A Tool Box for Strategic Analysis

OVERVIEW

Strategic analysis is a linchpin for organisational success. This comprehensive guide dives into the realms of extended thinking, informed decision-making, and effective communication. Exploring a myriad of tools and techniques, from PESTEL and SWOT analyses to advanced frameworks like McKinsey 7-S and Blue Ocean Strategy, this article illuminates the path to strategic prowess. Navigating through the vital steps of interpreting data, setting objectives, evaluating options, and resource allocation, emphasising the art of transforming raw information into actionable strategies. With a keen focus on the symbiotic relationship between dynamic and crystallised intelligences, to unravel the synergy between mind and environment, unveiling insights into strategic cognition. Additionally, this article explores the nuances of persuasive writing structures and engaging content formats crucial for conveying intricate analyses. Strategic analysis is more than a practice—it as a mindset, empowering businesses to adapt, innovate, and thrive in the face of challenges, fostering sustained growth, resilience, and enduring success.

adjective
1. relating to the identification of long-term or overall aims and interests and the means of achieving them.
  "strategic planning for the organisation is the responsibility of top management"
2. relating to the gaining of overall or long-term military advantage.
  "Newark Castle was of strategic importance"
1. detailed examination of the elements or structure of something.
  "statistical analysis"
2. short for psychoanalysis.
  "other schools of analysis have evolved out of the original disciplines established by Freud"

25MIN READ

WHAT IS THIS

In today's fast-paced and ever-changing business landscape, strategic analysis has become more crucial than ever before. The global market is characterised by rapid technological advancements, shifting consumer behaviours, and unpredictable economic climates. Businesses are navigating uncharted territories, facing unprecedented challenges and opportunities. In this dynamic environment, strategic analysis serves as a guiding light, offering invaluable insights into market trends, customer preferences, and competitive landscapes.

Understanding the external factors through tools like PESTEL analysis allows companies to anticipate regulatory changes, societal shifts, and emerging technologies. Internally, SWOT analysis and other frameworks provide a deep understanding of organisational strengths, weaknesses, and areas for improvement. These analyses empower businesses to make data-driven decisions, enabling them to pivot swiftly, adapt to market demands, and capitalise on emerging trends.

why this is important

Strategic analysis fosters resilience. By envisioning multiple scenarios and preparing for various outcomes, organisations can proactively strategise, ensuring they are well-prepared for uncertainties. Tools like OKRs and constraints analysis help in setting clear objectives, overcoming challenges, and optimising processes.

In the digital age, where data is abundant but insights are invaluable, leveraging advanced tools such as business intelligence and data analytics has become a competitive advantage. These tools enable businesses to gain in-depth customer insights, enhance user experiences, and personalise offerings, leading to improved customer satisfaction and loyalty.

Embracing strategic analysis in the present time is not merely a choice; it is a necessity for survival and growth. Businesses that invest in understanding the complexities of their environments, both internal and external, are better positioned to make informed decisions, innovate effectively, and stay ahead of the curve. Strategic analysis is the cornerstone upon which agile, adaptive, and successful businesses are built, making it an indispensable practice in today's ever-evolving business landscape.

HOW WE DO IT : THE TOOLs

These tools, each presenting a unique lens, offer a focused perspective on specific aspects of business, and together, they craft the mosaic of strategic wisdom we see in some of the most successful businesses of today.

