Strategic Issue Management

Author(s): H. Igor Ansoff

Source: Strategic Management Journal, Vol. 1, No. 2 (Apr. - Jun., 1980), pp. 131-148
Published by: Wiley
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 Strategic Management Journal, Vol. 1, 131-148 (1980)

Strategic Issue Management

H. IGOR ANSOFF
European Institute for Advanced Studies in Management, Brussels, Belgium

SUMMARY

The paper presents a systematic approach for early identification and fast response to important
trends and events which impact on the firm. Two versions of such an approach are described:
a strong signal and a weak signal strategic issue management system.
Strategic issue management, which responds to signals in 'real time', is compared to periodic
strategic planning, and criteria for choice among the three are proposed.

EVOLUTION OF MANAGEMENT SYSTEMS

In the course of this century business firms have developed numerous systematic
responses to changing environmental conditions. These management systems, as they
are now called, typically were invented to cope with problems which were imperfectly
understood. As is typical with inventions, each appeared to be independent of the
preceding ones. Enthusiastic adherents of the latest system claimed that it replaced and
made obsolete all of the preceding ones.
In the perspective of time and experience, there is now a clear understanding of the
problems which the respective systems are best equipped to solve, as well as of the limits
of their applicability. It is further clear that the respective systems are complementary,
and frequently mutually supporting, approaches to solving different managerial
problems.
In Table 1, we have summarized the characteristics of five modern management
systems. The Table shows the different purposes which the respective systems were
designed to serve. It also shows the view of the world (described by the basic and the
limiting assumptions) that is assumed to exist and which determines both the strengths
and the limitations of each system.
The first two systems: long range planning and strategic planning are, respectively,
inventions of the 1950s and the 1960s. Long range planning is now widely used in
business firms, while strategic planning, a slower starter, is now gaining wide-spread
acceptance.
Strategic management and strategic issue management are recent newcomers, now
being developed and tested by firms and by some non-profit enterprises.
As has always been the case in the past, as these new systems are gaining acceptance,
the need for further developments is already perceivable. The last system of Table 1,
strategic surprise management, is a likely candidate for the future.
0143-2095/80/0201-0131$01 .00 Received 3 December 1979
?) 1980 by John Wiley & Sons, Ltd.

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132 H. Igor Ansoff

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 Strategic Issue Management 133

Another need, which we have now shown in Table 1, is to adapt all management
systems to the new realities of power within the firm. This need, already strongly felt in
many European countries, will modify systems, which have been historically focused
on the needs of management, to include the needs of other social partners which now
participate in the strategic decision making of enterprises (Ansoff and ten Dam,
forthcoming).
An extensive literature is available on long range planning and on strategic planning.
Modest literature is available on strategic management. [For this author's
contributions, see Ansoff (1972, 1979), Ansoff, Declerck and Hayes (1976).] Less has
been written on the currently urgent strategic issue management, see Ansoff (1975,
1976), Ansoff, Eppink, and Gomer (1978), Ansoff, Kirsh, and Rowenta (forthcoming).
The articles on strategic issue management have explored the strategic issue problem
and the newly important phenomenon of weak signals. There is now a need to translate
these explorations into a straightforward, practical 'how to do it' process. It is the
purpose of this paper to describe such a process.

WHY STRATEGIC ISSUE MANAGEMENT?

As we shall describe it, a strategic issue is a forthcoming development, either inside or

outside of the organization, which is likely to have an important impact on the ability of
the enterprise to meet its objectives. An issue may be a welcome issue, an opportunity to
be grasped in the environment, or an internal strength which can be exploited to
advantage. Or it can be an unwelcome external threat, or an internal weakness, which
imperils continuing success, even the survival of the enterprise. Frequently, external
threats, because they signal significant discontinuities in the environment, can be
converted into opportunities by aggressive and entrepreneurial management. In fact,
such ability to convert threats into opportunities has been one of the most prized
characteristics in the history of American management.
The concept of strategic issues first appeared during the evolution of strategic
planning. When strategic planning was first introduced in practice, the expectation was
that strategies will be revised annually. But experience quickly showed this to be both
impractical and unnecessary. Impractical because strategy revision is an energy and
time absorbing exercise which, if conducted annually, overloads management.
Unnecessary because a strategy is a long term thrust which takes several years to
implement. Unnecessary annual revisions, instead of improving a strategy, will cause
vacillations in managerial behaviour and prevent a fair test of the strategy.
As this understanding grew, business firms began to space comprehensive revisions
of strategies several years apart. In the beginning of each year's planning cycle a review
of last year's progress focuses attention on strategies which have encountered
important strategic issues. A comprehensive analysis of environmental trends and
prospects identifies additional strategic issues. Resolution of these strategy and
environment-derived issues becomes the central preoccupation of the annual planning
process. Thus strategic issue analysis (analysis of impact and response to significant
developments) was added to strategy analysis (determination of thrusts for the future
development of the enterprise).
In recent years two considerations have made it desirable to separate strategic issues
analysis from the annual strategic planning cycle. The first is that some enterprises

