In the 1960s a Harvard researcher asked 137 managers how they found out what was happening in the world outside their companies. Their answers led, in time, to one of business's most-used checklists.
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One missing word fits every phrase in the group. Say it, then reveal.
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In the 1960s Francis Aguilar, a researcher at Harvard, set out to answer a simple question: how do managers find out what is happening in the world outside their company? In in-depth interviews, he talked to 137 managers from 41 companies, mostly in the chemical industry.
The results surprised him. More than half of the information the managers mentioned was what he called “market tidings” — news about their markets — even though most of them didn't work in marketing. Wider issues in the world around them seemed to be of little importance. And most of their information came not from reports or publications, but from personal contacts — people they knew.
In 1967 he published his findings as Scanning the Business Environment. He introduced the idea of “environmental scanning”: searching the world outside the company systematically, not just by chance.
1. What question did Aguilar want to answer?
2. What did the managers pay most attention to?
3. Where did most of their information come from?
1. How managers find out what is happening outside their company.
2. “Market tidings” — news about their markets.
3. Personal contacts — people they knew.
The framework later known as PEST is usually traced back to Aguilar's book. As the story is usually told, he grouped the outside world into four areas in a different order: Economic, Technical, Political and Social — ETPS. Later writers rearranged the letters into PEST: Political, Economic, Social, Technological.
Then the letters multiplied. Legal and Environmental factors were added to make PESTLE. Other versions include STEEP and STEEPLE, and military planners use a much longer one, PMESII-PT. Each new letter is an attempt to make sure that nothing important is forgotten.
Today the framework is used far beyond business. Researchers have applied PESTLE to subjects as different as coastal management in India and the biofuel industry in Europe.
1. What were the four areas, as the story is usually told?
2. What did the L and the E add?
3. Name two other versions of the framework.
1. Economic, Technical, Political and Social (ETPS).
2. Legal and Environmental factors.
3. Any two: PEST, STEEP, STEEPLE, PMESII-PT.
PESTLE has well-known weaknesses. It is much better at explaining what has already happened than at predicting what will happen next. And it is easy to fill in badly: people write long lists of factors under each heading without asking which ones really matter, or how they affect each other.
There is also an irony. Aguilar's own research showed that managers paid most attention to their markets and relied on the people they knew. A tidy six-box chart doesn't change those habits on its own. A team can complete a perfect PESTLE analysis in a planning meeting — and then forget about it.
Used well, the tool is less about the boxes than about the conversation it starts: what is changing out there, what will it mean for us, and what are we going to do about it?
1. What is PESTLE better at: explaining the past or predicting the future?
2. What mistake do people make when filling it in?
3. What is the irony in Aguilar's research?
1. Explaining the past.
2. They list lots of factors without asking which matter most or how they connect.
3. Managers relied on market news and personal contacts — habits a tidy chart doesn't change on its own.
Six headings for the world outside an organisation. Under each one, list the changes that could affect it — then decide which matter most.
A company that runs a chain of gyms is doing a PESTLE analysis. Which heading does each factor belong under?
1. Technological — new technology is changing how people exercise.
2. Economic — costs and prices.
3. Environmental — climate and weather.
4. Legal — a specific legal requirement.
5. Social — a demographic and lifestyle change.
6. Political — a government policy decision.
A list isn't an analysis. Long lists under six headings tell you little until you decide what matters most.
Better at hindsight. It explains the past more easily than it predicts the future.
The boxes overlap. Is a carbon tax political, economic, legal or environmental? Arguing about the box wastes time.
PESTLE is about looking ahead. To describe the world at a point in the future, English has two useful tenses: one for actions in progress then, and one for actions finished by then.
Put the verbs into the future continuous or the future perfect.
1. By the end of the year, the company (open) three new shops.
2. This time tomorrow, I (fly) to Lisbon.
3. In ten years' time, robots (do) much of the work in warehouses.
4. By the time you get here, we (eat) all the cake.
5. Don't call at eight — we (have) dinner.
1. will have opened
2. will be flying
3. will be doing
4. will have eaten
5. will be having
A café owner is thinking about 2030. Complete each prediction with the verb in brackets.
1. By 2030, the price of coffee (probably / rise).
2. In 2030, most customers (pay) with their phones.
3. By then, the council (ban) cars from the high street.
4. In 2030, I (still / run) the café, I hope!
1. will probably have risen
2. will be paying
3. will have banned (or may have banned)
4. will still be running
Now tell your teacher about your life in five years: two things you'll be doing then, and two things you'll have done by then.
Scan the horizon out loud. Choose a task, start the timer, and talk.
Choose an organisation you know — your company, your school or a local shop. Go through the six headings: what is changing outside it?
Describe your town ten years from now. What will people be doing? What will have changed?
Talk about a change that took a business or a person by surprise. Which heading was it under, and could they have seen it coming?