PESTEL Analysis
Originating from Harvard professor Francis Aguilar in the 1960s, PESTEL analysis systematically examines Political, Economic, Social, Technological, Environmental, and Legal factors influencing an organisation. By comprehensively evaluating these factors, businesses gain insights into external influences, aiding strategic planning and risk management.
SWOT Analysis
Developed by Albert Humphrey during the 1960s and 1970s at the Stanford Research Institute, SWOT Analysis assesses internal Strengths, Weaknesses, and external Opportunities, Threats. It's a foundational framework for understanding an organisation’s current position, guiding strategic decisions by leveraging strengths, addressing weaknesses, seizing opportunities, and mitigating threats.
SWOT/TOWS Matrix
Evolving from SWOT Analysis, this matrix was developed to generate specific strategies (SO, ST, WO, WT) based on identified internal and external factors. It provides a structured approach for translating SWOT insights into actionable plans, optimising the alignment between internal capabilities and external opportunities.
Scenario Planning
Originating in military strategy, scenario planning was adapted for business by Royal Dutch Shell in the 1970s. It involves creating multiple hypothetical future scenarios to anticipate diverse outcomes. By preparing for a range of potential futures, organisations enhance their strategic resilience, enabling proactive decision-making in uncertain environments.
McKinsey 7-S Framework
Developed by consultants at McKinsey & Company in the late 1970s, this model assesses seven interrelated elements: Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff. It emphasises the interconnectivity of these elements within an organisation, offering a holistic view. The 7-S Framework assists in diagnosing organisational issues and aligning strategies with internal capabilities and culture.
Porter's Five Forces
Introduced by Harvard professor Michael Porter in 1979, this framework analyses industry competitiveness by evaluating the bargaining power of buyers, suppliers, threat of new entrants, threat of substitute products or services, and competitive rivalry. It aids organisations in understanding their industry’s dynamics, guiding strategic positioning and decision-making.
Ansoff Matrix
Proposed by Igor Ansoff in 1957, this matrix identifies four growth strategies: market penetration, market development, product development, and diversification. By providing a structured approach to growth, it helps organisations choose suitable paths, aligning their products and services with market demands.
Blue Ocean Strategy
Developed by W. Chan Kim and Renée Mauborgne in 2005, Blue Ocean Strategy focuses on creating untapped market space. Unlike traditional strategies that compete in saturated "red oceans," this approach seeks innovation to establish new, uncontested market segments, emphasising value innovation and differentiation.
Customer Segmentation Analysis
While not attributed to a specific originator, customer segmentation analysis involves dividing a diverse market into distinct groups based on shared characteristics. By understanding unique customer needs within segments, businesses can tailor products, services, and marketing strategies, enhancing customer satisfaction and loyalty.
Game Theory
Originating in mathematics and economics, game theory was applied to business strategy by John von Neumann and Oskar Morgenstern in the mid-20th century. It studies strategic interactions between competitors, helping businesses anticipate competitors’ moves and make decisions in competitive scenarios.
Benchmarking
Popularised in the 1980s by Xerox, benchmarking involves comparing organisational processes and performance metrics with industry best practices or competitors. By identifying performance gaps and adopting superior methods, businesses improve efficiency, enhance quality, and drive continuous improvement.
Value Chain Analysis
Introduced by Michael Porter in his book "Competitive Advantage" (1985), value chain analysis dissects a company's internal activities into primary and support activities. By understanding how each activity contributes to value creation, organisations optimise processes and gain competitive advantage.
Balanced Scorecard
Developed by Robert Kaplan and David Norton in the early 1990s, the Balanced Scorecard aligns strategic objectives with performance metrics across financial, customer, internal processes, and learning and growth perspectives. It provides a balanced view of organisational performance, ensuring comprehensive evaluation beyond MOST Analysis: While lacking a specific originator, MOST Analysis assesses Missions, Objectives, Strategies, and Tactics to ensure organisational alignment. It helps businesses clarify their purpose (Missions), set goals (Objectives), devise plans (Strategies), and implement actions (Tactics), fostering coherent strategic efforts.
OKRs (Objectives and Key Results)
OKRs are a goal-setting framework that defines Objectives (what needs to be achieved) and Key Results (measurable outcomes indicating the achievement of the objectives). OKRs are used to align individual, team, and organisational goals, making them a valuable tool for organisational analysis within this category.
Resource-Based View (RBV) Analysis
Developed by Birger Wernerfelt in the 1980s and later popularised by Jay Barney, RBV emphasises internal resources and capabilities as sources of competitive advantage. By identifying unique and valuable resources, organisations gain insights into their core strengths, guiding strategic decisions and sustainable advantage.
Business Model Canvas
Proposed by Alexander Osterwalder and Yves Pigneur in 2008, the Business Model Canvas is a visual tool outlining key aspects of a business: customer segments, value propositions, channels, customer relationships, revenue streams, key activities, key resources, key partnerships, and cost structure. It facilitates strategic brainstorming and innovation by offering a structured framework for business model analysis.
Business Intelligence (BI) Tools
As technology advanced, BI tools emerged to analyse data for actionable insights. These tools collect, process, and visualise data, enabling organisations to make informed decisions, track performance, and identify trends, enhancing strategic decision-making processes.
Data Analytics and Data Mining
With roots in statistical analysis and computer science, data analytics and data mining involve examining large datasets to discover patterns, correlations, and trends. These techniques provide valuable insights, guiding strategic planning and informed decision-making.
Critical Path Analysis
Originating in the 1950s as part of project management methodologies, Critical Path Analysis identifies the sequence of essential tasks in a project. By determining the longest path to project completion, it ensures efficient project scheduling and timely delivery.
Cost-Benefit Analysis
Widely used in economics and decision-making processes, cost-benefit analysis compares the costs of a decision or project with its anticipated benefits. By evaluating financial and non-financial factors, it aids organisations in determining the feasibility and profitability of initiatives.
Decision Tree Analysis
Utilised in probability theory, decision tree analysis evaluates decisions using a tree-like graph of possible outcomes. By considering different scenarios and their probabilities, organisations optimise decisions in complex, uncertain situations.
Sensitivity Analysis
Originating in quantitative analysis, sensitivity analysis assesses the impact of variable changes on other variables within a model. By identifying variables with the most significant influence, organisations enhance decision-making and adaptability to changing conditions.
Value Stream Mapping
Evolving from lean manufacturing practices, value stream mapping visualises steps in a process, identifying value-adding and non-value-adding activities. It eliminates waste, reduces lead times, and enhances efficiency in product or service delivery.
Critical Success Factor Analysis
Although not attributed to a specific originator, this analysis identifies and prioritises key areas crucial for project or business success. By focusing efforts on critical factors, organisations maximise.

