Tag: PEST analysis

Our strengths are our connections to the environment

Our strengths are not in ourselves.  They are in our connections with our environment.  So says Ralph Stacey, complexity theorist at University of Hertfordshire.

What on earth does he mean?  Is this just some abstruse idea that I can safely ignore?  Is it some pop idea that it is not what you know, it is who you know?

Use systems theory to understand your business and take action!

I am going to explain this idea using ideas from MGMT101: very basic systems theory.

Imagine the world as set of concentric circles. Go on.  Draw them.  Draw three.

Outer circle : macro-environment ~ the cloud

The very outer circle is the big bad world ~ the macro environment ~ the cloud. This is where you do your PEST analysis. This is where we worry about Politics, Economics, Social Trends like birth rates and Gen Y and Technological Change like Social Media.  What is happening in the stratosphere of our lives?  It is important to know this stuff.  In the slow moving world of the 1950’s, it was possible to look up and do this once a year.  In this day and age, you should have a set of Google Alerts just for this purpose. If you are a large organization, you should have part of your intranet reserved for articles on these topics written by your own staff in their areas of expertise.

Outer circle but one : micro-environment ~ your pond

The next circle are your competitors ~ your micro-environment ~ your pond.  Who is in your pond?  This is where we use Porter’s Five Forces.  We think about what your customers actually want.  What are the benefits of our products and services (rather than our features).  We think about what it takes to get into this business (barriers to entry).  We think about the suppliers on whom we depend (and how much they or we call the shots).  We think about who else ‘wants in’ to the business ~ who are our competitors.  We think about what our customers could use as a substitute for our service our product.

The ecosytem of our pond is quite complicated and we are sometimes overwhelmed by thinking it out.  I’ve found two concepts really help.

• Think of your lunch.  Who wants your lunch? The answer is often very surprising. After all, if scientists depend on government for their money, then they are in the businesses of public administration, government or politics.  This is usually an aha moment.
• Think of the food chain.  We are often make jokes about being at the bottom of the food chain. Actually you want to be at the bottom of the food chain. If you are nobody’s lunch, then there is no reason for your existence.   Who dies if you die?  Often your existence is rather diffuse.  So let’s phrase that a little.  Who would be inconvenienced if you closed down? You can see why businesses try to create monopolies. They are safe if they are indispensable.  Here is another aha moment when you see clearly who are your allies in the great game of  commerce.

When we have our competitors (they want our lunch) and our customers (they eat us), we are on the way to describing the ecosystem of our pond.

Defining your micro-environment ~ your pond ~ is work that you have to do yourself

Both these questions about ‘lunch in the eco-system’ are hard to answer.  They are not like PEST which is common to huge swathes of people and answered in The Economist and other general sources like that.

These are questions you must answer.  I can suggest ideas. We can borrow ideas and insights from other people in the trade.  Occasionally we find a really good book on our business like Michael Riley’s Human Resource Management in the Hospitality Industry.  Mostly we have to sit down and answer

• Who wants my lunch?
• Who thinks I am their lunch?  Who depends upon me?

We need concrete answers.  Take photos for me.  Tell me what they had for breakfast and where they are are 2.17 in the morning.  Why that time?  Because you know them so well.

The third circle – who are you and what is your agenda?

With those concrete and specific answers we can define the next circle.  Who are you and what are your strengths?

Now we do the SWOT analysis.  What are your strengths ~ your internal capacity, or things that you do every day, that allow you to be who you are.  Your weaknesses ~ those things you wish you weren’t (but might just be the flip side of your strengths).  The opportunities ~ those things coming up that you really want to do.  Threats ~ those things upcoming that you want to get out of.  You SWOT analysis is just a fancy ‘to do’ list.

Your strengths are the things you like to do and that you probably did yesterday too.  That’s what makes us thing they are us.

But they are really a story that we tell ourselves about us.  That’s why we look partly at our inner talk. We have a story of who we are, who we secretly fear that we are, we we secretly want to be.   We will always have our secret fears and aspirations, but our happiest times are when most of our story is out in the open.

And what is our story?  It is the story of what we do with other people for other people while we are up against a threat (those who want our lunch!).  It is a playful story about people who are in this game ~ with us and against us.  Cheering us on and getting in the way!

We cannot tell this story with the story of the outer two circles.  We cannot tell this story with the story of our times – the PEST analysis. We cannot tell the story without the story of our pond – Porter’s Five Forces.

Our story is a story about real people.  You must tell me who those people are.

Your strengths are your participation in the game of life. Everything you say and everything you do, with real live people.

Tell me that story and I will show you a successful business and blossoming career.