There’s something you should know. Yes, your products and services are essential, but on their own they won’t make your company succeed.
The right business model is what makes a venture thrive. In order to see all the paths open to your business, it’s vital you understand the environment in which your company exists.
Watch the Bitesize Lesson below and review the notes to understand how the 'Five Economic Forces' will impact your company 👇
Learning how to examine your business’s environment in order to collect the information you'll need about the OUTSIDE WORLD is how you connect IDEAS to OPPORTUNITIES in order to find problems worth solving.
We cover HOW to do this in depth during our 12-week development and innovation programme, New Beginnings. Here are some DIY tools you can use to apply our methodology now...
A PESTLE analysis is a powerful tool that can help you better understand your business and the external forces impacting it.
By conducting a pestle analysis, you can identify potential opportunities and threats and develop strategies to mitigate them.
The PESTLE acronym stands for:
These all play a role in how your business operates and can impact its performance.
How to use the PESTLE tool
Grab some post-its and pens. Focus on the forces that matter most to you/your business/your customer.
Under each section, write down key signs of change that are influencing the shape of the world around you and your customers.
🏛️ P - POLITICAL
A good way to think about the Political pillar is to list any impact the government may have on your operational day to day business. For instance, employment law or taxes.
Example Generic Political Areas:
- Change of government
- New maternity policy law
- Corporate tax change
- Trade war
- What industries are you or your customers working in?
- When is the next election?
- Is your business international?
💰E - ECONOMIC
The economy is always changing, and any factor that is around it may impact your business.
A recession, changes in interest rates, or fluctuation of currency value can all have an effect.
Example Generic Economic Areas:
- Interest rate
- Currency value
- Are all of your sales in one country?
- What is your current tax footprint?
- What is the forecast for your country’s economic growth?
👩🏾🏫 S - SOCIAL
The Social pillar examines the social and demographic issues of your customers.
If you're a marketing-focused company or target one segment of society, this is an important pillar to discuss.
The Social pillar examines population and social trends and how they've impacted business, not just in marketing but also through to areas such as litigation and employment.
Example Generic Social Areas:
- Cultural trends
- Health awareness
- Working trends
- Behaviour of different ages
- What are the personals your business targets and how are they changing?
- What are the demographics of your employees?
- How may these change in the future?
💻 T - TECHNOLOGY
Technology. Everybody talks about it. It's changing everything, from how you do business to the way you live your life.
This pillar reflects how your business could be impacted by technology. It's the fastest-changing pillar and it will affect every part of your company, from innovation to operations.
Even if you're not a tech company, you have something to learn from technology—like how to use it.
Example Generic Technology Areas:
- Device profiles and usage
- R&D products
- Data tools / AI
- Battery technology
- What are the current operations in the company and how could technology impact them?
- How are your products or services impacted by the rate of technology change?
- What parts of your company could benefit from automation?
👩🏾⚖️ L - LEGAL
Legal is the broadest pillar, but it’s also the least specific. It’s about the general legalities of operating your company, including the policies and intent to best align with your company vision.
For example, GDPR has caused significant work for many businesses in the EU. It has cost them millions in lost revenue.
Legal isn’t just about specifics like laws or litigation, but also about what you do when you’re not sure what to do.
Example Generic Legal Areas:
- Health & Safety laws
- Digital & Antitrust laws
- Trademark & Patent laws
- Employment laws
- Department by department, what laws influence you day to day?
- Are there new laws coming into effect within the next 12 months?
- Do you have an in-house lawyer or outsourced service you can ask?
♻️ E - ENVIRONMENTAL
Weather, climate, green taxes, and more could all affect the success of your company. In fact, adopting policies of being environmentally conscious can also give you a competitive advantage.
In this pillar brainstorm all of the environmental factors that may result in you needing to make changes to your business.
Example Generic Environmental Areas:
- Weather conditions
- Green taxes
- Supply chain and resource availability
- Commodity costs
- Physical risks
- What aspects of your business impact the environment?
- How sustainable are your resources?
- What aspect do employees currently play in your company CSR?
Top tips 💡
- The hardest part of PESTLE can be deciding what to include in the scope.
- Think about whether you're looking at a local business or a global business
- If you're considering too many factors at a global level, such as Brexit, it may become too broad for PESTLE.
- Refine, refine, refine. With so much change happening across the economy, make sure you keep it focused to the things that matter to YOU and YOUR CUSTOMER the MOST.
Want to continue down the rabbit hole 🕳️ 🐇?
Check out these resources that will keep your inspiration tank full...