Embracing the Extended Mind and COLLECTIVE Intelligences

In the realm of strategic analysis, the mind transcends the confines of the mind, extending its reach into the world around us. This expanded cognition, often referred to as the extended mind, encompasses various dimensions that influence our strategic thinking profoundly. Moreover, understanding the interplay between dynamic and crystallised intelligences adds depth to our cognitive toolkit in the realm of strategic analysis.

Thinking with our Bodies: Sensations, Movement, Gesture
Our bodies are not mere vessels; they are integral to how we perceive and analyse strategic situations. Sensations, movements, and gestures convey a wealth of information. The rush of adrenaline in a high-stakes meeting, the subtle nod of agreement, or the tension in our muscles during a crucial decision-making moment—all these physical cues shape our understanding of strategic contexts.
Thinking with our Surroundings: Natural Spaces, Built Spaces, Space of Ideas
The environments we inhabit play a pivotal role in strategic analysis. Natural spaces inspire creativity and clarity, offering a sense of harmony that nurtures insightful thinking. Built spaces, from boardrooms to bustling city streets, influence our cognitive processes, impacting our problem-solving abilities and decision-making. Additionally, the 'space of ideas', where thoughts converge and collide, often facilitated by digital platforms, fosters collective intelligence, enriching strategic perspectives.
Thinking with our Relationships: Experts, Peers, Groups
Our interactions with others form a nexus of strategic cognition. Engaging with experts provides specialised knowledge, offering nuanced viewpoints essential for astute analysis. Peers challenge our assumptions, fostering healthy debates that refine our strategic thinking. Collaborative group dynamics, where diverse minds converge, enhances our cognitive capacities. This collective intelligence leads to holistic and comprehensive analyses.

