From its start-up phase, leaders of an organization make choices concerning where they want to locate themselves, what they want to do, and which resources they want to buy, access, or otherwise develop and deploy. These historical decisions set the stage for future actions and outcomes, and which human, technological, and capital resources they subsequently seek from the environment. The history of an organization provides insights into how it evolved its mission, culture, strategy, and approach to how it organizes and manages itself. 3M’s early experience, for example, as a near bankrupt mining company set the stage for a sustained culture that highly values flexibility and innovation as keys to its resilience and success.
In addition to history and resources, external environmental factors play a huge role in influencing what organizations choose to do. These include political, economic, social, technological, ecological, and legal factors (PESTEL factors). For example, if a competitor launches a more attractive product/service, if new environmental regulations are enacted that create risk or opportunity for your products/services, or if an attractive new foreign market is emerging due to changing economic and demographic conditions, organizations will need to consider such environmental factors and trends as they decide upon their strategic approach. All organizational leaders must deal with an organization’s history and recognize the impact and constraints, as they deal with the current external environment and seek to align their resources with the strategy to produce the desired results. In thinking about what to change, all inputs may be sources of opportunity and constraint.
For change leaders, an ability to analyze the organization’s external environment and see implications for action in the organization is a central change skill.
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