THE STAGES OF THE STRATEGIC PLANNING PROCESS

Environmental Scanning

During the 1960s and 1970s, planners and forecasters succeeded in developing many useful methods based on an inside-out perspective-, that is, it was implicitly assumed that knowledge about issues internal to their organizations was most important. At the same time, however, analysts increasingly found that emerging external issues often had a greater impact on the future of their organizations than any of the internal issues. In response, they began to modify some of their techniques and concepts so that outside developments could be formally included in their results. Initially’ the emphasis on tracking the outside world fell on monitoring developments that, from an inside perspective, had already been identified as potentially important (Renfro and Morrison 1982).

Eventually, even this so-called monitoring was found inadequate as entirely new issues emerged that had major effects through mechanisms that had not previously been recognized. Thus, it became the responsibility of the forecaster to scan more widely in the external environment for emerging issues, however remote. The search for the possibility, rather than the probability, of major impact became common. The importance of scanning in the new sense was first recognized in the national security establishment and later by the life insurance industry, when it discovered that its market was declining. From the inside-out perspective of the insurance industry, the decline could not be explained. The economy was growing. The population was growing. The baby boom was just entering the labor market, adding millions of potential new customers. Yet the sales of life insurance failed to reflect this expected growth. Somehow the industry had failed to perceive a fundamental social change—the emergence of the wife as a permanent, second earner in the family. While many women in the past worked briefly before marriage or before starting their families, many if not most left the labor force when they began their families. In the late 1960s and through the 1970s, however, more and more women returned to work after starting their families. And this change affected the demand for life insurance: The life insurance needs of a family with one income are much greater than those of the family protected by two incomes. This development, coupled with a postponement of forming families, a decline in the birthrate, and an increase in childless couples, all reduced the traditional market for life insurance. That so major an industry could have overlooked these social developments stimulated the development of environmental scanning methods, particularly as the scope of scanning activities expanded to include technological developments, economic developments, and legislative and regulatory developments.

Developing the environmental scanning structure

Two main barriers impede the introduction of environmental scanning techniques in higher education: (1) learning the new process and (2) achieving the necessary organizational acceptance and commitment to make the process work and be worthwhile (Renfro and Morrison 1983a). These two barriers pose several questions: How can an environmental scanning function be developed in an already existing organizational structure? How should environmental scanning work within the organization? What resources are needed for the process to function successfully?

While the organizational structure of the scanning function will vary according to a given institution’s management style, the functions of the scanning process are universal. Developing a scanning function within an existing organizational structure is necessarily evolutionary because sudden organizational change is disruptive and costly. While the scanning function could be implemented in many ways, the most popular of the formal systems by far is through an in-house, interdisciplinary, high-level committee of four or five members (but no more than 12 or so). If assigned to a particular department or contracted out, the results of scanning can easily be ignored. And to achieve the widest appreciation of the potential interactions of emerging issues, the scanning function must be interdisciplinary. Without several disciplines involved, cross-cutting impacts, such as the impact of a technological development (for example, the home computer) on social issues (for example, the family), will most likely be missed. To facilitate the communication of the results of scanning throughout the institution, it is easiest to work directly with the various leaders of the institution rather than with their designated experts. Ideally, therefore, the chief executive officer of the institution should appoint the scanning committee, and to increase the likelihood that results will be incorporated into the decision-making process, the chair of the committee should be one of the president’s or chancellor’s most trusted advisors.

Perhaps the essential issue for the successful operation of a scanning committee is the selection of the other members. Ideally, membership should include a broad cross-section of department heads, vice presidents, deans, the provost, faculty members, trustees, and so forth. Certainly the institutional research office should be represented, if not by the director, then by a senior assistant. The objective is to ensure that all important positions of responsibility in the institution are represented on the committee.

