U.S. higher education (HE) faces a multitude of challenges brought on by shifts in demography, the economy, technology, and global competition. The disconnect between these realities and HEIs' perception of and response to their organizational environment may have negative implications for national educational attainment and the knowledge economy. While environmental analysis contributes to successful strategic response, many postsecondary leaders struggle to clearly understand their respective organizational environments. This multiple-case study examined how regional comprehensive universities leaders’ understanding of the external environment influenced the strategic response of their institutions. Research findings revealed that environmental scanning and analysis tools influenced leaders’ sensemaking during the strategic planning and, in turn, modulated their institutions’ strategic response. Macro- contextual and prospective sensemaking conditioned a future-focused strategy, relevant to the external organizational environment. In contrast, micro-contextual and retrospective ways of thinking produced an internally-oriented strategic response. This study provides evidence that universities’ leaders routinely make sense of their internal organizational environment, but only occasionally engage in sensemaking of the external surroundings. While the study confirms that university presidents played a crucial role in the strategy creation process, it also reveals that their average tenure might not be long enough to produce a successful strategic response. Findings illustrates how internal organizational challenges might lead to a deviated use of the strategic planning process, as compared to the processes suggested by extant literature. This research enhances extant theory via evidence that a developed definition of “strategy” separate from “planning” is crucial for producing an externally relevant organizational strategy. These findings could help HE practitioners to better understand their organizational environments and to enact strategic decision-making which allows for effective strategic response by their entire institutions. Understanding the relationships between the type of sensemaking and organizational environment as well as using macro-contextual, prospective, and routine scanning and analysis tools could produce an externally relevant strategic response.