Image Source: RENE RAUSCHENBERGER | Pixabay
Over the past few years, companies faced volatile business environments all while keeping up with sustainability requirements, workforce and customer behavioral changes, and market trends. Because of the turbulence of the business environment, the role of strategic planning becomes even more essential to the survival and growth of any business.
As John Child defines it, business volatility is “the degree of change which characterizes environmental activities relevant to an organization’s operations.” According to the 2023 Global Trends Brief, these are some of the components that caused disruptions and unpredictability in the business environment:
The traditional strategic planning process, according to Jean Dieudonne, strategic planning lead at ANZ, includes a three-to-five-year plan with actionable steps to achieve long-term goals. However, businesses must rethink this to adapt and deal with turbulent times.
One of the leading providers of energy solutions worldwide, bp is currently investing in low-carbon solutions. The 2023 edition of the bp Energy Outlook, as outlined in this year’s annual report, has identified two turbulent factors: the Russia-Ukraine war and the US Inflation Reduction Act. Given the unpredictable nature and potential enduring impact of these events on the trajectory of the national and global energy systems, the organization’s strategic planning process becomes even more essential.
Accordingly, bp proactively monitors the external environment and regularly updates its strategic plans in response to these external signals. They employ scenarios from the World Business Council for Sustainable Development’s “Climate Analysis Reference Approach for Companies in the Energy System” to assess and validate their strategy. This proactive approach enables them to seize opportunities and navigate challenges in turbulent times. The leadership team and board review the strategy, capital allocation, risks, and opportunities, making regular updates as needed. Also, to successfully go through the fast-changing business landscape, they monitor key indicators and metrics, including policy developments, renewables capacity, electric vehicle sales, and low carbon technology costs.
Another company that had to deal with turbulence in the business environment is Saudi Aramco Power Company, which has incorporated risk assessment into its strategic planning process. Projects go one by one through a structured decision process that includes rigorous risk assessments and value assurance evaluations, and each strategic scenario is stress-tested to ensure positive results in any business environment.
Strategic planning will always stay relevant, and the selection process for strategists should be of critical importance. Also, choosing the right resources to strategize and execute plans with is like choosing friends to accompany one in a dynamic environment—an escape room, for instance. Choose those that can be effectively utilized or leveraged for a specific purpose.
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Survival in today’s constantly shifting business world depends on a company’s ability to anticipate and adapt to external factors. One way to do so is by using the PESTEL analysis—a framework used to identify and monitor the macro-environmental factors impacting an organization. By analyzing these factors, companies can gain insights into existing opportunities and threats and use these insights to formulate their strategy to better align with the external environment.
Figure 1. PESTEL analysis framework | Adapted from slideteam.net
Recent global events have significantly impacted companies worldwide. Russia’s invasion of Ukraine led to worldwide food shortages, supply chain disruptions, and an energy crisis in Europe. The ongoing disruption in the supply chain coupled with geopolitical tensions have led to concerns about an upcoming recession, as evidenced by slow growth in the global GDP.
Persistent high energy prices have also contributed to inflation, which has resulted in central banks raising interest rates and causing currency devaluation worldwide.
The prolonged COVID-19 lockdown in China also caused a severe strain on the global economy due to China’s prevalence as a global supplier. Moreover, tensions between the US and China continue to add uncertainty.
Another external factor is climate change, which is posing new threats to businesses. Thus, regulations for climate protection are becoming increasingly stringent.
Meanwhile, technology is becoming increasingly integrated into a wider number of industries, leading to increased digital transformation around the world.
In the face of these fast-paced and unpredictable external conditions, the PESTEL analysis is now more valuable than ever for businesses to navigate the challenges that arise.
The PESTEL analysis is a simple framework that encourages businesses to consider the external environment in which they operate, prompting them to consider external factors that affect their operations and evaluate their potential impact. Furthermore, it provides valuable insights for decision-making, empowering organizations to make informed choices and adjust their strategies to better match the broader external landscape.
To sum it up, the PESTEL analysis enables businesses to foresee potential threats and proactively mitigate their impact while spotting emerging opportunities and capitalizing on them.