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134 H. Igor Ansoff

either cannot afford or do not need the cumbersome paraphenalia of annual strategic
planning. The former is the case for smaller enterprises which must cope with
environmental turbulence, but have neither the managerial capacity, nor the resources,
for annual planning. The latter is the case for an enterprise whose basic strategic thrusts
are clear and relatively stable, but whose environment is turbulent.
The second factor has been a growing incidence of 'fast' issues, caused by events
which come from unexpected sources and impact quickly on the enterprise. The
combination of speed and novelty of such issues may make them too fast to permit
timely perception and response within the annual planning system. Some of these
issues, which occur between planning cycles, may impact too quickly to be delayed until
the next cycle; others, which occur during the planning cycle, may impact before the
planning period is over.
When either or both of the above factors is present, it becomes desirable to separate
issue resolution from the annual planning cycle.

WHAT IS A STRATEGIC ISSUE MANAGEMENT SYSTEM?

A strategic issue management system (SIM) is a systematic procedure for early

identification andftist response to important trends and events both inside and outs
an enterprise.
Early identification can be assured in the following ways:

(i) Unlike the first three systems of Table 1, which address issues during an annual
planning period, SIM is 'real time', continuously preoccupied with strategic
issues throughout the year. In practice this means a periodic (say monthly)
review and updating of key strcategic issues list.
(ii) This also means a continuous surveillance, both inside and outside the
enterprise for 'fast' issues which may arise in between the reviews. When such
issues arise, a 'red light signal', alerts management of the need for immediate
attention.

Fast response to trends can be assured in the following complementary ways:

(i) The responsibility for managing the system is assumed by a senior management
group which has the resources and the authority to initiate prompt action
without unnecessary delays.
(ii) If necessary, SIM cuts across normal hierarchical organizational lines. Senior
management assigns responsibility for individual issues directly to units which
are best equipped to deal with the issue, even if this means reaching across
several hierarchical levels. If, as is often the case, an issue is not particular to a
unit, an ad hoc project is formed, composed of both affected and expert
individuals. Resources are assigned directly to the project, and it reports
directly to senior management.
(iii) The assigned responsibilities are not for planning the response but for resolving
the issue. Thus SIM is a management action (and not only a planning) system.
With several projects under way and continuous updating and revision of the
strategic issue list, the usual separation between planning implementation
periods is not visible in an SIM.

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 Strategic Issue Management 135

Internal performance
trends external trends
events

Strengths/weaknesses T Threats /opportunities

staf f

detection

impact /urgency

flashes red lights'

war room

operating feedback room

A issues

general management

priorities assignment

strategies
strategy feedback

I
projects, operating units

resolve issues

Figure 1. Responsibilities for strategic issue management

There are a number of ways in which responsibilities for the system can be assigned.
One way is illustrated in Figure 1, which divides responsibilities among three groups:

(1) A 'staff group which is concerned with detection of trends, evaluation of their
impact and timing, assessing the time required for response, and alerting decision
makers about sudden and important issues. This group is also responsible for
maintaining a 'war room' an up to date display of the key issue list, their priorities and
the status of the projects. As part of this function, the 'staff group concerns itself with
monitoring the progress of the various projects toward their assigned objectives.
On Figure 1, we put 'staff' in quotation marks, because this surveillance-
interpretation-measurement function will be handled differently in different settings.
In a large enterprise a separate staff department, probably a part of the larger
planning department, would be set up for the job of issue analysis. In a small firm,
two or three top managers would put on 'staff hats' for the purpose of systematizing
the strategic issues, preferably with the part-time help of one of the few available
assistants.
(2) The second, general management, group (which in a small firm may be the same as
the 'staff' group) is responsible for assessing the relative importance of the issues,

