Strategic issue diagnosis
You think things are changing fast? You ain’t seen nothin’ yet. We’re just at the start of changes in technology, global competition, and geo-demographic transformations. Futurists tell us that the rate of technological change is accelerating, along with related changes in society, culture, and geopolitics, which means that all sorts of new challenges and opportunities are waiting for you just over the horizon. And that means you’re going to need to get better at seeing what’s next and figuring out innovative ways to respond to it. Strategic issue diagnosis (SID) will help you with the “seeing what’s next” part of the process.
Strategic issue diagnosis is a structured process for identifying risks and opportunities. A strategic issue is an emerging trend or development that is likely to have a significant impact on an industry or organization. The operative term is emerging. Issues and their consequences rarely present themselves whole. Rather, they tend to start out as weak signals that are difficult to discern and even harder to interpret. A useful analogy is an oft-used scene in the movies.
As the opening credits roll, we look to the distant horizon where we see a barely visible wisp of dust moving toward us along a dirt road. The dust plume gives way to the faint outline of a vehicle, which becomes progressively larger and louder until the vehicle arrives and the identity of the driver is revealed to us. Issues emerge in much the same way, starting out as wispy signals and arriving as big, fast, honking changes. Those who practice SID have time to position themselves to hop on and profit from the ride. Those who don’t are destined to look up at the last moment and—pause for effect—become road kill.
A SID system has two fundamental components. The first is a scanning and monitoring function, which like a 360-degree radar, routinely sweeps the environment for early warning signals and monitors them as they grow (or fizzle) in significance. Approaches to scanning range from simple to sophisticated. The most rudimentary system is to assign an individual to read a range of publications and produce an internal newsletter. More sophisticated are company-wide efforts that employ volunteer scanners and a panel to integrate the information. Still more sophisticated is to recruit and manage a network of inside and outside scanners. The ideal situation is to have a broad and diverse network of observers who can examine the environment from multiple perspectives.
The second component of a SID system is the interpretation function. The purpose of interpretation is to understand the future direction and implications of the signals, either singly or in combination. Surprising and important insights often emerge when signals are creatively combined. One way of doing this is scenario building. Simply put, scenarios are conjectures about what might happen in the future.
The building blocks of scenarios are the signals identified during scanning. Once the building blocks are on the table, they are combined and recombined to create 3 - 4 plausible stories about future conditions and their consequences for an organization. The final step in scenario building is to identify signposts for monitoring. Signposts are events or thresholds that can be used to determine which of the stories is playing out. For an excellent guide, see Scenario planning: a field guide to the future by Woody Wade.
In essence, SID is a thought process in which the inputs are diffuse, ambiguous signals and the outputs are focused, interpreted issues. Once you’re aware of and understand an issue, you’re in position to develop an innovative response to it. But that’s a subject for future columns. For now, I’ll simply say that if you want to do a better job of competing on the fast-changing playing field of your industry, your organization should commit to making SID a core capability.
Kevin W. Holt, the founder of Co.Innovation Consulting, is a strategic planning consultant and meeting facilitator based in Phoenix, Arizona. He works with commercial, government, and nonprofit organizations to develop innovative strategies and solutions. His strategy consulting and meeting facilitation practice centers on the use of proven processes mapped to collaboration technologies (e.g., electronic brainstorming) and specialized software tools (e.g., the Blue Ocean strategy canvas). The technologies enable him to serve as both an offsite meeting facilitator and a virtual meeting facilitator for strategic planning workshops, innovation labs, brainstorming sessions, feedback sessions, and other types of meetings. Kevin is the author of Differentiation Strategy: Winning Customers by Being Different, published by Routledge in June 2022.