One thing is certain: change. The forces of change are so dynamic in our lives that if we aren’t continuously thinking about them, they could put us, and our organizations, at risk.
We’ve come to call the “uncontrollable forces” of change “the external environment.” If you’re not aware of, planning for, and ready for your external environment as a leader, you may get caught flat footed. It could be the difference between success and failure.
So, be ready as a leader by using the below worksheet and process to prepare and plan for a volatile and dynamic external environment. This occasional best practice may just prepare you for some of your defining moments as a leader.
What is The External Environment
The phrase “external environment” refers to forces of change that are largely outside of your control but that have a big impact on you, either individually or organizationally. This may be natural disasters, economic changes, death of loved ones or business partners, illness, accidents, war, government regulations, technology changes (think AI), family challenges, financial setbacks, competition, changing markets, or bad weather.
Very simply put, if you’re not aware of your external environment, you’re standing on railroad tracks blind to the train around the corner.
How to Be Prepared and Ready
So, here’s how to be aware and ready — and don’t underestimate the practicality of this best practice by its simplicity: leaders simplify, and there’s genius in simplicity. Here are the three steps to understand and plan for your external environment:
- Use a blank paper or print this worksheet. Write out the threats and opportunities in your external environment. This can be an individual or team exercise.
- Circle the three (3) highest risk or most probable events.
- For each one of these events, think ahead, prepare, and plan. Brainstorm, articulate, and write out how you will prepare, pivot, or adapt if that train comes around the corner. This is a great place to use the “six-step process” for planning and getting a plan in-hand of who would do what.
And then, have a regularly scheduled time where you, either individually or with your key decision makers, will repeat this practice. Many of the companies we work with now do this regularly as part of their executive quarterly meetings — and those executives are prepared for the uncontrollable and unknowable! They are agile and adaptable.
Not-So-Hypothetical Case Study
Let’s imagine you are in the electric car industry. You perform this exercise and identify “Supply chain disruptions in Chinese chips” as one of your bigger risks. Consequently, you ask your supply chain / operations team to develop some new supplier relationships, invest in chip design and manufacturing, and source capacity with alternative suppliers. If in 18 months supply chains are disrupted, your competitors may be caught flat footed whereas you’ll be ready to pivot and maintain production. This would be both an opportunity and huge competitive advantage.
This happened to play out in the electric car industry a few years back. EVs use more chips than traditional gas-powered cars due to the need to control the electric motor, battery, and other components. The global auto industry produced 8.2 million fewer vehicles in 2021 because of the chip shortage. And, EVs were disproportionately affected, with production falling by 24%, and EV car prices rising 20%. Tesla, however, was ready and quickly pivoted. They redesigned software for fewer chips, and they had alternative chip suppliers in their queue. Where others got caught flat footed, this chip shortage became a pivotal advantage for Tesla.
So, regularly assess your external environment. You’ll be adaptable and agile as a leader and organization. You’ll learn and apply new knowledge (you may recall this is one of the five key ways for leaders to gain and apply new knowledge). And, if nothing else, the practice equips you and your people with the mindset and skillset to quickly adapt to change — the one constant you can count on.
“Some people don’t like change, but you need to embrace change if the alternative is disaster.” – Elon Musk
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