Blog Submission #1: Analyzing the External Strategic Environment and Evaluating Industry Dynamics

Blog Submission #1: Analyzing the External Strategic Environment and Evaluating Industry Dynamics

A common factor in evaluating the external strategic environment today is technology.

“Technology allows businesses such as WhatsApp to start and gain scale with stunning speed while using little capital. Entrepreneurs and start-ups now frequently enjoy advantages over large, established businesses. The furious pace of technological adoption and innovation is shortening the life cycle of companies and forcing executives to make decisions and commit resources much more quickly” - https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-four-global-forces-breaking-all-the-trends.

The pace at which technology can change the horizon for a company, especially larger more rigid companies is scary. I wonder how possible it is to develop a strategy that adequately accounts for the uncertainty of technology. A recurring quote for me the past few week is “Everybody has a plan till they get punched in the mouth” – Mike Tyson. Technology delivers hard uppercuts; how could one plan for such an eccentric factor that could seemingly instantly change the future? I think what makes it even worse is how aware everyone is and you can see the evidence of organisations “arming up” their technology know how, creating a sense of an environment where everyone is armed and it becomes even more impossible to predict what happens next, who blows up or when the next unicorn will appear.

I agree with McKinsey when he states that technology has the ability to change our intuitions. A quick analysis of the cliché investing phrase “the trend is your friend” shows this. I am of the opinion that technology and the evidence of large-scale industry shifts in real time has made trends more suspicious. Take for example the bitcoin wave, while many may argue that they made great profits, sections of the population like myself found that the fever created through technology sent out clear red flags. I believe that not only does technology desensitise us to trends, it also makes them feel more like scams, this creates a sort of analysis paralysis where you experience the dread of FOMO concerning trends but also cannot decipher what is really worth the hype.

Part and parcel of the problems created by technology with regards to analysing the external strategic environment is globalisation. Technology has shrunk the world. In cases where your Environment was limited to your physical 20-mile radius, technology has created a scenario where your strategy has to encompass possible shifts spurred by movements as far off as South East Asia. It makes understanding your opponents and crafting a unique advantageous position extremely difficult and in depth. However, this globalisation problem is also the positive that technology brings to the table. It bridges the gap affording greater specialisation, as niches that couldn’t be well supported by close range barter now have the world at large as their market. I believe this is why strategy is probably most important now more than ever, the choice of where, when and how to specialise has never been more crucial to surviving in the greater strategic environment.