Mapping the food industry’s PESTEL landscape
The food industry is a complex network of businesses engaged in the production, processing, packaging, distribution, marketing, and selling of food and beverages.
Given their crucial role in feeding the world’s population, food businesses must ensure they are prepared to handle any external factors that may impact their operations. To illustrate briefly, a PESTEL analysis for the food industry may cover several factors (See Figure 2).
Figure 2. PESTEL analysis of the food industry | Adapted from slideteam.net
The aforementioned recent global events have led to reduced purchasing power and food price inflation. Sociocultural changes and a growing focus on wellness are also expected to shape the industry’s future. Moreover, technological advancements and environmental efforts are significant factors that will influence its outlook. Hence, conducting regular PESTEL analysis is vital for companies in the food industry to be future-ready.
Ultimately, the PESTEL analysis is an indispensable tool for businesses, regardless of industry. Current global developments have demonstrated the importance of monitoring macro-environmental factors. Companies that prioritize PESTEL analysis are more likely to thrive in the face of external challenges and emerging trends, and it is high time that all businesses recognize its value and incorporate it into their strategy formulation.
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Like a captain steering a ship through a stormy sea, leadership plays a crucial role in shaping the organizational climate, which in turn affects the individual’s level of commitment to the organization, job satisfaction, and productivity (Oktem, 2022). Creating a positive organizational climate requires management to focus on promoting autonomy, freedom, and support. Organizations can use internal environment scanning methods such as employee surveys, focus groups, and organizational culture analysis to gain insights into how leadership affects the work environment—knowledge that can then be used to create a positive climate to enhance employee knowledge, behavior, and effectiveness.
Critical factors such as interaction with team members, behavioral patterns, and the quality of the leader’s information—which covers updates, decisions, and strategic plans that they need to communicate to their team—all shape the organizational climate. Leadership behavior can significantly influence employee attitude and behavior. Studies have shown that managers who acknowledge their team members’ accomplishments can improve the perception of the organizational climate and leadership quality.
Conducting an internal environment scan can help assess the current state of the organizational climate and identify opportunities for improvement. The organizational culture analysis, a method of internal environment scanning, involves reviewing the values, beliefs, and behaviors of employees and aims to gain insights into how leadership is perceived and how it is influencing the culture of the organization.
One company that values its organizational culture and recognizes the significant role of leadership in shaping the work environment is Netflix. The company empowers employee decision-making by widely sharing internal documents, such as memos on title performance, strategy decisions, and product features.
Additionally, Netflix prioritizes open and direct communication by investing in coaching and modeling behaviors. To promote good decision-making, the company emphasizes the need for highly effective people and fewer management layers. The company encourages a “context not control” culture where leaders are expected to coach, set context, and provide feedback instead of micromanaging while employees make their own decisions. To foster this culture, Netflix values certain behaviors and skills in its employees, such as good judgment, selflessness, courage, communication, inclusion, integrity, passion, innovation, and curiosity.
The company employs a feedback system that includes surveys and focus groups to continuously improve its operations. A recent initiative to promote work-life balance involved the implementation of an unlimited vacation policy, which was contingent on fulfilling job responsibilities and goals. To set a precedent, leaders take vacations themselves and urge their teams to do likewise.
As we can clearly see from Netflix’s example, leadership has a significant impact on the organizational climate. This highlights the importance of internal environment scanning to identify opportunities for improvement.
Improve your organizational climate by enrolling in our Certified Strategy and Business Planning course. Gain valuable insights into the process of internal environment scanning and learn how to identify areas for improvement within your organization.
Egypt 2030 Vision | Source: Telecom Review Africa
In 2016, President Abdel Fattah El Sisi exhibited tremendous support for Sustainable Development Strategy: Egypt Vision 2030. Since then, Egypt has undergone a major digital transition to modernize its economy, improve public services, and boost digital literacy. To attain such goals, the country has invested heavily in education, research, and technical infrastructure. This article will analyze Egypt’s recent technological developments across three main pillars.
- Infrastructure development
The Egyptian government has invested considerably in the development of its digital infrastructure to provide reliable and high-speed internet connectivity across the country, such as expanding its fiber optic network to connect more households and businesses to the internet. As of 2020, more than 70% of the country’s population had access to the internet. Egypt has allocated more than $1.1 billion for the development of 5G technology and infrastructure. Adopting new technologies, such as 5G, will provide faster internet speed and improve connectivity across the country.
