Task A5.1: Look for Relevant External Factors and Trends

What is Task A5.1?

Task A5.1 is part of the "Observe" phase in the Viability Canvas methodology, specifically within the "System Four - Outside and Then" step (Step A5). This task instructs you to "Review critically how the elements of the environment can change or influence the organization's future."

Purpose of Identifying External Factors and Trends

The purpose of this task is to systematically analyze the external environment and identify factors that could impact the organization's future viability. This serves several important functions:

1. Future preparedness: Identifying emerging trends that could present opportunities or threats
2. Strategic foresight: Understanding how the external landscape is evolving
3. Adaptation planning: Recognizing changes that might require organizational response
4. Risk management: Spotting potential disruptions before they affect operations
5. Opportunity identification: Discovering new possibilities for growth or innovation

By identifying relevant external factors and trends, you create awareness of the evolving context in which your organization operates, enabling more informed strategic decisions.

Understanding System 4's Environmental Focus

In the VSM framework, System 4 represents the part of the organization concerned with "Outside and Then" - looking outward to the environment and forward into the future. System 4 adds a separate environment bubble in the VSM diagram for the domain of "possible futures" or scenarios.

This function is critical because a viable organization must be able to adapt to changes in its environment. Without effective environmental scanning, an organization risks becoming irrelevant as its context evolves.

How to Complete Task A5.1

To identify relevant external factors and trends:

1. Scan the broader environment across multiple dimensions:
   • Market trends and customer behaviors
   • Competitive landscape changes
   • Technological developments
   • Regulatory and policy shifts
   • Economic conditions and forecasts
   • Social and demographic changes
   • Environmental and sustainability factors
2. Identify specific factors that could impact your organization:
   • What changes are currently occurring in your environment?
   • What trends are emerging that could become significant?
   • What uncertainties exist that could develop in different ways?
   • What disruptions might fundamentally alter your operating context?
3. Assess potential impacts of these factors:
   • How might each factor affect your organization's operations?
   • What opportunities might arise from these changes?
   • What threats might these changes pose?
   • Which factors might have the most significant impact?
4. Document your findings clearly, noting:
   • The specific environmental factor or trend
   • Its potential direction of development
   • Timeframe (short, medium, or long term)
   • Potential impact on the organization
   • Degree of certainty/uncertainty

Example Application

For a manufacturing company like Canned Tornado:

• Market factors: Increasing customer demand for customized products and shorter delivery times
• Technological trends: Emergence of advanced manufacturing technologies like IoT and predictive maintenance
• Competitive landscape: New market entrants using digital-first business models
• Regulatory changes: Stricter environmental regulations affecting production processes
• Supply chain developments: Growing volatility in global supply chains
• Workforce trends: Changing skill requirements and labor market conditions

By identifying these factors, the company can better understand how its environment is evolving and what implications this might have for its future viability.

Strategic Considerations

When identifying external factors and trends:

1. Adopt multiple time horizons: Consider short, medium, and long-term developments
2. Challenge assumptions: Question established beliefs about your environment
3. Look for weak signals: Pay attention to early indicators of potential significant changes
4. Consider second-order effects: Think about how trends might interact with each other
5. Engage diverse perspectives: Include viewpoints from different parts of the organization
6. Use structured approaches: Employ methods like PESTEL analysis or scenario planning

The insights gained from this task provide critical input for understanding whether your organization's System 4 is adequately equipped to monitor the environment and prepare for future developments.