Scanning is activity that explores the organizational environment for weak signals of future developments.
It has the objective to detect trends, issues, events, advancements and ideas at an early stage before they affect the sector/industry in which an organization operates.
Graphic 1: Elements of the organizational environment
Monitoring is a systematic and on-going information gathering activity.
It has the objective to get a clearer picture of what the detected trends, issues, events, advancements and ideas could mean for their sector/industry and the organization itself.
Importance of scanning and monitoring the external environment
A. NGOs have to plan and decide under uncertainty
You base your plans and decisions on the information available at a specific point in time. Sometimes you have all relevant information; you know the exact outcome of a decision beforehand. You are certain.
But often you only have some information and sometimes no information at all. The more information you need about developments and events that lie far ahead and the more complex an issue is, the more likely it becomes that you will have incomplete knowledge.
Plans in this case become less reliable or even lose their value completely. Decisions will not achieve the wanted positive outcome. They might even make a problem worse, endangering the well-being of people or the survival of an organization.
B. Many NGOs face uncertainties about their external environment
The external environment of nonprofit organizations is uncertain because they
1. Do not know what will happen. This could be due to lack of information or lack of knowledge about obtainable information.
2. Are not able to predict the consequences and magnitude of what might happen.
3. Are not able to establish credible probabilities of possible outcomes.
The degree of not knowing and of not being able to predict consequences can vary.
- Have very high, high, medium, low or very low confidence in a piece of information.
- Consider the likelihood of a specific outcome as very likely, likely, unlikely or very unlikely.
C. NGOs can reduce uncertainty through scanning and monitoring
The information gathered through scanning and monitoring will indicate how the future might be different from today.
It will help management to understand better
- What might happen
- Whether it might be a gradual or a rapid change.
- Whether external developments might be relevant for the organization.
- What impact relevant developments might have
Understanding better future developments and their implications will put an organization in the position to
- Decide on which issues they should focus
- Develop strategies for these issues
- Implement adaptive actions.
As a consequence of scanning and monitoring, the organization is less likely to:
- Miss opportunities that the environment will offer in the future.
- Be unprepared for future shocks and negative changes.
D. Advantages of frequent or continuous scanning
Organizations should ideally scan their external environment frequently or continuously. The activity increases the quality and credibility of their
- Strategic planning.
- Business planning.
- Program planning.
- Project Planning.
It also increases the probability that the organization identifies potential threats and opportunities at an early stage or at least before it is too late to respond adequately.
E. When to start monitoring
Organizations that detect trends, issues, events, advancements and ideas that could be relevant have to decide
- The importance of what they have detected.
- Whether they should find out more about what has been detected now or later.
One way of deciding when to start monitoring would be to determine a threshold. Once this threshold has been passed the organization will start to collect systematically information.
Examples: Thresholds for starting monitoring
- A world-class organization operating in the same industry shows an interest in a specific issue regarding the Macro-Environment.
- A highly regarded technology website shows an interest in an innovative technology
Examples of uncertainties in the external environment of NGOs
It is uncertain
- Whether a natural catastrophe will occur again in the next few years, of what type it will be and what will be the consequences.
- When the next recession will start and what it will mean for its income.
- Whether the government will introduce new laws that increase the operating costs or limit the access to some raw materials or other inputs needs.
- Whether new technologies will make the products or services obsolete that it offers to beneficiaries or paying customers at the moment.
- What the development priorities of grant makers will be in 5 years time.
- Whether the organization will be able to develop successfully a new product or service.
- Whether other organizations will offer similar or identical products or services in the future and how much they will charge.
- Whether recently developed training courses for unemployed women in rural areas will lead to a notable reduction of unemployment.
- What impact the introduction of subsidies for a specific sector will have on market opportunities of their own product(s) and service(s).
- Whether most members of a community will actively support a new development program or only a few families.
Methods to scan the external environment
There a various methods that an organization could use. Some do not involve much effort and financial resources.
Others require more resources and you might have to make use of external experts.
- Automated or semi-automated scanning on the internet.
- Holding staff meetings which allow individual staff members to discuss trends, issues, events, advancements or ideas that have recently detected or that are on their mind.
- Analyzing scenarios.
- Conducting surveys (e.g. stakeholders, experts).
- Using scouting networks.
- Searching through websites of organizations that focus on detecting long-term trends and emerging issues.
- Reading publications of futurists or specialists in a specific field about trends and emerging issues.
- Searching through websites of leading organizations in an industry, sector or field of research.
- Searching through annual reports of companies, NGOs and other organizations.
- Studying research reports about a specific sector, industry or issue.
Sources / Guide to further reading (available online)
The free dictionary, Scanning, at: http://www.thefreedictionary.com/scanning
Business dictionary, Environmental scanning, at: http://www.businessdictionary.com/definition/environmental-scanning.html#ixzz1qfnY1pOb
L.Morrison, I.Wilson, Analyzing Environments and Developing Scenarios in Uncertain Times, at: http://horizon.unc.edu/courses/papers/JBChapter.html
M.Sorgenfrei, R.Wrigley, Building Analytical and Adaptive Capacities for Organisational Effectiveness, at: http://www.dochas.ie/pages/resources/documents/adaptive_capacity.pdf
Chun Wei Choo, Environmental scanning as information seeking and organizational learning, at: http://informationr.net/ir/7-1/paper112.html
The Futures Academy, Futures Methods& Techniques, at: http://www.thefuturesacademy.ie/futures/methods#sec1
M.Jackson, Practical Foresight Guide – Scanning, at: http://www.shapingtomorrow.com/media-centre/pf-ch04.pdf