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136 H. Igor Ansoff

selecting the key strategic issue list, deciding on how the respective issues are to be
treated, assigning responsibilities for their resolution, and providing appropriate
resources.
Since response to some urgent issues may be started when their ultimate significance
is still unclear, a critical general management responsibility is to exercise strategic
contr ol over such issues. This means continual re-evaluation of the significance of issues
and redefinition of both priorities and the direction of projects. This also means timely
cancellation of projects dealing with issues which turn out to be false. Strategic control
is a key factor in the success of an SIM, because as experience shows, once started,
projects tend to acquire a life of their own and are frequently continued beyond the
point of diminishing returns.
(3) The third group of participants are the 'workers' the units or ad hoc groups which
have been assigned the responsibility for respective issues. On occasion, when the
strategy of response to an issue is not clear, these groups may be asked to act as planners
and to submit action recommendations. But the success of SI M depends on making the
projects r-esolvers, and not planners, of issues. Again, experience shows that, unless this
role is clearly established, SIM may degenerate into 'paralysis by repeated analysis'.

ASSESSMENT OF IMPACT

The success of an SI M depends on its ability to complete the response in tim

threats and to 'cash in' on opportunities. As we have seen above, the timeliness of
response depends, on the one hand, on the anticipation of changes, and on the other
hand, in using expeditiously the time provided by the advanced warning.
Early detection of strategic issues increases the time available for response. But in the
case of 'fast' issues the 'resolving power' of forecasting begins to run up against limits:
timely information, of a quality high enough to permit specific and well-considered
responses, can no longer be obtained. To make SIM work, it becomes necessary to
detect less specific 'weak signals' and to respond with correspondingly 'weak responses',
which are progressively strengthened as information becomes more specific.
In an earlier paper (Ansoff, 1976), we have developed an approach for detection and
use of weak signals. The concept of weak signals is summarized in Appendix 1. An SIM
based on weak signals needs a trained staff and a substantial investment time.
Therefore, its use should be reserved for environments in which very 'fast' changes are
frequent. In environments of moderate turbulence a simpler and less sophisticated
procedure to detection and evaluation of issues will suffice. In this section we shall
outline the basic steps for strong signal SIM. In Appendix 1 we shall compare the
conditions under which the strong and weak SIM should be used.
The principal steps in this procedure are shown in Figure 2. As the Figure shows,
there are three possible sources of information about impending strategic issues: the
trends in the external environment, the evolutionary trends within the enterprise, and
the trends in its performance. In Tables 2, 3, and 4 we present 'starting lists' of the
respective trends. Table 2 shows a list of environmental trends which today are of
importance to a majority of firms in the industrialized capitalist countries. Table 3
presents a list of internal characteristics which change over time and typically give rise
to issues. Table 4 is a comprehensive list of performance attributes by which enterprises
measure their successes and failures.

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 Str-ategic Issue Management 137

envilronmental nternal performance

trends trends trends

jectives objectives

impact /urgency l

lKmoni'tor'

assignment _,, -no action

immedia te de layed
action action

Figure 2. Strategic issue management (SIM)

The first step in the analysis is to eliminate from each list the attributes which do not
apply to the particular enterprise and to identify and add additional attributes which
are specific to the enterprise.
The second step for Tables 2 and 3 is to identify the potential future impact of the
trends on the future performance of the enterprise. The ideal approach is to estimate
impact on the performance attributes which have been identified as the applicable
objectives in Table 4. But in many practical situations the information for such
estimates may not be available. A practical substitute is to assign on a judgemental
basis, a single impact number (say, on a scale of + 10 to - 10) to the impact of each of
the trends (while keeping in mind that this number represents a summary judgement on
the performance on all of the relevant objectives).
The impact of both external and internal trends may be positive, or negative, or both.
The latter case may indicate either a range of uncertainty in the evaluation, or the
expectation that the trend will be both beneficial and harmful to the enterprises.
In business literature, a positive environmental impact is usually described as an
opportunity, a negative one a threat; positive impact of an internal development is a
strength (with respect to this particular trend), and negative impact a wieakness.

