Chapter 2 – Clause 4, Context
Lesson 1: Clause 4.1 Understanding Context
Technology, regulations, and, hence, customer needs are changing faster than ever. We must monitor these trends, especially in areas where we have the knowledge and ability to meet new needs. We focus on the areas in which we can develop a competitive edge. This is why innovation has moved to the top of the agenda in any forward-thinking organization.
The context of an organization is the situation within which an organization exists. The situation within which we exist means finding the forces acting on us and what their effect is.
Clause 4.1 Understand Context
Clause 4.1 of the standard points us to regularly scanning the external environment and finding ‘issues’ affecting us, and hence finding opportunities. Innovation starts with the potential customer. The ideal tool for analyzing this scan is SWOT analysis.
Businesses have been doing ‘SWOT’ analysis for many years. It is originally attributed to Albert Humphrey at Stanford in a project which analyzed why corporate planning failed. The issues will be different for every organization. In SWOT we ask questions like:
Which new technologies will open new opportunities?
Which major social changes are likely?
Who are your future customers, and what will they want?
Who will you compete with in the future?
We then need to identify our internal strengths and competencies that would support a new offering. We also ask whether we need to acquire new competencies or technologies, perhaps by partnering with other businesses. We then ask whether the opportunities we have identified will fit with our overall business strategy and whether we need to change our strategy.
The SWOT analysis focus is on opportunity but does not ignore risk. Opportunity will be subject to a risk analysis, and I will address this later in Chapter 4. In that chapter, I will explain how to prioritize opportunities and identify the related risk.