As noted in an earlier post, I tend to distinguish between environmental scanning and horizon scanning, the former being relatively more proximal to the organisation/entity (in my usage), the latter being relatively more distal, although the terms are frequently used interchangeably in the literature. Expanding upon this distinction is useful because it allows for the creation of a more tractable ‘segmentation’ of the broader organisational environment into parts for which certain information sources are more clearly relevant and thereby more easily selected for inclusion into the overall scanning frame. In this way, a wide variety of disparate information sources can be combined into a unified framework for systematically reducing the risk that organisations – corporate, civic, governmental and military – could get caught out and ‘blindsided’ by a future they should have been able to detect coming.
The term ‘environmental scanning’ itself appears to have been introduced by Francis Aguilar (1967), who also first introduced and described the four main ‘modes’ of scanning (described in an earlier post), which have been the basis for a variety of classifications and modifications over the years. The term ‘horizon scanning’ seems to have been introduced more recently by the UK Govt’s Foresight Directorate (e.g., Schultz 2006), apparently done – according to the foresight “folklore” (Bishop and Hines 2012, p.177) – as a way to prevent the term ‘environmental’ being misunderstood to mean the more specific ecological/physical environment.
The segmentation of ‘the environment’
The two main ‘segmentations’ of the environment I used for scanning – and which I also taught for many years in the Swinburne Master of Strategic Foresight – came from divisions proposed separately by Fahey and Narayanan (1986), and van der Heijden (1996).
Fahey and Narayanan (1986) proposed a three-fold division of the organisational operating environment (p.25):
- the task environment – the customers, suppliers, competitors, and other related agencies (such as trade associations) of the organisation;
- the competitive/industry environment – all competitor organisations operating within the same industry; and
- the macro-environment – the broader social, technological, economic, and political environment (usually described in the literature using the well-known acronym STEP or PEST, or its later more expanded variants).1
Kees van der Heijden (1996) on the other hand – citing Emery and Trist (1965) as his source – used the two-fold division (p.115):
- the transactional environment – direct interactions with customers, employees, stakeholders, competitors, suppliers and so on; and
- the contextual environment – indirect factors outside the transactional environment that ‘shape’ the transactional environment (again, usually rendered as STEEP or PESTEL or some equivalent set of factors).
The transactional environment of van der Heijden is somewhat analogous to, and overlaps but is not identical with, the combination of the task and industry environments of Fahey and Narayanan, while the macro and contextual environments are also analogous but not necessarily identical. Each segmentation has its analytical advantages. For practical scanning purposes, I sometimes combined these two forms of segmentation, regarding the transactional and contextual aspects as cross-cutting the task, industry and macro environments, for the following reason.
van der Heijden specifically noted (p.115) that the transactional environment represents that part of the organisation’s operating environment over which the organisation has some influence (i.e., through its interactions) but not control. This “playing field”, as he put it, is in turn “embedded” in the contextual environment, where the organisation has little or no influence.
However, as I see it, there are in principle aspects of all environments in which an organisation operates that it interacts with but may not necessarily be able to influence. Similarly, there are parts of the task, industry and even the macro environment that an organisation can influence through its interactions, albeit with a very limited degree of ‘reach’ out in the macro environment. The resulting ‘’ view produces six sub-divisions of the overall organisational operating environment: a threefold division of task/industry/macro that is ‘cut across’ by a twofold division of those parts of each of these that can be influenced by the organisation versus those parts that cannot, as it interacts with these different aspects of the operating environment. The distinction is important when compiling a set of scanning sources since they yield different types of information, and a properly-designed panoramic scanning frame needs to take this into account to ensure proper coverage of the total informational environment.
The futures of desire and fate
The source of my use of this explicit distinction between the transactional/contextual aspects across the triple-environment segmentation was the well-known observation of John Desmond Bernal (2017, p.1) in the early 20th Century, that:
There are two futures, the future of desire and the future of fate, and man’s reason has never learned to separate them.
In foresight talks and presentations, I would introduce and then interpret this statement as meaning that there are two important aspects of the future that need to be borne in mind: there are parts that can be influenced and about which we can do something by shaping it through directed desire; and there are parts that cannot be influenced (i.e., fate) for which we have no other rational choice than to simply adapt. It is not at all useful to conflate these two aspects of the future, as Bernal suggests we do in the above quote, and a good deal of grief tends to arise from falling prey to this conflation.
Therefore, foresight work, properly carried out, consists not of ‘attempting to predict’ the future, which is a thoroughly losing game. But, rather, it consists of, in the first place, realising this dual-fold nature of the future – and then ensuring we only seek to influence those parts of the future which we can influence, while also accommodating ourselves to those which we cannot (which I rendered as ‘deciding to shape’ and ‘preparing to adapt’, respectively). The primary skill then lies both in not breaking ourselves through wasted pointless action on the intransigent wheel of Fate; but equally in not needlessly surrendering any actual agency we do possess to the remorseless workings of Fate.