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138 H. Igor Ansoff

Table 2. A list of environmental trends

1. Trends in the global market place (protectionism vs free trade)

2. Growth of government as a customer
3. Development of the Common Market
4. Business with socialist countries
5. Economic and political trends in developing countries
6. Monetary trends
7. Inflationary trends
8. Emergence of the multinational firm
9. Technology as competitive tool
10. Bigness as competitive tool
11. Saturation of growth
12. Emergence of new industries
13. Technological breakthroughs
14. Growth of the service sector
15. Affluent consumers
16. Changes in age distribution of customers
17. Selling to reluctant consumers
18. Social attitudes toward business
19. Government controls
20. Consumer pressures
21. Union pressures
22. Impact of society's concern with ecology
23. Impact of 'zero-growth advocates'
24. Shrinking product life-cycles
25. Intra-European nationalism
26. Conflict between multinational firms and national interests
27. Public distrust of business
28. Shrinking of forecasting horizons
29. Strategic surprises
30. Competition from developing countries
31. Strategic resource shortages
32. Redistribution of power within the firm
33. Changing work attitudes
34. Pressures for employment maintenance

Table 3. A list of internal trends

1. Size
2. Complexity
3. Structure
4. Systems
5. Communications
6. Power structure
7. Role definitions
8. Centralization/decentralization
9. Values and norms
10. Management style
11. Management competence
12. Logistic ('work force') competence
13. Capital intensity
14. Technological intensity
15. Product diversification
16. Market diversification
17. Technology diversification
18. Other

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 Str,ategic Issue Management 139

Table 4. A list of objectives

1. Growth
2. Profitability
3. Cyclical stability
4. Flexibility
5. Invulnerability to environmental surprises
6. Solvency
7. Debt/equity
8. Invulnerability to take over
9. Competitive leadership
10. Innovativeness
11. Market share
12. Internal social climate
13. External social responsiveness
14. Good citizenship
15. Work satisfaction
16. Responsiveness to aspirations of internal constituencies (identify both constituency and
aspirations):
a.
b.
c.
d.
17. Responsiveness to external constituencies
a.
b.
c.
18. Other

The next step is to give substance to these codewords by identifying and describing
the specific strengths/weaknesses (S/W) or threats/opportunities (T/O) presented by
the trends. In Figure 3, we suggest a simple format for analysing the impact of the
environment. The format for the internal impact will differ only in the labelling of the
last two columns which would be labelled 'strengths' and 'weaknesses', respectively.
The need for response is to be determined not only by the size of the impact but also
by its urgency. The latter is determined by comparing estimates of the timing of the
impact of the trend and of the time needed. Thus, for example, a trend which has high
impact, but will occur far enough into the future to permit a delay of the response would
be assigned low urgency. In Table 4 we have provided room for estimates of timing of
impact, time needed for response, and of urgency.
In the preceding discussion, the list of objectives in Table 4 has been useful as a guide

TRENDS IMPACT TIMING OF RESPONSE URGENCY THREATS OPPORTUNITIES

ItIPACT TIMIE

Figure 3. Impact/urgency of environmental trends

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140 H. Igor Ansoff

for estimating the impact of internal and external trends. Another use is for
determining additional threats and weaknesses from the performance trends of the
enterprise. As shown in Figure 3, this is done by comparing the objectives with the
performance trends to determine the objectives gap, and the causes of the gap are
traced back, either to internal weakness, or to the external threats.
This source of threats/weaknesses is easy to tap in a business firm, where accounting
data typically contain a record of historical performance. It is simple to extrapolate
this history into the future, which is, in fact, routinely done in many firms.
Furthermore, many firms make their future goals and objectives explicit which permits
a routine determination of the objectives of gap by staff.
In enterprises in which objectives are not made explicit, an examination of trends by
general management, with the aid of Table 4, is required in order to establish the gap.
Finally if, as in the case of many non-profits, accounting data are not in a form which
permit extrapolation of performance, this source of threats/weaknesses becomes
unattractive and difficult to tap.

ASSIGNMENT OF PRIORITIES

In order to assure adequate attention to both positive and negative prospects, it is next
useful to list separately the opportunities/strengths and threats/weaknesses. The types
of action to be taken for each list can next be determined with the aid of a matrix, such
as shown in Table 5.