According to the ICT 2030 strategy, Egypt has made significant progress in digitizing its government services, which has made it easier for citizens to access essential services online. In 2020, the Egyptian E-Government Services Portal was launched, providing a one-stop-shop for government services such as applying for passports and IDs. The portal offers more than 100 services, and as of 2021, more than 6 million citizens have registered for the service.
- Financial inclusion & e-commerce
Meeza card, a national electronic payment card launched in 2019, allows citizens to receive their salaries, pensions, and other government payments electronically.
Egypt’s digital transformation has paved the way for private companies to launch several mobile payment applications, such as Fawry, Instapay, and Vodafone Cash, allowing citizens to pay bills, transfer money, and make purchases using their mobile phones.
The following explains why Egypt’s case should serve as a model based on two main motives:
The digital sector has been one of the fastest-growing sectors in Egypt, contributing significantly to the country’s GDP. According to a report by the governmental statistics, the ICT sector contributed 5% to Egypt’s GDP in 2021, and digital exports reached $4.9 billion by 2022.
The digitization of financial services has increased financial inclusion among Egyptians. According to a report by the MCIT, 56% of Egyptian adults have a bank account. Moreover, the money wallet accounts are expected to reach 57.9 million in 2025, which is higher than the average for countries in the Middle East and North Africa. In conclusion, Egypt’s digital transformation has advanced due to government investments in infrastructure, education, and innovation.
Digitizing government services, increasing digital literacy, and the government is pursuing digital transformation to meet its long-term aims. Last but not least, a valuable resource for those seeking to enhance their knowledge and skills in strategy planning is The KPI Institute’s Certified Strategy and Business Planning Professional course. It is recommended to sign up for this course to learn more about strategy planning.
Adel Ali Mreer, a strategy expert with more than 15 years of experience in various industries, believes that organizations should invest in people, technology, and time to drive performance and a data-driven culture with clear, consequence management.
What are the key trends that have shaped the public sector in recent years?
Many new trends have shaped the public sector in recent years, such as macroeconomic and Microeconomic, Social and Environment, Technology, business, and industry restructuring.
- Sustainability: It has become a global imperative with the introduction of the United Nation’s 17 Sustainable Development Goals (SDGs) or the (ESG) Environmental, Social and Governance Index (ESG).
- Branding and Non-tangible Assets: Moving to increase the non-tangible assets, such as the city or country branding. Deploying a lot of effort and resources to improve the quality of life, the citizen happiness, and visitors’ satisfaction. It is becoming a critical element in attracting foreign visitors and investment.
- Funding structure: Funding new initiatives efficiently made the public sector move toward Public Private Partnership (PPP) and more collaboration with non-profit organizations. In addition, privatization in some cases and creating state-owned companies and later listing them in the stock- market with IPO.
- The Efficiency of Government Expenditure: The need to enhance government expenditure, such as the Average cost per Bed in Healthcare, Average Cost per Student in Education, etc.
What do the public services of the future look like?
The following three approaches will shape the future of public services:
For example, beneficiaries in G2C will be looking for a One Stop Shop where they finish all the public services during their life journey from birth to death in one virtual place. These public services will be provided in the One Gov portal or by downloading only one App. There is no need to juggle different portals and apps; each has a different user experience and credentials.
- Whole of Government Approach (WoG-A): Ministries and government agencies work together and align all related activities to provide reliable and efficient public services
- One-Stop-shop Approach: Beneficiaries will compare the public services ( G2B or G2C) to the services they receive from the private sector (B2B or B2C)
- Customer Centric Organization: Public agencies will be more customer-centric organizations in the future. Cx will play a significant role since the public agencies are sole-source provider of a service. Beneficiaries from public services in most cases do not have the luxury and the freedom to churn or go to a different service provider.
What role will strategy planning and KPI usage play in this futuristic scenario?
They play a vital role in the futuristic scenario. Having clear strategic objectives and KPIs shows all the stakeholders where the future direction and North Star is.