Thus, van der Heijden’s distinction between the transactional and contextual environments shows itself to be very closely analogous to this distinction between what cannot be influenced (the environment of fate) and that which can be influenced (the environment of desire). This distinction is important also because in scenario work – such as was conducted by Royal Dutch/Shell and in which van der Heijden was himself involved – the scenarios should always be about the contextual environment – i.e., the future of fate – to which an organisation must adapt. Visions, on the other hand, are normative images of the future that we desire to bring about – which desire only makes sense, of course, for that part of the environment that we can influence, namely the transactional part. And, again, it should be clear that organisations that seek to vision their way into the future – the future of desire – without paying proper heed to the wider contextual environment – the future of fate – are leaving themselves open to serious missteps on their way to the future. It is as well to be quite aware of those parts of the task and industry environments which are contextual and which are transactional.
The ‘nearby’ environment vs the ‘horizon’
Organisations have generally, albeit with some exceptions, tended to focus more strongly on the ‘nearby’ more ‘direct’ environments – essentially, the task and industry – and less so on the broader more ‘indirect’ macro environment that lies ‘further out towards the horizon’. This notion has the dual metaphorical implication of being further away both in space as well as in time due to the delay between forces and factors arising in the macro environment ultimately influencing the organisation. So, it is here that I tend to make the distinction between environmental and horizon scanning – the latter usually refers to the macro environment, and most typically to the farther reaches of that environment, both in space but also and especially in time.
‘Scanning the horizon’ therefore implies looking well beyond the more proximate task and industry environments to the more distal macro-environment and to the forces and factors that shape both it and ultimately everything enfolded within it. Because of the unique position that governments occupy in societies, they have tended to focus their foresight projects on horizon scanning (i.e., of the macro-environment), in order to help inform policy-makers of emerging issues and opportunities for public policy, especially with regards to science and technology (e.g., Habegger 2009, 2010; van Rij 2010; Juech and Michelson 2012; Delaney and Osbourne 2013; Rowe, Wright and Derbyshire 2017; Hines et al. 2018; Cuhls 2020).
Furthermore, the macro environment also extends beyond the local state-based or nation-state-based context, to the wider regional, and ultimately even the planetary level itself – and sometimes even beyond that, too (e.g., Association of Space Explorers International Panel on Asteroid Threat Mitigation 2008), as reported in Snippets No. 17. Naturally, the further afield spatially and more distant temporally, the more difficult it is to identify and ‘read’ the shaping forces and factors of the future that are forming ‘out there’. For this reason, I have tended in recent years to refer to attempting this extreme distal view of the macro-environment as “over-the-horizon scanning”.
The idea of scanning ‘over’ the horizon actually comes from radar systems developed through the mid-to-latter part of the 20th Century by several nations, including Australia, ours being the Jindalee Operational Radar Network, or JORN (Sinnott 1988). When considered in the futures methodology context, the idea connotes the concept of seeking very weak signals that have not yet, so to speak, ‘pinged’ or ‘popped up’ into visibility in even those types of sources which would typically be used in ‘conventional’ (i.e., what one might identify as analogous to radar ‘line-of-sight’) horizon scanning.
It’s in this sense, then, that the term ‘“over-the-horizon” scanning’ is intended to connote a focus on even weaker signals of even more distant shaping forces and factors than the already very distal ‘conventional’ horizon scanning – or the scanning of the distant ‘Horizon 3’ in the Three Horizons approach to futures analysis (Curry and Hodgson 2008, Sharpe 2013, Sharpe and Hodgson 2017) – is concerned with. We might even call this this sort of ‘over-the-horizon’ scanning “‘Horizon 4’ scanning” as a result. In this usage, then, the term ‘Horizon 4’ is intended to connote a view that is even more distant and difficult to discern than what is more clearly recognisable as being ‘Horizon 3 activity’ in that method.
Another usage of the term ‘Horizon 4’ unrelated to the Three Horizons model is also intended to connote going ‘beyond’ the three ‘horizons’ implied by the perspectival focus of each of the task (1), industry (2) and macro (3) environments, the last of which is where conventional ‘horizon scanning’ as described above takes place. Scanning ‘beyond’ this ‘third’ horizon (i.e., of the conventional macro-environment) of course similarly suggests a ‘fourth’ horizon that is even further away than the conventional one.
In a sense, therefore, this ‘over-the-horizon’ scanning approach is intended to be somewhat analogous to the astounding ability of Polynesian ‘wayfinding’ to navigate the open ocean with incomparable skill using only the minutest signals and clues to what lies very, very far away over the horizon (Finney 1975, 1977). But, a more detailed discussion of such ‘over-the-horizon’ – or ‘Horizon 4’ – scanning is something for another place and time – much like the signals such scanning seeks to become aware of…
- The idea of ‘task environment’ was sometimes confusing for students (it can be misconstrued with ‘operations’, for example), so in teaching I tended to use the term market in place of task when referring specifically to commercial or corporate organisations, even though this is a fairly crude simplification – rather like the ‘solar system’ model of an atom compared to the more nuanced and complex model based on quantum-mechanical wave functions. The advantage was that the ‘nesting’ of a market within an industry within the broader macro-environment was much more easily grasped, as a first approximation. However, it should be noted that the market environment is really only a sub-set of the task environment (i.e., the customers aspect), and while the task and industry environments do have an overlap, the task environment is not a proper sub-set of the industry environment since it is not in principle – according to how it is defined – necessarily contained within the industry environment.
Image credit: Adapted and cropped for size from an image at the Kaʻiwakīloumoku Hawaiian Cultural Centre.
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