Table 5. Priorities for strategic issues

Impact

Urgency Low Significant Major

Low Drop from list Periodic Monitor

review continuously

Significant Drop or Periodic review Plan delayed

periodic or monitoring response
review

Pressing Monitor Monitor Respond

continuously immediately

Key strategic issue list

Each T/O or S/W is assigned to one of the cells. As Table 5 suggests, the entries in the
low impact category will, as a maximum, be monitored and, as a minimum be dropped
from further consideration. The lower right cell requires immediate action, and
response to strategic issues in the cell above it should be preplanned. In firms with
periodic planning these issues would be delayed until the next planning cycle. The issues
in the remaining cells would be assigned to monitoring, with pressing and major impact
issues receiving priority attention.
The approach of Table 5 helps solve a difficulty commonly encountered in
enterprises: that the number of issues exceeds the capacity to respond. With the aid of

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 Strategic Issue Mainagement 141

Table 5 issues to be acted upon can be selected commensurately with the available
resources, but the larger list of issues is retained and continuously monitored.
The procedure described in this paper is comprehensive in the sense that it cross-
checks S/W/T/O facing the enterprise by reference to three independent sources. A
simpler procedure, called impact analysis, which has been used in practice, confines
attention to one source only the external environment. A somewhat more complex
procedure (still confined to the environment), called cross-impact analysis, recognizes
that the respective impacts are not independent. The cross-impact matrix assesses the
likelihood of simultaneous impacts by more than one trend.
Still another approach recognizes the interdependence of threats/opportunities with
strengths/weaknesses. We shall discuss this approach in Appendix 2.
There is no one 'correct' approach to all situations, and any one of them can
significantly improve the responsiveness of the enterprise to external turbulence and
internal complexity.
Three simple rules can be used to guide the choice for a particular enterprise. First,
the approach must be responsive to the complexity of the challenges, second, the
approach must be as simple as the complexity permits; third the approach must be
feasible within the resources of the enterprise. The advantage of the relatively simple
SIM described in this paper is that it can be used by enterprises of any size, and it
requires very little prior experience with formal management systems.

PERIODIC PLANNING AND SIM

As previous remarks already suggested, SIM is emerging to fill a gap in periodic

planning and not to replace it. The two types of systems are addressed to
complementary purposes: periodic planning concerns itself with determining the basic
thrusts of an enterprise and assuring coherence and cooperation among different parts
of a complex enterprise. SI M is addressed to dealing with deviations from these thrusts
which may occur as a result of new opportunities/threats strengths/weaknesses.
An enterprise which is well coordinated (or too small to have coordination problems)
and which has well developed and promising strategic thrusts, may need only a simple
periodic system such as financial control, or long range planning. But if the external
and/or internal environments are turbulent, such enterprises will be well-advised to
use SIM.
When both future thrust and turbulence present problems, then a sophisticated
system (such as strategic planning or strategic management) will have to be coupled
with SIM. (A dangerous approach in this case, which this author observed in a number
of practical situations, is to limit the enterprise to SIM, without accompanying
strategic planning. If the major prospects of such an enterprise are on a declining trend,
SIM is likely to make its descent to bankruptcy more elegant than it would be without
the system. But the presence of SIM would also create a false sense of security as, for
example, may be created by the progress in patching holes in the hull of a leaking ship
which is about to explode.)
A way to couple the two systems is illustrated in Figure 4. At the outset of the period
the annual planning cycle picks up the strategic issues from SIM and includes them in
the comprehensive company-wide planning. The final outputs of the planning are (i) a
set of operating programs and budgets for ongoing operations, which are aimed at

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142 H. Igor Ansoff

- ~~OP2
O P3 -__
_ _ --- ~~~~~~~~~~OP4

OP operating strat/capab
,programs / budgets
programs

ad dressed L {P
to goals

CP = change CP3
projects

addressed C P4

to issues c P's

continuing issue detection - evaluation- sele

Figure 4. Periodic and real time issue management

meeting the near term performance objectives and goals; (ii) a number of strategic
issues translated into change programs and budgets. The latter are addressed at
changing either the strategic thrusts of the enterprise, or its internal configuration, and
contribute to the future petformance potential (and thus to the long term objectives).
As Figure 4 shows, the change programs and budgets generated by periodic planning
became a part of a larger group of temporary projects; the other part being generated
by SIM. An important conclusion suggested by the Figure is that, in addition to
managing the projects generated by opportunities/threats/strengths/weaknesses, the
administrative arrangement of Figure 1 can be used to manage all of the strategic issues
(change projects) of the enterprise.

