The One “Pest” That You DO Want!

No one likes pests. We have sprays and chemicals and professionals that get rid of pests from our lives. But in business planning and development, there is one pest that we DO want! I’m talking, of course, about the PEST analysis.

PEST is an acronym that stands for “political”, “economic”, “social”, and “technological” elements, and it is a framework that business strategists use when developing strategy for organizations. It’s a mnemonic device that guides strategic thinking and prompts analysts and strategists to explore each of the four areas and consider how current and future conditions may positively or negatively impact the business.

This is a useful tool in business strategy, and it’s a useful tool in the work I do, too. Whether bringing a product to market, or managing a project from concept to completion, or creating a social media strategy for a business, the PEST analysis is a useful framework to refer to.

Applying PEST in any of these situations can help to mitigate risks and uncover opportunities that might not have been apparent in the early stages.

Here are some examples:

•    A financial management company that wants to explore how social media can help it serve customers might need to carefully weight its opportunities against the political risks of SEC regulations.

•    Economic factors are especially relevant today. Many projects starting up need to make a case for why they are important in today’s economic climate, and how a turnaround will make the end-product even more successful.

•    A retailer will want to consider how social trends might positively or negatively influence consumer buying patterns. For example, as consumers become more environmentally aware, more and more companies will need to account for their eco-footprint.

•    A manufacturer bringing a new product to market would do well to explore how current and future technological factors might be integrated into the product to make it a better product. (Webkinz is a great example of a company that does this well).

So, when you are starting a project or thinking about bringing a product to market or developing your company’s marketing strategy for the near future, incorporate a PEST analysis into your thinking.

A good place to start is at Wikipedia, http://en.wikipedia.org/wiki/PEST_analysis#The_Model.27s_Factors, which breaks down each of the four elements into smaller pieces. Get a group of people into a room and spend the time to work through each element in detail. It might seem like it adds yet another day to your schedule and yet another task on your to-do list (and, indeed, it may add even more tasks as you run through the analysis), but the time spent anticipating and responding to current and future political, economic, social, and technological factors can help to make your project, product, and marketing plan far more successful.

Related posts:

1. Business “best practice” in today’s economy
2. What’s Your End-Game Play?
3. Embracing the recession
4. What’s stopping you?
5. Mitigating Risks: The Key to a Stronger Project