Watch out for PESTs

snail sculpture on a roof

I mentioned when talking about the brain that humans are constantly scanning the environment for changes to see whether they might indicate a threat or a reward.

However, on a day-to-day basis we often get on with our habitual routines of daily living, and we may fail to be aware of what’s going on in our wider environment.  In the previous post I explained that things are constantly changing and so there is a need for us to be aware of these ‘big picture’ changes so we can adapt as individuals, teams or organisations.

One well-known tool that can help us is PEST analysis.  PEST enables us to stop and consider in turn what’s happening in the Political, Economic, Socio-Cultural, and Technological aspects of our environment.

Doing a PEST Analysis

To do a PEST analysis, go through each of these areas in turn and brainstorm what’s happening that might be most relevant to you or your organisation.  Doing this will also help you discover where you are lacking information and may need to do some research. 

Here are some questions you might consider:

Political – eg What’s happening with government policy, regulations and laws? How stable is the political environment?  What’s the likelihood of change in the next election?

Economic – eg What’s happening in the economy?  Is it growing or declining? How stable is it?  What is the exchange rate, wage levels, borrowing rate, cost of living, level of unemployment?  How easy is it to access credit?

Socio-cultural – What are current social norms and expectations?  Consider social attitudes, levels of education, health and lifestyle choices. What about demographics? Is the population increasing or decreasing?  What proportion are young/old?

Technological – What new technologies are available?  How is use of technology changing?  (eg for remote working)

You can also go further by increasing PEST to PESTLE, which adds:

Legal – What are potential changes to legislation affecting you or your business?

Environmental – What’s happening with waste/recycling, energy consumption, renewable resources, pollution?

(NB It’s likely that you’ll find some overlap when you try to do this exercise as some items can fit into more than one area.)

So what?

Like any tool, doing this exercise won’t tell us directly what we need to do with the information we find.  That’s the next step.  Once you’ve done your PEST analysis, you should then consider how you might take advantage of any opportunities you discover, as well as overcome or avoid any potential threats.

At an individual level, you might use this to think about your next career move.  What’s on the horizon that might make one job or career more attractive than another?  At the organisational level you might consider what products or services you should develop or remove.  So this helps with strategy and planning, or can be used as input into a SWOT analysis (see an upcoming post).

Of course, this analysis just gives us a snapshot of what’s happening in the environment now. You will need to re-do this regularly to make sure you’re keeping up with all the the constant change.

Further reading:

CIPD (2020), PESTLE analysis [accessed 02/07/20] (requires log-in (free))

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