High-level administrators should participate in scanning for several reasons. First, only those with a broad perspective on an institution’s current operations and future directions can make an informed evaluation of the potential importance or relevance of an item identified in scanning. Second, the problems of gaining the necessary communication, recognition, and acceptance of change from the external environment are minimized. Hence, the time between recognition of a new issue and communication to the institutional leadership is reduced, if not eliminated. And when an issue arises that requires immediate action, a top-level scanning committee is ready to serve the institution’s leadership, offering both experience and knowledge of the issue in the external world and within the institution. Third, one of the more subtle outcomes of being involved with a scanning system is that the participants begin to ask how everything they read and hear bears on the work of the scanning committee: What is its possible relevance for my institution? Indeed, the development within top-level executives of an active orientation to the external environment and to the future may well be as beneficial to the organization as any other outcome of the process.

A scanning committee does not need to have general authorization, for it serves only as an advisory board to the chief executive. In this sense it functions similarly to the planning office in preparing information to support the institution’s authorized leadership. The scanning committee is, of course, available to be used as one of the institution’s resources to implement a particular policy in anticipation of or response to an issue. But the basic purpose of the scanning committee is to identify important emerging issues that may constitute threats or opportunities, thereby facilitating the orderly allocation of the institution’s resources to anticipate and respond to its changing external environment.

The environmental scanning process

Environmental scanning begins with gathering information about the external environment. This information can be obtained from various sources, both internal and external to the organization. Internal sources include key administrators and faculty members; they could be interviewed to identify emerging issues they believe will affect the institution but are not currently receiving the attention they will eventually merit. Such interviews usually release a flood of emerging issues, indicating that the organization’s key leaders are already aware of many important new developments but rarely have the opportunity to deal with them systematically because they are so overburdened with crisis management.

Administrators and selected faculty members could identify the sources they use for information about the external world-the newspapers, magazines, trade publications, association journals, and other sources they regularly use to keep in touch with developments in the external world. Typically, these surveys show that administrators read basically the same publications but only selected sections.

Scanning includes a broad range of personal and organizational activities. It is a process of screening a large body of information for some particular bit or bits of information that meet certain screening criteria (Renfro and Morrison 1983b). For example, some people scan headlines in a newspaper for particular kinds of articles, and when they find that information, they stop scanning and read the article. Then they resume scanning. This process has several distinct steps:

1. searching for information resources
2. selecting information resources to scan
3. identifying criteria by which to scan
4. scanning and
5. determining special actions to take on the scanning results.

How these steps are taken determines the kind of scanning-passive, active, or directed. (For an excellent discussion of scanning used by business executives, see Aguilar 1967, pp. 9-30.)

Passive scanning. Everyone scans continually. Whatever a particular individual’s interests, goals, personal values, or professional objectives, it is an element of human nature to respond to incoming information that might be important. Ongoing scanning at an almost unconscious level is passive scanning. No effort is made to select a particular information resource to scan. The criteria of passive scanning are obscure, unspecified, and often continuously changing. Only ad hoc decisions are made on the results of this type of scanning.

The basic purpose of the scanning committee is to identify important emerging issues that may constitute threats or opportunities.

Passive scanning has traditionally been a major source of information about the external world for most decision-makers and hence for their organizations. The external environment has historically been a subject of some interest to most people, requiring at least passive scanning at fluency in current or emerging issues. The pace of change some level for the maintenance of one’s chosen level of in the external environment has moved this scanning from an element of good citizenship to a professional requirement-from a low-level personal interest satisfied by passive scanning to a high-level professional responsibility requiring active scanning-more like the special scanning used for subjects of particular importance, such as career development.

Active scanning. The components of active scanning are quite different from those of passive scanning. For example, the searching or screening process requires a much higher level of attention. The information resources scanned are specifically selected for their known or expected richness in the desired information. These resources may include some, but usually not all, of the regular incoming resources of passive scanning. Thus, a member of the scanning committee would not actively scan magazines about sailing for emerging issues of potential importance to the university. This is not to say that such issues will never appear in this literature but that passive scanning is sufficient to pick up any that do.

