Strategic Audit and Analysis: the realistic approach for good times and for
The development of any
business or government organization relies on its ability to identify and solve issues and
problems the consumer is facing. The consumer and citizen simply wants their demand
satisfied. In turn they will support the business or political party that they perceive
provides the best solutions and offers the highest degree of social satisfaction.
Consequently, issues and problems are not only negative - they also create opportunities.
This paper addresses the importance of identifying the real
long and short term issues facing a company or government institution. It is obviously
impossible to formulate and implement long and short term solutions in an organization if
we lack accurate knowledge of the problems the company or organization is, or will face.
It is just as difficult if we are focusing on the wrong issues or on the symptoms
instead of the disease.
The problem is that the conditions that applied last year, or
to the eighties, may not be relevant for today or for the future. During the nineties we
are facing the end of the post war economy and marketplace. The stable, tariff-regulated,
resource, essential goods, and inflation driven conditions are giving way to a rapidly
changing knowledge and technology driven economy and marketplace. Subsequently, financial
statements tell much less of a companys future. When market, organizational, and
technological problems show up in the financial statement it is often too late. The rapid
changes make equity and assets less secure - empty buildings and obsolete equipment having
limited or no value.
Are the issues obvious?
Every era has its trendy solution to successfully develop a
business and how to become successful in all occasions. In the seventies it was
sensitivity training, in the eighties it was goal setting, and in the nineties it is
positive thinking and the belief that attitude solves everything.
This is not to discredit the value of these approaches. One
cannot dispute that positive thinking stimulates our overall well-being and performance or
that negative thinking can become self-fulfilling. A positive thinker certainly has a
greater possibility to reach obtainable goals such as: earning a degree, developing a
business, making a sale, or climbing a mountain. The problem develops when positive
thinking and other universal solutions become wishful thinking that ignores
our market, financial, organizational, and other realities.
Being positive will not help if the marketplace rejects our
product -- if there is no demand for our product or service - - or if our organization,
platform, or technology is obsolete or ahead of its time.
It is critical for banks, investors, employees, shareholders,
board, and management to be aware that a positive attitude and a happy countenance in an
organization may be only a facade which masks the realities. It may or may not be with
purpose. BreX is an extreme example where positive impressions deceived intelligence and
The problems in BCs fishery, mining, forest, and allied
industries are other examples where realities have been masked. The fundamental economic
and environmental problems, and the market and socio-psychological shift occurring in BC
have been well known since the seventies - yet have not been addressed. These are now
becoming acute during the nineties.
In our own organization: Is our past success masking market,
financial, and organizational issues that could become acute; eroding cash flow, balance
sheets, and share values? Do we identify the strategic issues before the problems show up
in the financial statement? Are smiling faces in our organization a superficial impression
that deceives market, financial, and organizational realities?
Have we identified the underlying cause? Do we know the root
cause of poor financial results? Is the answer in the market, human resources, control
systems, or the organization? Why do we over consume medical services? Is it because we
are old and lonely, because our health demands it, or does the system encourage it?
If there is no demand for our product and service in the
market; if our organization, platform, manufacturing or technology is obsolete or ahead of
its time; if our product is out-competed in price, quality, or service -- positive
thinking and attitude will not save the organization. If government strategy, policies,
and programs are not aligned with the reality in the market and community then joyous
acclamation of jobs and aluminum smelters will not help. Of course neither will
The critical factor, whether things are apparently going
well, or the financial statement already shows problems, is to know and recognize the
strategic issues the organization is facing and revise the business plan to adapt to
We want to encourage positive thinking and attitudes in
ourselves and in our organization. At the same time we want to prevent positive and
wishful thinking from deceiving reality and masking the real issues in the marketplace,
finances, organization, or technology. Once we have identified the real issues we can
direct positive thinking toward positive solutions.
What steps can we take to ensure that we are identifying and
recognizing the real issues and are formulating and implementing the best possible
The first step is to ensure that we have a strategic audit
and analysis system to positively identify the issues the company and organization is
facing across all disciplines. A strategic audit, analysis, and planning process across
the organization from the market to MIS, human resources, manufacturing, and technology
will ensure that the strategic issues and long and short term problems are identified;
preventing wishful thinking from deceiving reality.
All interest groups: the owners, shareholders, employees,
investors, directors, management, banks, suppliers, employees, and the community rely on
management knowing the strategic issues the company is facing, and secondly that they
apply realistic solutions.
In the same fashion, the community and taxpayers depend on
each level of government to have a similar process.
In order to detect, recognize, and adapt to the reality in
the economy and marketplace, business and governments will need to refine their strategic
analysis, planning, budgeting, and control systems. An unbiased Strategic Audit and
Analysis is the imperative reality check.
The second step is to recognize the behavioral factors
What makes management invest in promotion and advertising
which is out of touch with the companys profile in the marketplace? What
drives (or kills) the demand for a particular service? What makes people believe in
revenue and profit projections that are pure guesswork? What makes shareholders,
investors, and banks invest in and lend to companies which lack an audited strategic
analysis and planning process?
The answer is found in basic psychology. It is peoples
socio-psychological behavior that drives the economy and marketplace, causes social,
political, and environmental problems, and affects the choices and actions of employees
and management. Being aware of these factors can sometimes help us avoid a negative
outcome, and turn deceptive thinking into positive realistic thinking.
Human desire and ambition are endless, but the resources and
time available to us are limited. That means the self-interest of the present generation
may not always harmonize with the needs of future generations -- and the objectives of
management and politicians may not always coincide with the best interest of the long-term
survival of the company or community.
Ultimately, it is only by altering the economic and
organizational behavior that we can solve economic and business problems. That requires
adapting the organizational behavior to the changing conditions in the marketplace; making
the psychological factors driving consumers, employees, and other interest group behavior
increasingly more important for the management and development of any company and
For example, when people have insufficient knowledge of the
issues an organization faces, they are unable to align their own needs and objectives with
those of the organization. Subsequently, they cannot be expected to behave in a rational
way that will benefit the organization.
The only way that management and government can solve
labor relations and public relations problems is by providing open
genuine information and a dialogue with the personnel and people in the economic,
market, financial, and organizational issues. That of course presumes that the management
has a strategic audit and business planning process in place, which includes communication
with the business interest groups.
In this rapidly shifting economy and marketplace, the issues
an organization is facing across the disciplines from the market, to human resources,
production, and technology, are becoming increasingly mutually important for the
management, shareholders, banks, and other interest groups. As stakeholders we want to be
confident that the management knows the strategic issues the organization is facing and
that they are implementing viable solutions.
Identifying and adapting to changes in the economy and
marketplace is imperative for any organization. This is obviously only possible with an
understanding of the real issues in the marketplace and within the organization.
For example: why is the consumption of health care on the increase and the standard of
living on the decrease? Why is our organization failing to keep up with the changes?
There will always be some problem which is unexpected or
impossible to forecast. We cannot accurately forecast every pothole in the road but it
sure helps to know when the bridge is out.
Strategic audit and analysis and strategic business and
economic development are a positive and realistic problem-solving process -- satisfying
the present, without compromising sustainable long-term development. It is the foundation
for the development of any small or large organization and for all modern business
If you would like more information on strategic audit,
analysis, business planning, and control, or have an opinion, we would be pleased to hear
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