One of the first lessons of leadership is to constantly acknowledge that we operate in a very dynamic environment. While the ongoing nature and rapid pace of the change is often frustrating (if not mind-boggling!), we can also acknowledge that there are specific categories of environmental forces at work that can be studied to help us predict possible changes that may affect us. Then we have the chance to plan accordingly. In fact, investment columnist Malcolm Berko alluded to these very items as a way to make investment decisions in this article a while back.
The four basic categories of environmental forces are: Political/legal, Economic, Socio-cultural, and Technological (PEST). Before we talk about what each of these are, I think it’s important to note that there’s good news and bad news with regard to environmental forces. The bad news is that they are ultimately out of our control. The good news is, anything that can impact our decisions will ultimately fall under these categories, so if we study them constantly and ask how they relate to our business, we can use them as indicators of what the future might hold. The fancy term for that is “trend spotter” and if you can become one who wears this label, just watch your market value shoot up. Later on, we’ll look at examples of each of these categories and what to watch for.
You can observe a lot just by watching” – Yogi Berra