Dynamic vs. Crystallised Intelligences:

Dynamic Intelligence: This represents our ability to think and learn flexibly. In the dynamic landscape of strategic analysis, being able to adapt swiftly to new information, adjust strategies on the fly, and learn from experiences is paramount. Dynamic intelligence allows us to navigate uncertainty and complexity, enabling agile decision-making in rapidly changing scenarios.
Crystallised Intelligence: This pertains to our accumulated knowledge and expertise. In strategic analysis, crystallised intelligence manifests as our deep understanding of industry trends, historical data, and organisational intricacies. Leveraging this reservoir of knowledge equips us with insightful perspectives, enabling us to make informed, well-founded strategic decisions.

By recognising the synergy between mind and environment and understanding the interplay between dynamic and crystallised intelligences, we unlock a wealth of perspectives and insights. This dual awareness enriches our strategic acumen, empowering us to navigate the intricate landscapes of business with proficiency and foresight.

Navigating Complexity with Informed decision-making

At the heart of strategic analysis lies the pivotal role of decision-making. Transforming raw data into actionable strategies requires a sophisticated decision-making process that encompasses various critical aspects.

Decisions here revolve around identifying relevant data points, discerning patterns, and extracting meaningful insights. This foundational step is where the raw information transforms into the building blocks of strategic understanding.
Strategic analysis paints a picture of current states and potential futures. Decision-making steps in to define objectives aligned with organisational vision, ensuring that goals are not only feasible but also impactful, steering the company toward its desired destination.
Generating multiple strategic options is commonplace. Decision-making weighs these options meticulously, considering factors like risk, resources, and potential outcomes. It's a delicate balancing act that culminates in the selection of a strategy borne out of a well-informed decision-making process.
Once a strategy is chosen, decisions about resource allocation come into play. Financial resources, manpower, time, and technology must be allocated judiciously to support the chosen strategy, ensuring the necessary tools are available for implementation.

Every strategic decision carries inherent risks. Decision-making assesses these risks, formulating strategies to mitigate them. Leaders decide acceptable risk levels, fallback plans, and mitigation strategies, ensuring the organisation moves forward with calculated confidence.
The business landscape is dynamic, and decisions made during strategic analysis are not static. Leaders continually adapt strategies based on changing market conditions, competition, and internal factors. Decision-making is a continuous, iterative process, ensuring strategies remain relevant and effective.
Decision-making extends to how insights and strategies are communicated within the organisation. Leaders decide how to convey complex information in a clear, understandable manner, ensuring everyone comprehends the strategic direction, fostering a unified organisational approach.
After implementation, decision-making continues through monitoring and feedback. Decisions revolve around whether the strategy is delivering expected results. If not, leaders decide whether to adjust the strategy, tweak specific elements, or maintain the course, ensuring the organisation remains on track toward its goals.

Mastering the Art of Business Writing

In the realm of strategic analysis, the power of persuasive and clear communication cannot be underestimated. Effective writing structures serve as the backbone of conveying intricate analyses and insights. Here's a glimpse into the essential forms of business writing crucial for strategic endeavours:

Reports: Business reports follow a formal structure, often including sections like executive summary, introduction, methodology, findings, conclusions, and recommendations. They present detailed information about a specific topic, often with the aim of informing decision-making within an organisation.
Proposals: Business proposals typically start with an introduction, followed by a problem statement, proposed solution, methodology, timeline, budget, and conclusion. The goal is to persuade clients or stakeholders to approve a project, investment, or partnership.
Business Plans: Business plans outline a company's goals and the strategy to achieve them. They usually include sections such as executive summary, company description, market analysis, organisation and management, product or service line, marketing and sales, funding request, financial projections, and an appendix. Business plans are essential for startups and entrepreneurs seeking funding or partnerships.
Email Correspondence: In the business context, emails often follow a clear and concise structure: greeting, introduction, body of the email (containing the main message), closing remarks, and a signature. Effective email communication is crucial for professional interactions.
Memorandums (Memos): Memos are typically used for internal communication within an organisation. They have a specific format, including a header, opening, context, purpose, main message, and closing. Memos convey important information or directives to employees within a company.
Business Letters: Business letters are used for formal communication with external parties. They include the sender's address, date, recipient's address, salutation, body of the letter, closing, and signature. Business letters are commonly used for official communication, such as inquiries, complaints, or job applications.
Presentations: Business presentations often follow a structured format, including an introduction, agenda, main content divided into sections, visuals (such as slides or charts), and a conclusion. Presentations are essential for conveying information to a group of people during meetings or conferences.

