Strategic Partner, Diane Janovsky, is preparing us to switch our mindsets from closing out 2017 and moving on to forward thinking for 2018. In this article you will revisit a great tool that has been reliable for many years to take a “SWOT” at where you are currently, and a lesser known tool to understand conditions around you in the world. Think of it as making a “PEST” of yourselves! We hope you enjoy these concepts and this fresh thinking about switching gears to the coming year!
Well, it’s that time again. As important as it is to drive to finalize results in the remaining weeks of 2017, the priority for leadership must now turn to planning for 2018. As I tell my CEO and business owner clients, if they aren’t doing strategic planning, then no one is, and that is a recipe for failure.
In small to mid-size organizations, conducting a lengthy and detailed strategic planning process every year may not be practical or necessary. However, the exponential rate of change in the overall business environment creates the potential for disruption and unexpected risks, so it is critical to stop and take a high-level view, both internally and externally, and make any needed adjustments at least once a year.
One of my favorite tools to use for this purpose is the venerable SWOT Analysis, along with a companion tool called the PEST Analysis.
SWOT Analysis is a well-known tool that can help businesses maximize their Strengths, eliminate Weaknesses, take advantage of Opportunities and mitigate Threats. The key to an effective analysis is to understand that it is divided into two main perspectives on the organization: Internal and External.
The PEST Analysis
Lesser known than SWOT, PEST is an acronym that stands for Political, Economic, Social and Technology. It is an environmental scanning tool that originally appeared as ETPS in a 1967 book called “Scanning the Business Environment” by Harvard professor Francis Aguilar. The acronym changed to PEST and now includes other expanded versions such as PESTLE, PESTLIED and STEEPLE.
A PEST Analysis is useful as a complementary tool to a SWOT Analysis because it provides a framework for more in-depth understanding of external opportunities and threats that are outside of the control of the company.
The four basic elements of a PEST Analysis with some associated factors to consider are:
Although the CEO or owner is responsible for launching and sponsoring the SWOT and/or PEST Analysis, they should not do it on their own. While the final output is important, there is also great value to the collaboration process itself, and it is crucial to engage as many people as practical. Participation across multiple functions and levels in the organization will result in more diverse inputs and perspectives, improved alignment and increased buy-in to the results.
During the actual group activity, the usual rules of brainstorming apply, and senior leaders should strive to speak last so as to not dominate the discussion. Having a knowledgeable facilitator and a scribe will also make the process work more efficiently.
The final and most challenging step is to interpret how the various factors may impact the business and to develop an action plan with timelines and assigned accountabilities.
One of the most critical responsibilities of a senior leader is to protect the long-term sustainability of their company. The application of SWOT and PEST Analysis tools can serve as an advance warning system that enables a business to be proactive and not fall victim to unpleasant surprises, especially for factors outside its control.
It can also stimulate people to think differently and more creatively about the business in order to take advantage of previously unrecognized opportunities for growth. Investing the time to do this type of environmental scan using SWOT and/or PEST Analysis at least once a year is well worth the effort.