If you have some quiet time during the lock-down, now might be a good time to think about the future direction of your enterprise. Those of us who work with ISO management systems, know that it’s important to begin any review of strategic planning by thinking about the environment that the enterprise is operating in. I use two simple and widely used tools to do this – PESTEL analysis and TOWS analysis. PESTEL is best for looking at the big picture, while TOWS is better for developing simple strategies at a site or small business level.
Step 1 – Brainstorming possible issues
The aim of PESTEL analysis is to identify risks and opportunities, that may arise from external forces, under the headings of Political, Economic, Social, Technological, Environmental & Legal.
It isn’t critical which heading you place something under – so long as it’s relevant and it has been taken into account. I don’t suppose that many of us saw Covid-19 coming, but more obvious examples might be:
- Political: Tax policy; foreign trade deals; regulation of competition; attitude to business
- Economic: General economic growth; exchange rates; employment trends; consumers’ disposable income
- Social: Peoples’ expectations of work, leisure, career & retirement; attitude to working from office or home; demographics
- Technological: Can/should work be automated; communications infrastructure; disruptive technologies
- Environmental: Weather & climate change; waste management; attitudes towards sustainability
- Legal: Health & safety; intellectual property; data protection; the effect of new legislation
Step 2 – How could the issues affect your enterprise?
Ask whether the issue could be a risk or an opportunity? Sometimes it could be both, for example in the Chancellor’s recent budget it was announced that red diesel would no longer be legal for building projects. In the short term, this raises the possibility for increased theft because colourless diesel would be harder to trace. Over the longer term building companies might be able to negotiate lower cost contracts that cover both road vehicles and on-site plant, because volumes would be larger.
Once the possible effect is known, think about how large an affect that might be. Use RAG rating; colour coding red, amber or green; or a numbered scale, to prioritise the issue.
Step 3 – Are you well placed or vulnerable?
This is the point at which you take a frank look at the strengths and weaknesses of your enterprise against each issue that you’ve identified. You may be in a good position to take advantage of opportunities and to mitigate risks or, frustratingly unable to take advantage of opportunities and vulnerable to risks.
Step 4 – Come up with plans
TOWS analysis is a reworking of the crusty old favourite SWOT. A TOWS analysis draws on the significant issues identified by the PESTEL analysis (remember the RAG rating?) to help identify simple strategies that take advantage of opportunities and mitigate risks. TOWS is a mnemonic for external threats; external opportunities; internal strengths; and internal weaknesses – although I prefer “vulnerabilities”.
TOWS strategic alternatives worksheet
A Maxi-Maxi strategy is one that uses strengths to take advantage of opportunities, like an enterprise finding new channels of communication to promote their expertise.
A Maxi-Mini strategy is one that uses strengths to counter threats, for example by being able to rely on a close relationship with suppliers when difficult times are expected.
A Mini-Maxi strategy is one that uses external opportunities to render internal vulnerabilities become less important. This would include a start-up company using external experts to strengthen their management team.
Finally, a Mini-Mini strategy is simple risk mitigation that addresses internal vulnerabilities in the face of external threats, such as Professional indemnity insurance.
Contact Us if you want to discuss strategic planning or your requirement for ISO management systems. Happy planning!