PRESENTING THE Content

In strategic analysis, the way information is presented is as vital as the content itself. Here's a breakdown of essential content structures that not only simplify complex ideas but also enhance engagement.

- When to Use: In business reports for summarising data or key findings; in email correspondence for listing action points or important details.
- How to Create: Choose a specific topic, craft a catchy title, plan your list logically, use numbers for order, keep each point concise, add variety with facts or examples, incorporate subheadings, include visuals, maintain a consistent tone, end with a conclusion or call to action, edit and encourage reader engagement.
- When to Use: In email correspondence for guiding employees; in presentations for explaining processes or workflows.
- How to Create: Choose a specific topic, understand your audience, outline clear steps, start with an introduction, provide clear instructions, use visuals, be concise yet comprehensive, maintain a logical flow, include troubleshooting tips, end with a conclusion or next steps, encourage feedback.
- When to Use: In proposals to identify client problems and propose solutions; in reports for presenting issues and recommendations.
- How to Create: Identify the problem clearly, understand your audience, research thoroughly, present the problem concisely, propose practical solutions, explain each solution in detail, address potential challenges, conclude with a summary and call to action, engage your readers.
- When to Use: In business reports to showcase successful strategies; in business plans to support market analysis.
- How to Create: Choose a relevant case, introduce the case, state the problem or challenge, describe the methodology, present the findings, analyse the data, discuss solutions or outcomes, include visuals, tell a compelling story, draw conclusions, provide recommendations, proofread thoroughly.

- When to Use: In market analysis for comparing market trends; in marketing for comparing products/services.
- How to Create: Choose subjects with meaningful similarities and differences, establish a clear thesis, identify similarities and differences, use a consistent criteria, organise your structure logically, provide clear examples and evidence, use transitional phrases, maintain balance, draw a conclusion, edit and consider your audience.
- When to Use: In marketing materials for creating emotional connections; in presentations for engaging your audience.
- How to Create: Start with a strong hook, develop engaging characters, establish the setting, build tension and conflict, create a compelling plot, use descriptive language, include dialogue, show, don’t tell, craft a climax, provide resolution, reflect or leave an impression, edit for clarity and flow.
- When to Use: In blog posts with industry experts; in reports for adding depth and credibility.
- How to Create: Prepare well with thoughtful questions, identify a knowledgeable interviewee, start with a brief introduction, ask open-ended questions, mix general and specific questions, follow the flow of the conversation, include personal anecdotes, record and transcribe if possible, edit for clarity and coherence, include introductions and transitions, add visuals, conclude with a summary, proofread and fact-check.
When to Use: In business guides for topics like marketing strategies; in training manuals for covering company policies.
How to Create: Choose a niche topic, research thoroughly, create a detailed outline, start with an introduction, provide step-by-step instructions, use visuals, include examples and case studies, cite your sources, use clear and concise language, address common problems and solutions, organise for readability, end with a conclusion and further resources, edit and encourage engagement.

In essence, mastering the art of strategic analysis is a transformative journey that encompasses the realms of extended thinking, informed decision-making, and effective communication. These tools not only provide the clarity to make pivotal decisions by transforming information into strategic insights and actionable plans but they also enable a deeper understanding of customer needs and strategic foresight by conveying intricate analyses clearly, engagingly, and persuasively. Strategic analysis helps leaders and organisations adapt swiftly, innovate fearlessly, and continuously improve, paving the way for sustained growth, resilience, and enduring success.

Researched and written by Rebecca Agent with editorial support from Grammarly (English AUS) and ChatGPT

Strategic InnovationRebecca AgentJune 30, 2023