Do you associate a PEST/PESTEL Analysis with hours of administrative work? Why would you even bother analyzing Political, Economic, Social, Technological, Ecological and Legal factors? What is the so-called PEST/PESTEL Analysis? And how do you determine the scope of the analysis?
A strategic framework for your organization
A well balanced process of strategy development consists of several phases.
- A phase where you analyze your internal and external environment in order to discover potential threats and opportunities for your organization.
- A phase where you involve as many relevant stakeholders (employees, customers, suppliers, shareholders… ) to register their dreams and expectations towards your company.
- A phase of creative and out-of-the-box thinking
- A decision-making phase
- A phase of writing down the company vision and strategy. In this phase you make your strategy as concrete as possible by determining Actions and KPI’s.
A lot of managers and leaders trust “their guts” when it comes to the decision-making process. Of course experienced managers can trust their instinct to assess different scenario’s and choose the right path for their company.
Nevertheless, strong managers do not rely blindly on their intuition. They combine evidence based decision making with intuitive decision making.
PESTEL Analysis
A well-known methodology to collect useful facts and figures is the PEST/PESTEL analysis. PEST is an acronym for Political, Economic, Social and Technological. It is the basic version of the methodology. Many extensions exist: PESTEL/PESTLE, SLEPT, STEEPLE, STEEPLED… In which you add additional external factors to analyze.
A good PEST/PESTEL Analysis contains a chapter of facts and figures per dimension. Gathering this information could be ‘one hell of a job’ but the next step is perhaps even more challenging. You should define a number of objective conclusions per dimension. The third step is to discuss what each conclusion could mean for your organization: which opportunities or risks do we discover? What Actions are we going to plan to tackle these potential threats and opportunities? And which stakeholders are we going to involve in order to deal with these threats and opportunities?
What’s in it for me?
If you are ISO-certified, a PEST/PESTEL analysis is an excellent input for the yearly context- and stakeholder analysis.
Secondly, the results of the PEST/PESTEL analysis are valuable input for a SWOT Analysis. In a SWOT Analysis the Strenghts and Weaknesess are situated within the company, and the Opportunities and Threats outside (e.a. in the external environment) of the organization. To create a relevant SWOT you should know what is happening in your environment.
Besides monitoring changes in your external environment, you should track changes in your internal environment as well. How satisfied are your employees? How long do they stay working for your company? If they leave, why? How do your co-workers remain up to date with respect to their field of expertise? How do we manage competences in our organization?
A quality management system (like ISO 9001, ISO 14001 or ISO 45001 for instance) makes sure that an organization considers all these elements in the decision-making process.
But how can you deal with these analyses efficiently and without hours of administrative work? There exist many (technological) tools that help you to analyze external and internal factors.
How do you monitor the changes in your environment? What are your ideas about intuitive and rational decision-making? What technologies facilitate your environment analysis? Share your thoughts with us, we would like to discuss this with you!
Our cloud based application, Phronesys, facilitates a quality management system. Do you want to discover more? Do not hesitate to contact us for a free demo