More importantly, they show how to reach that future state and what success looks like.
How is technology impacting the performance of government entities?
Technology and systems are important to enhance the performance of government entities. Government entities must be equipped with data-driven decisions, insights, analytical tools, and techniques. On the other hand, let us not forget that one of the main mandates for government entities is to regulate their related industry. Fulfilling this mandate is becoming more challenging with the rapid change in technology and emerging technologies. They changed the traditional boundaries of the business industry. The unpredictable business models that rely on emerging technologies in Fintech, AI, cryptocurrency, drone, data, and others keep evolving quickly and shifting from one regulatory category to another.
What are your recommended best practices in strategy planning for government agencies?
I would say the strategic planning principle is the same regardless of the industry or organization. Therefore, the recommended best practices during strategy planning are the following:
- Conduct the internal and external environment screening very well
- Consider national and international benchmark
- Review success and failure stories and lessons learned
- Consider historical data and future trends
- Define clear long-term strategic objectives with a clear way to measure them
- Communicate the strategy in a three-minute video or one-page infographic for stakeholders. Otherwise, your strategy is so complex, and it will create confusion more than shaping the direction.
What key performance indicators should be reported for the successful delivery of public services?
I would not jump to a conclusion quickly and just select a KPI. I would first identify what the strategic objective is. Then, I would have a 360 assessment of the full experience from Initiation until Delivery to Delivery Services. In addition, I would study different aspects and parameters, such as average service delivery time, customer satisfaction, number of complaints, average resolution time (ART), etc. Finally, I would select the KPI that will move the needle to achieve the strategic objective or develop an index that captures the full customer experience Cx.
What are the key performance management tools that any government entity should use to ensure performance improvement?
Any tool that would capture the real performance with less lagging time and has reliable data and business insights. I would go even with a simple Excel sheet and PowerPoint slides if the integrity is higher and provides the outliers with insights.
What are the biggest challenges that government entities face during the implementation and usage of a performance management system? Please provide your suggested solutions.
- The integration of the performance system and other management systems
- Lagging time to provide accurate, reliable data
- Lacking business insights and scenario analysis
What are the crucial success factors in building performance and data-driven culture in the public sector?
The management should invest in people, technology, and time to drive performance and a data-driven culture with clear, consequence management.
Which government entities would you recommend to be observed due to their successful approach to strategy and performance management? Why?
I would recommend observing the Saudi Vision Realization Programs (VRPs). I choose them for the following reasons:
- Having a clear strategic direction and a way forward to measure the execution
- Adopting the Whole of Government Approach (WoG-A), where multiple government entities work together to overcome a national challenge, such as housing, quality of life, and health
- Included in the strategic plan are players, such as the private sector, non-profit organizations, society
- Measure the output clearly and measure the impact from different perspectives: contribution to the GDP, job creation, and local content.
What are the key competencies of a successful business leader in a government entity?
The key competencies of a successful business leader are strategic thinking, communication, being motivational, resilience, partnering, and relationship building.
What are the processes and tools you look at when differentiating a successful Performance management system from a superficial one?
First, I would look at having a clear translated strategy in a measurable term. Then, I would check their ability to conduct continuous monitoring and learning. Third, being resilient and agile through periodical tests and adapting methodology. This is done by testing the strategy’s robustness and using decision analytical tools. Finally, the overall organization’s fitness and capability.
About the Expert
- Over 15 years of experience in Strategy Formulation & Execution, Corporate Development, Transformation, Organization Excellence, GRC, Process Mapping & Re-Engineering, Quality Management & Performance, Organization Management, Marketing research and marketing Strategy. Multi industry experience in Banking, petrochemical, semi- government and government, ICT and Telecom
- Executive Leadership Program (LEAD), Stanford University. 2021 – 2022.
- Executive Leadership Program, Ross School of Business, Michigan University. 2019 – 2022.
- Master, Business Information Technology (BIT), DePaul University, Chicago USA 2009
- Bachelor in Accounting, KAU, Jeddah, KSA 2004.
This interview was first published in the 24th printed edition of PERFORMANCE Magazine. You can get a free digital copy from the TKI Marketplace here or purchase a print copy from Amazon for a nominal fee here.