The criteria of screening for signals of emerging issues must be broad to ensure completeness, and they usually focus on certain questions: Is this item presently or potentially relevant to the institution’s current or planned operations? Is the relationship between the likelihood and potential impact of the item sufficient to justify notifying the scanning committee? For example, a major renewal of central cities in the United States accompanied by high rates of inward migration might have tremendous impact on the educational system but just be too unlikely in the foreseeable future to warrant inclusion in the scanning process. It is not part of the institution’s current interesting future, which is a very small part of the whole future.

The interesting future is bounded by the human limitations of time, knowledge, and resources; it represents only that part of the future for which it is practical to plan or take actions now or in the foreseeable future. For almost all issues, this interesting future is bounded in time by the next three or four decades at the most, although most issues will fall in the period of the next 20 years. This time frame is defined as that period in which the major timely and practical policy options should, if planned or adopted now, begin to have significant impact.

The issues-policy-response time frame depends on the cycle time of the issue. For the issue of funding social security, the interesting future certainly runs from now for at least 75 to 85 years-the life expectancy of children born now. Actually, as their life expectancy will probably increase in the decades ahead, 90 to 100 years may be a more realistic minimum. For financial issues, the interesting future may be the next several budget cycles-just two or three years. For a new federal regulatory requirement that may be imposed next year, the interesting future runs from now until then.

The interesting future is bounded by a measure of the uncertainty that a particular issue might actually materialize. Developments that are virtually certain either to happen or not happen are of little interest in scanning, because they involve little uncertainty. If the institution has little ability to affect these more or less certain happenings, they should be referred to the appropriate department for inclusion in its planning assumptions. The aging of the baby boom, for example, is certain to happen and should be factored into the current strategic planning process. A potential new impact of the baby boom that may or may not happen-such as growing competition within the medical care system for federal resources-should be forwarded to the scanning committee for evaluation of both its probability and its importance. Thus, the interesting future is comprised primarily of those developments that are ( 1) highly uncertain, (2) important if they do or do not happen, and (3) responsive to current policy options.

A second dimension of scanning concerns the time element of the information source being scanned. Information sources are either already existing resources, such as the literature, or continuing resources, which continue to come in, such as a magazine subscription. Passive scanning uses all continuing resources-conversations at home, television and radio programs, conferences, meetings, memos, notes, and all other incoming information. Passive scanning rarely involves the use of existing resources. Active scanning involves the conscious selection of continuous resources and, from time to time, supplementing them with existing resources as needed. For example, an item resulting from scanning continuing resources may require the directed scanning of an existing resource to develop the necessary background, context, or history to support the determination of an appropriate response.

Directed scanning. The active scanning of a selected existing resource for specific items is directed s(-anning. Usu ally this scanning continues until the items are located, not necessarily until the resources are exhausted. For example, if a member of the scanning committee knows that a good analysis of an issue was in a particularjournal some time last year, he could examine the table of contents of all volumes of the journal to locate the article. As the specific desired item is known and the resource can be specified, the scanning committee can delegate whatever directed scanning is necessary.

Scanning for the institution

To anticipate the changing conditions of its external environment, the institution needs both active and passive scanning of general and selected continuing information resources. The results of this process-in the form of clippings or photocopies of articles-will be reported to the scanning committee for evaluation. The chair of the committee (or its staff, if any) compiles the incoming clippings to prepare for the discussion of new issues at the committee’s next regular meeting. In performing this task, the chair looks for reinforcing signals, for coincident items (each of which may have sufficient importance only if both happen), for items that may call for active or directed scans of new or different resources, and for information about the interesting future.

Developing a scanning taxonomy. Any number of taxonomies and mechanisms have been used to structure the scanning process. All of them attempt to satisfy several conflicting objectives. First, the taxonomy must be complete in that every possible development identified in the scanning has a logical place to be classified. Second, every such development should have only one place in the file system. Third, the total number of categories in the system must be small enough to be readily usable but detailed enough to separate different issues. The concepts developed from technology assessment in the mid- 1970s provide an elementary taxonomy consisting of four categories: (1) social, (2) technological, (3) economic, and (4) legislative/regulatory.