THE HUMAN FACTOR

At first glance, SIM appears to be an easy system to put in place and to manage: It is
lightweight, with a minimum of apparent 'make-work' often observed in periodic
systems; it addresses pressing problems; it is compatible with other systems and
organizational structures, it is responsive to change and does not have many of the
bureaucratizing self-perpetuating tendencies observed in periodic systems.
But experience shows that installation and acceptance of SIM is not simple. The
difficulties stem from two sources.
The first is refusal of the top management group to submit itself to the discipline of
SIM. Periodic planning is frequently used for organizing'the others' in the enterprise.
If top management refuses to become a part of the process, periodic planning can still
make a useful contribution to the enterprise. But if top management pays lip service to
SIM (and for example appoints a staff planner to 'manage' the war room) SIM will not
work.

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 Strategic Issue Management 143

Refusal to take charge is frequently coupled with a refusal by top management to

accept new and unfamiliar issues as relevant to the business of the enterprise. Thus, for
example, early warnings of the emergence of the petroleum crisis were ignored in many
business firms, because they were inconsistent with prior experience and image of the
Arab world.
Thus acceptance of SIM by top management should not be taken for granted. A
'sales campaign' by the 'converted' subgroup of general managers, careful education,
and a process of joint involvement in reality confrontation by the top group are more
promising courses of action. In cases when the new realities to be confronted are
drastically different from the past, the enterprise will need external help.

CONCLUSIONS ADVANTAGES AND LIMITATIONS OF SIM

The principal limitation of the strategic issue management system discussed in the
preceding pages is that while it reacts to individual departures from the historical
dynamics of the organizations development, it does not permit the management to
rethink and redefine these dynamics as is done in periodic strategic planning.
Strategic issue management offers the following advantages:

(1) Quick 'real time' response to new developments.

(2) A quick internal reaction time.
(3) Response. to problems which may arise from any source, economic, politica
social, technological.
(4) A 'lightweight' system, which is not affected by organizational size and
complexity.
(5) It is compatible with most organizational structures and systems.

Strategic issue management cannot be made to work unless key managers in the
organization accept a central role in the system. Experience shows that getting key
managers to submit themselves to the relatively light discipline demanded by the
system, and getting them to react to strategic issues which do not conform to historical
experience are the two most difficult problems of introducing SIM into organizations.

APPENDIX 1

Choice among periodic, strong signal, and weak signal issue management
As discussed earlier in the paper, the timeliness of the response of an enterprise is
dependent on the interaction between the forecasting horizon the number of years
into the future at which an impending change is identified, and the r-esponse time-the
time required by an enterprise to select and implement its response. We illustrate the
interaction of these two variables in Figure 5.
The vertical scale describes the state of know ledge about a change. The concept of the
state of knowledge is different from (but complementary to) the concepts of risk and
uncertainty frequently used in forecasting. Under both risk and uncertainty conditions
it is implicitly assumed that enough is known about an event to permit estimation of its
impact on the enterprise and also selecting a specific response. The lack of knowledge
comes from uncertainty either about the occurrence of the event, or about a particular
impact, or about the effect of a particular response.

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144 H. Igor Ansoff

full l l Tl
knowledge Tl A SIMl

I7 SIM / /p
01)

o Ic //B A#

o weak signal
detection
level

time

Figure 5. Interaction between forecasting horizon and response time. A, = strong signal
forecasting horizon, A, = weak signal forecasting horizon; $p = periodic system response time,
6s,m = SIM response time

The state of knowledge concept adds another dimension of ignorance' which is

imperfection in knowledge about the nature, timing, or the consequences of an event.
Near the zero level on our scale of ignorance there may be only a conviction that an
important event will occur, but there is no further knowledge about its nature. In an
earlier paper (Ansoff, 1976) we called this state of knowledge a sense of tuirbulence, for
example, a conviction that an earthquake is going to occur, without any further
knowledge about its strength, source, or timing. In business a sense of turbulence is
found in technologically intensive industries in which there is a conviction of an
impending technological breakthrough, but no further knowledge of where it will come
from or what it will consist of. Near the top of the knowledge scale enough is known
about the event to assess its likely impact on the enterprise, to select and implement
response strategies (although there still may be residual uncertainties about strength of
impact and effectiveness of response).
Every new event will pass from a sense of turbulence to the 'full knowledge' level, but
the speed of evolution will differ. In Figure 5 we show three examples of the evolution
pattern, ranging from a 'slow' event (curve A) to a 'fast' one (curve C).
From the point of view of an enterprise, the important moment in the history of an
event is the time of its impact, which is the point after which it is too late to respond:
either the opportunity will 'have passed by' or a threat can no longer be avoided. In
Figure 5, we labelled the respective points of impact TA, TB and Tc.
If the response is to have a chance of being effective, it must be completed before the
time of impact. Figure 5 shows that the ability to do so depends on the forecasting
horizon A being longer than the time 6 needed for response.

