becoming increasingly complex. I also promised to send along an analytical tool in this eZine.

One of the sources of the complexity organizations must deal with is the multiplicity of stakeholder groups that are important to their success. Among the most common are:

  • Shareholders
  • Employees
  • Customers
  • Communities

Another source of complexity is the environment itself. You may recall I outlined the parts of the business environment my Kellogg professor, Dr. Stanley Hallett, outlined in his class on "Managment and Its Environment." These were:

  • The green, or ecological, environment
  • The technological environment
  • The social/cultural environment
  • The economic environment (which includes the organization's financial situation as well as the competitive and general economic environment)
  • The regulatory and legislative environment

In my work through the years I came up with the rather simple idea of creating a grid of environments against stakeholders. It looks like this:

Stakeholder-Environmental Grid ©2001 Forrest W. Anderson







Green (Ecological)




Micro Economic


When you consider the intersection of a stakeholder group and an environment, areas of concern tend to pop out. For example, any energy utility probably would have check marks all the way across the "Green (Ecological)" and "Reg/Leg" environment rows. Our local utility, Pacific Gas & Electric (PG&E) recently experience a pipeline explosion in San Bruno, California; some consumer lives and property were lost. Right now, PG&E would have check marks in the "Technological" environment row at least in the "Shareholder," "Customer" and "Community" columns. I would think they would have one in the employee column as well.

In the case of PG&E, I'm confident that its stakeholders have concerns in these areas. But this may not be as clear for all organizations. I remember working with a hospital that had been surprised by an issue and wanted to be prepared in the future. For that organization, we needed to identify the issues before we could prioritize and manage them.

I think the grid is useful as a way to identify potential points of concern for any organization at these junctions of stakeholders and environments. You might not know for sure that issues exist at any given intersection, but if you think they might, you can do some research to determine if there are concerns and what they are.

To identify issues at the hospital I mentioned above, we went to the people inside the organization who were responsible for the stakeholder groups, and asked them for input to the grid. As you might expect, these people had the issues top of mind.

One way I've used the grid quite effectively is by putting it on a large white board and having cells big enough to write in the actual issues. If you have a number of issues and limited resources (as most of us do) you can prioritize the issues to determine which you should tackle first.

Returning to the hospital example, we created a working group comprised of those responsible for the stakeholder groups and met monthly to assess progress with the issues we'd identified, add new ones to the board and retire those that had become unimportant.

These exercises are, no doubt, simplistic to those of you who do public affairs as your sole focus, but for those of us who do not, I've found it to be a good way to get a handle on what is generally a very complex set of challenges.


Liz Guthridge said...

Great framework and tool, Forrest. And in our complex environment these days, many of these stakeholder groups have sub-categories. For example, using your example of PG&E employees, subgroups include executives, union employees, employees nearing retirement, retirees, job candidates, etc. The level of concerns could differ in all of the environment segments. Even getting the attention of potential job candidates and talking to them about working at PG&E could be a challenge for which you need a special message strategy.

Forrest W. Anderson said...

Excellent points Liz!

One of the challenges in all analysis is how much to break things down. I generally try to decide based on what's actionable. A large organization with a large HR and internal communications staff probably could address all the subgroups. Some smaller organizations probably could not at a program level.

Nevertheless, as you point out, attitudinal segments in each stakeholder group can be very important. The question then becomes should an organization's leaders try to manage in reference to these segments and how? The answer would be influenced by how important the segment is to the success of the organization and can it afford to do anything to respond to the segment?