Strategic early warning system

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The aim of a Strategic Early Warning System (SEWS) is to assist organizations in dealing with discontinuities or strategic surprises. By detecting weak signals (Igor Ansoff, 1975), which can be perceived as important discontinuities in an organizational environment, SEWS allows organizations to react strategically ahead of time.

Igor Ansoff American mathematician

Harry Igor Ansoff was a Russian American applied mathematician and business manager. He is known as the father of strategic management.

Strategy is a high level plan to achieve one or more goals under conditions of uncertainty. In the sense of the "art of the general", which included several subsets of skills including "tactics", siegecraft, logistics etc., the term came into use in the 6th century C.E. in East Roman terminology, and was translated into Western vernacular languages only in the 18th century. From then until the 20th century, the word "strategy" came to denote "a comprehensive way to try to pursue political ends, including the threat or actual use of force, in a dialectic of wills" in a military conflict, in which both adversaries interact.

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Underlying theory

The underlying assumption of SEWS is that discontinuities do not emerge without warning. These warning signs are described as "weak signals" (Ansoff, 1975), a concept aimed at early detection of those signals which could lead to strategic surprises -- events which have the potential to jeopardise an organization’s strategy. Furthermore, the concept of a SEWS is intended to constitute an important part of a strategic management system, operating real-time in an organization, and assisting in identifying the new, which emerge as those "weak signals".

In the field of management, strategic management involves the formulation and implementation of the major goals and initiatives taken by an organization's top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization operates.

Detecting weak signals is achieved by scanning the organizational environment. The concept of environmental scanning (Aguilar,1967) describes a process whereby the environment in which an organization operates is systematically scanned for relevant information. The purpose is to identify early signals of possible environmental change and to detect environmental change already underway.

The need for a formal strategic early warning process in organizations is based in large part on the existence of blindspots, which prevents leaders and executives from identifying weak signals of change (Gilad, 1998). Any formal SEWS process must incorporate blindspots analysis as part of its cycle.

Blindspots analysis is a method aimed at uncovering obsolete, incomplete, or incorrect assumptions in a decision maker’s mental scheme of the environment. Michael Porter used the term "blind spots" to refer to conventional wisdom which no longer holds true, but which still guides business strategy. The concept was further popularized by Barbara Tuchman, in her book The March of Folly (1984), to describe political decisions and strategies which were clearly wrong in their assumptions, and by other authors since, such as social psychologists Mahzarin Banaji and Anthony Greenwald in their study of prejudice.

The system must be able to detect symptoms and weak signals outside and in the company and sent to a competent employee who will carry out an analysis of the cause of this state and confirm or deny negative development that might lead to a crisis situation (Zuzak, 2001).

Phases

The ideal SEWS process has three phases.

The scanning activity is complemented by monitoring trends and issues that have already drawn attention.

Diagnosis is the identification of the nature and cause of a certain phenomenon. Diagnosis is used in many different disciplines with variations in the use of logic, analytics, and experience to determine "cause and effect". In systems engineering and computer science, it is typically used to determine the causes of symptoms, mitigations, and solutions.

Stakeholder theory

The stakeholder theory is a theory of organizational management and business ethics that addresses morals and values in managing an organization, such as those related to corporate social responsibility, market economy, and social contract theory.

Cluster analysis Task of grouping a set of objects so that objects in the same group (or cluster) are more similar to each other than to those in other clusters

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SWOT analysis Business model analysis

SWOT analysis is a strategic planning technique used to help a person or organization identify strengths, weaknesses, opportunities, and threats related to business competition or project planning. It is intended to specify the objectives of the business venture or project and identify the internal and external factors that are favorable and unfavorable to achieving those objectives. Users of a SWOT analysis often ask and answer questions to generate meaningful information for each category to make the tool useful and identify their competitive advantage. SWOT has been described as the tried-and-true tool of strategic analysis.

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Competitive intelligence (CI) is the action of defining, gathering, analyzing, and distributing intelligence about products, customers, competitors, and any aspect of the environment needed to support executives and managers in strategic decision making for an organization.

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Critical infrastructure protection

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In futurology, future research, horizon scanning, and foresight, wild cards are low-probability, high-impact events. This concept may be introduced into anticipatory decision-making activity in order to increase the ability of organizations and governments to adapt to surprises arising in turbulent (business) environments. Such sudden and unique incidents might constitute turning points in the evolution of a certain trend or system. Wild cards may or may not be announced by weak signals, which are incomplete and fragmented data from which foresight information might be inferred.

Context analysis is a method to analyze the environment in which a business operates. Environmental scanning mainly focuses on the macro environment of a business. But context analysis considers the entire environment of a business, its internal and external environment. This is an important aspect of business planning. One kind of context analysis, called SWOT analysis, allows the business to gain an insight into their strengths and weaknesses and also the opportunities and threats posed by the market within which they operate. The main goal of a context analysis, SWOT or otherwise, is to analyze the environment in order to develop a strategic plan of action for the business.

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A key risk indicator (KRI) is a measure used in management to indicate how risky an activity is. Key risk indicators are metrics used by organizations to provide an early signal of increasing risk exposures in various areas of the enterprise. It differs from a key performance indicator (KPI) in that the latter is meant as a measure of how well something is being done while the former is an indicator of the possibility of future adverse impact. KRI give an early warning to identify potential event that may harm continuity of the activity/project.

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References

See also

Society of Competitive Intelligence Professionals