1 See the concept of partial ignorance first introduced in Ansoff (1965).

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 Strategic Issue Management 145

Case A illustrates the situation for a periodic planning system. The planning horizon
As is limited by the availability of'strong signals'-which carry enough information to
permit analysis of both impact and response. The response bp is made up of several
delays:

(1) The delay between emergence of adequate knowledge (which may occur any
time during the year) and the next planning cycle. In the worst case this may be
as long as 8 months.
(2) The time consumed within the cycle for planning the response. This may go
between 4 and 8 months in a large enterprise.
(3) The time to develop the necessary capabilities and capacities. This will vary
widely depending on the applicability of the existing capacities, and
capital/technological intensity of the enterprise.
(4) The time to implement the response, which will vary similarly.

In the example of change A these delays present no difficulties since 4 > 6p. In this
case there is no needfor a separate strategic issue management system.
In the faster case B the strong signal forecasting horizon is not sufficient for a periodic
response. But the response can be shortened by separating SIM from the periodic
planning and using procedures described in the body of this paper. The procedures will
shorten the response to 6SIM < kp. In the case illustrated in the Figure, this solves the
problem since the response time becomes shorter than the planning horizon A > 5s1M*
In this case a separate SIM based on strong signals should be used.
In the final case C, so long as the enterprise bases its response on strong signals, the
response will be ineffective. The minimum possible response delay 8SIM is longer than
the time allowed by As. As described in an earlier paper (Ansoff, 1976), the enterprise
can now shift to weak signal detection accompanied by appropriate weak responses.
This effectively extends the planning horizon to Aw > As, as shown in the Figure, and
thus allows adequate time for response. When As < 6siM a weak signal SIM should be
used.
To summarize:

(1) Strategic issues should be handled within the periodic planning system
whenever the strong signal forecasting horizon is longer than the planning
system response time.
(2) Strong signal SIM should be used whenever strong signal time horizon is
shorter than periodic response but longer than SIM response.
(3) Weak signal SIM should be used whenever SIM response is longer than the
strong signal time horizon.

APPENDIX 2

Use of the Eurequip matrix to relate threats/opportunities to strengths/weaknesses

Threats/opportunities are derived from deviations from the historical trends in the
environment. Strengths/weaknesses, on the other hand, are derived from extrapolation
of the historical trends. It is entirely possible, therefore, that a historical strength will
turn into a weakness in the face of new challenges; it is also possible that a weakness will
turn into a strength. On the other hand, if the current capabilities turn out to be highly

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146 H. Igow Ansoff

Table 6. Interdependence between T/O and S/W. Case I-Positive synergy: strengths and/or
'weaknesses' are applicable to responding to threats/opportunities

Opportunities Threats

(1) (2) (3) (4) (1) (2) (3) (4) (5)

(4) (i) Highest priority on (i) Reduce priority of

(3) opportunity threat
Strengths (2) (ii) Increase priority of (ii) Maintain priority of
_(1) building strength building strength

(3) (i) High priority on (X) Reduce priority of

Weaknesses (2)' opportunity threat
(1l ) (ii) Enhance 'weakness' (ii) Enhance 'weakness'

applicable to dealing with the new challenges, the attractiveness of opportunities will be
enhanced and negative impact of threats will appear less serious.
Therefore, response to strategic issues can be made more effective, if the
interrelationship between T/O and S/W is used to modify the estimates of
impact/urgency and hence the priorities of the key issues. This interrelationship can be
studied by means of the 'croisement' matrix introduced by the French Eurequip
consulting firm.
This matrix, shown in Tables 6 and 7, is illustrated for two cases. In the first case,
Table 6, both the strengths and weaknesses turn out to be useful for pursuing advantage
of the opportunities, or minimizing the impact of the threats. The entries in the matrix
indicate the kinds of shifts that are desirable in the priorities previously established by
estimation of impact.

