2.4 Strategy as fit between organisation and environment
The market perspective on strategy suggests that a major focus of strategic decision-making is how best to ensure an effective fit between an organisation and its environment. However, that fit is not static. The challenge is constantly to monitor and forecast changes in the business environment and to adapt the organisation and its strategy accordingly.
Box 1 Managing strategic fit at the US Nature Conservancy
The US Nature Conservancy had a clear mission: to preserve plants and animals and special habitats that represent the diversity of life. Traditionally they had sought to achieve this mission through the purchase and management of critical habitats for endangered species. They measured their success by the land area they owned and protected and in terms of their membership figures.
However, during the 1990s they began to realise that this strategy was no longer adequate to achieve their mission. Increasing development pressures meant that often the threats to wildlife habitats were coming from outside those areas. For example intensive farming on the outskirts of protected areas was causing damage. They needed a new strategy to meet the new threats.
They shifted their efforts from the purchase and protection of land parcels to a strategy of influencing land use in much wider areas. They hoped to ensure that economic and recreational activities going on outside critical habitats don't undermine the ecological balance within them.
To support this new strategy they needed to develop new capabilities. They had always relied on a strong base of scientific expertise and skills in land acquisition and management. These continued to be important, but they also needed to develop two further capabilities. First, they needed skills in community development to build and develop support for conservation in local communities around critical habitats. Second, they needed business development and marketing skills. An important strand of the strategy was to promote the growth of businesses with low environmental impact in environmentally sensitive areas to reduce tension between conservation and local economic health and employment prospects.
In relation to a product or service offered by your organisation, make some notes on the nature of its near environment, using either Porter's or McKevitt's models (or a sensible adaptation).
What are the most important external forces faced by your organisation, that need to be taken account of in formulating strategy for this product or service?
One of the first things that may have struck you is that, in order to answer these questions in other than a very superficial way, you require a great deal of information. The activity may have left you with more questions than answers about your organisation's near environment. Often the information that we have – about competitors (current and potential), customers, suppliers and potential substitutes for our products or services – is heavily anecdotal. Although many organisations invest significant resources in scanning their environment and understanding the competitive forces they face, the information they gain is often partial and quickly outdated.
Gathering information is of course only the start. How is that information analysed and used? Is the organisation involved in double-loop learning, questioning its basic assumptions about its activities (like the US Nature Conservancy in the example above), or is information discounted if it does not fit basic assumptions?