STEEP Analysis: Reducing strategic surprises and revealing opportunities

You must think broadly in a complex, rapidly changing world.

At the basis of our competitive analysis is the application of a tool called STEEP Analysis. Used by futurists, this mnemonic device reminds us to consider a wide variety of trends outside of our own industry, specifically:

• Social trends: aging populations, urbanization, mixed families, increased prevalence of diabetes, hypertension, and kidney failure
• Technology trends: increased distribution of GPS, IPv6 networking, decreasing price and increase application of robotics in the home, genomic medicine, electric automobiles, nanotechnology
• Economic trends: Real estate occupancy rates, unemployment rates, sovereign debt, household debt, corporate debt, government intervention in markets, corporate merger and acquisition activity, energy factors, raw material availability
• Ecological trends: Water availability, biodiversity, soil health, wetlands integrity, climate change
• Political trends: Legislation, regulation, political parties, authoritarianism versus liberal democracy

You may notice that only a few of these factors show up on the radar of many strategic planning tools. A "Balanced Scorecard" approach might deal with external market factors in a general sense, such as interest rates, unemployment (talent availability), M&A activity and energy costs as it attempts to evaluate "risk." The rest of the data collected focuses on internal factors, which is the focus ofthe vast majority of managerial activities. This is a reasonable approach in a time of relative growth and stability.

Clearly, we are no longer living in a time that warranty such assumptions about stability. As such, leaders need to redouble the resources they provide to the external factors explored in the STEEP methedology. We cannot stress enough - we know how much this flies in the face of modern management. Very few people are in the "nanotechnology" business, or the "aging populations" business. As such, there will little space in quantitative management for a proper understanding the of the risk - AND OPPORTUNITY - that such strategic shifts indeed promise. Leaders need to make space, incorporating such broad analysis into all of their other activities, such as marketing, supply chain management, sales, finance, and product development. In this day and age, strategic shifts are not optional and not frivolous wastes of intellectual time. Modern strategic management requires not only understanding STEEP trends, but more importantly, understanding their implications for the organization.

Competitive Futures specializes not only in a the collection and analysis of STEEP trends, but also in the distillation of implications so our clients can benefit from major change.