Table 7. Interdependence between T/O and S/W. Case II-Negative synergy: neither
strengths nor weaknesses help deal with threats/opportunities

Opportunities Threats

(1) (2) (3) (4) (5) (1) (2) (3) (4)

(3) (i) Low priority (i) Increase priority

Strengths (2) on opportunity on threats
(ii) Low priority (ii) Low priority
(1) on strengths on strengths

(i) Low priority (i) Increase priority

(2) on opportunities on threats
(ii) Priority on (ii) Priority on
Weaknesses elimination elimination
(1) of relevant of relevant
weaknesses weaknesses

(2) (i) Assign high (i) High priority

New priority to on new
capabilities building new new strengths
(1 ) strengths

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 Strategic Issue Management 147

For example, when a historical strength of the firm is applicable to the development of
an opportunity, two consequences follow: (i) the opportunity is likely to yield better
than average positive impact, (ii) the strength will appear more attractive than it did
before. The result is to increase the expectations and the priorities assigned to both.
An interesting result shown in the lower left cell of the matrix is the possible discovery
that capabilities which had been previously regarded as a weakness will become
strengths in the perspective of new threats/opportunities. Instead of being eliminated,
these 'weaknesses' should be enhanced! For example, a lack of tight cost controls and of
clearly defined vertical lines of authority/responsibility, which, in the past, may have
inhibited organizational efficiency, may become advantages if new opportunities
demand fast organizational response and entrepreneurial risk taking. As another
example, in a number of European firms the absence of a well developed controllership
function, a weakness in the mass production age, made it easy to introduce more
advanced forms of planning and control which are essential in the turbulent post-
industrial environment.
The matrix of Table 7 illustrates the consequences of the negative cross-impact.
Historical strengths become less attractive, threats must be taken more seriously than
in the past, new opportunities lose appeal. A very important consequence of negative
synergy is the need to identify new capabilities which must be developed in order to
cope with new environmental challenges.
The Eurequip matrix analysis should be undertaken if an examination of the threats
and opportunities, derived in the manner described earlier in this paper, appear to
depart significantly from the historical threats/opportunities. Since the matrix analysis
is time consuming, it is best reserved for medium- and high-impact T/O/S/W.
The results of the Eurequip matrix analysis can be summarized in Figure 6 (which is a
modification of Figure 3). As shown, matrix analysis may change both the impact
estimate and the urgency.

TRENDS IMPACT URGENCY THREATS OPPORTUNITIES COUPLED

. _ .__ _ . _STRENGTHS /UPAKINEESSE
BEFORE AFTER BEFORE AFTER
SYNERGY SYNERGY SYNERGY SYNERGY

Figure 6. Impact/urgency of threats/opportunities after synergy ana

Another important product of the matrix analysis is a coupling between

threat/opportunity and strengths/weaknesses. If the positive or the negative synerg
a strength/weakness to a particular threat/opportunity is very high, the T/O should not
be tackled without, at the same time, tackling the S/W. A column for identifying the
coupled S/W is provided in Figure 6.

REFERENCES

Ansoff, H. Igor, Corporate Strategy, McGraw-Hill, New York, 1965.

Ansoff, H. Igor, 'Concept of general management', Journal of Business Policy, 2, No. 4, Summer
1972, pp. 39-77.

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148 H. Igor Ansoff

Ansoff, H. Igor, 'Managing surprise and discontinuity-strategic response to weak signals',

EIASM Working Palper No. 75-21, April 1975.
Ansoff, H. Igor, 'Managing strategic surprise by response to weak signals, California
Management Reviewt, Winter 1976, pp. 21-33.
Ansoff, H. Igor, Strategic Management, Macmillan, England, 1979.
Ansoff, H. Igor, P. Declerck, and L. Hayes (Eds), From Stirategic Planning to Strategic
Managenment, Wiley, Chichester, 1976.
Ansoff, H. Igor, J. Eppink, and H. Gomer, 'Management of strategic surprise and discontinuity:
improving managerial decisiveness?, Marknads Vetande, Utgiven av Sveriges
Markn4adsf6rbund, 4/78 argang 9, 1978.
Ansoff, H. Igor, W. Kirsh, and P. Rowenta, 'Possibilities for development of portfolio analysis
as an early warning instrument', (forthcoming).
Ansoff, H. Igor, and Hans ten Dam, 'Strategic management in politically polarized enterprises',
(forthcoming).

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