Scanning the business environment: beyond PESTLE

Anthony Haynes

Anthony Haynes writes: A common risk for small businesses, perhaps especially micro-enterprises, is giving insufficient attention to developments outside the business itself and its immediate network.

When there is time for planning and reviewing, the temptation is to focus on the business’s own products and processes. Should we review our prices? How can we reduce cost? How can we improve our marketing? And so on.

Such questions are unquestionably important. The problem comes when the focus is restricted exclusively to such questions, rather than also lifting one’s gaze to scan what has become known as the ‘business environment’ (though I sometimes wonder whether ‘context’ might be a better term).

At FJ Wilson Talent Services (FJWTS) we have a policy of periodically scanning the business environment to see what is happening out there that could, or should, influence the way we do things.

A common model to focus such scanning is known as PEST, where the letters stand for various types of factors, namely:

  • Political
  • Economic
  • Social
  • Technical or technological

This basic model has been expanded, from PEST to PESTLE, where the additional letters stand for:

  • Legal
  • Ethical and/or environmental

We certainly prefer PESTLE and, when it comes to the second E, we like to consider both ethical and environmental factors. But we have also extended the model by adding the letter I, thus making the acronym EPISTLE.

What does the I stand for? Ideas!

Sometimes one finds that ideas become current an influential — ideas that are quite general and not easy to pigeon hole. While might influence other factors covered by EPISTLE, typically they cannot be confined to any one of them. The danger of sticking to PESTLE, rather than EPISTLE, is that one might miss such ideas: they are apt to slip between the cracks.

What kind of ideas? Many that have become more widely acknowledged have featured in the genre of non-fiction that has become popular over the last decade or two — books that popularise findings from behavioural science.

Think Malcolm Gladwell’s books, especially The Tipping Point; Levitt & Dubner, Freakonomics; Surowiecki, The Wisdom of Crowds; Thaler, Nudge; and so on.

The emphasis that Daniel Kahneman and others have placed on predictable irrationality has perhaps the most potential in helping to understand both how people in one’s business context think and how they behave.

Whenever we’ve devoted quality time to applying our EPISTLE model, I’ve never come away thinking it was fruitless. In particular, it’s given us confidence to proceed on the basis that, however much it dominates public discourse, Brexit is neither the only show in town nor, for our business, the most important.


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