The taxonomy at the University of Minnesota, for example, includes five areas (*Richard B. Heydinger 1984, personal communication). The political area includes the changing composition and milieu of governmental bodies, with emphasis at the federal and state levels. The economic area identifies trends related to the national and regional economy, including projections of economic health, inflation rates, money supply, and investment returns. The social lifestyle area focuses on trends relating to changing individual values and their impact on families, job preferences, consumer decisions, and educational choices, and the relationship of changing career patterns and leisure activities to educational choices. The technological area includes changing technologies that can influence the workplace, the home, leisure activities, and education. The demographic manpower area includes the changing mix of population and resulting population momentum, including age cohorts, racial and gender mix for the region, the region’s manpower needs, and the implications for curricula and needed research.

To develop a more specialized taxonomy, the scanning committee should focus on the issues of greatest concern to the institution. The committee can use any method it chooses to select these categories-brainstorming, questionnaires, meetings, for example. Whatever method is used, it should be thorough, democratic, and, to the extent possible, anonymous (so that results are not judged on the basis of personalities). One method that meets these criteria is to use a questionnaire based on an existing issues taxonomy. Sears Roebuck, for example, has over 35 major categories in its scanning system, ALCOA uses a taxonomy with over 150 categories, and the U.S. Congress organizes its pending legislation into over 200 categories. Such a list can be used as the basis of a questionnaire that asks respondents to rate the relative importance of each category and expand categories that may be of particular importance to the institution. For example, under the category of higher education, the committee may want to add subcategories concerning issues of tenure and the academic marketplace, among others.

Alternatively, the committee may want to develop its own taxonomy. Although using a detailed taxonomy like the one Congress uses helps to ensure thoroughness and although an organized system can be adapted to new issues as additional categories are opened, the advantage of starting with only four categories is simplicity.

When the questionnaire is complete, the categories named most frequently should be selected for scanning. That number is determined by the size of the committee; experience indicates that a 10- to 12-member committee can handle no more than 25 to 40 assigned categories for scanning, with each member having responsibility for two or three categories and the relevant sources to scan for each of them. The list of categories then becomes the subject index of the scanning files.

With this list of categories and a list of the publications and other resources already being scanned, the committee can identify the categories for which assigned scanning is necessary. At this point, the kind of resource takes on importance. For example, alcoholism may be an issue selected for scanning but one for which no current resource can be identified. For this issue, generic and secondary resources may be sufficient-newspapers, national weekly magazines, or other resources in ‘he passive scanning network. Nevertheless, the resources designated for this issue and their designated scanners should be identified. Of course, a particular publication or resource may cover more than a single category, and it may take several publications to cover a single issue adequately.

What to scan. Determining which materials to scan is an extremely important and difficult task. This process involves deciding what blinders the committee will wear. It is obviously better to err on the side of inclusion rather than exclusion at this point, yet the amount of material committee members can (or will) scan is clearly limited. The decisions made at this point will determine for the most part the kind, content, and volume of information presented to the scanning committee and will ultimately determine its value to the institution. This question deserves substantial attention.

Because of the limitations of various resources, scanning must be limited to those resources reporting issues that have a primary or major impact on an institution, whether the issues originate in the external world or not. A college or university must anticipate, respond to, and participate in public issues-issues for which it may not be the principal organization affected but for which it nevertheless has an important responsibility to anticipate. It is useful, then, to formally structure the discussion of issues and their relative position to each other. An example of such a chart is shown in figure 4. Such a chart creates an orderly structure for the discussion of issues, ranging from an introspective focus to a focus on the entire world. The levels should be arranged so that all issues confronting the institution can be identified as having their focus at one of the levels.

The vertical dimensions of the chart are the areas of concern to the university. Although they will necessarily vary from time to time, the issues include students, research, finances, technological change, legislative/ regulatory change, social values, and more. The relative importance of each of the intercepts of the horizontal and vertical axes can be evaluated using the Delphi process described in Forecasting. For the most important areas-usually about 10-to 12-the next step is to identify specific resources to be scanned. An area that is ranked as among the most important but without acceptable scanning resources may require some additional research.