Author's Name: Mark Schultz
Date: Thu 22 Oct 2015

Good governance – plan from the outside in, not the inside out

As the board is responsible for the direction and sustainability of their organisation, how the strategic planning process is approached will have a major impact on the effectiveness of this activity – utilising a framework that looks at the external environment will assist board members in their deliberations and decision-making. 

Change generally happens incrementally and major change initiated by Governments is usually flagged well in advance. However, if we are not consciously looking at our external environment, then what should have been something we recognised and planned for can easily become something we have to react to, which may or may not generate the best result for the organisation. A framework that assists in “outside in planning process” is the PESTLE analysis, the components of which are:

(P) Political: what is happening in the political world that is or could impact on our business activities? Any risks to our business model from potential interventions?

(E) Economic: how is the general economy running/trending, will this have any impact on our business, clients, suppliers?

(S) Social: is our society changing in any way that we should be aware of – cultural, stakeholders, demographics, population transfer?

(T) Technology: no question here, technology impacts on almost every aspect of our business and personal lives, so how are we managing this?

(L) Legal:
 we are becoming a more litigious society, is our business operating in a sector that is more exposed to activity and how should we be managing this at both a board and operational level?

(E) Environmental:
  How does our business consider the environment in our planning process, operational activities and reporting systems?

These are only a few questions the board should ask itself when it takes deliberate time to plan from the outside in, not the inside out. And if the board is not doing this, then who is?

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