Environmental Scanning-PEST Analysis
Understanding and adjusting for the impact of the environment on organizational success is an essential leadership skill. The environment is constantly changing and organizational leaders and managers must be prepared to make adjustments accordingly. In Chapter 5 of William Cohen’s book, A Class with Drucker, he describes Drucker’s insights about paying attention to the future and especially changes in the environment. Past success is not an absolute guarantee of future success. Cohen sites a number of examples of corporations that were blind-sided by changes in the environment and literally went out of business. On page 55 he also suggests a number of practices to anticipate and prepare for possible change. Click the template below to download the PEST graph.
It is one thing to suggest to managers that they track changes in the environment; it is another to know what these changes are. On page 51 there is a description of one typology of types of changes, that is, technology, economics, cultural or social, and politics, laws, and regulations. This typology has also been developed into a tool called “PEST” (political, economic, social, technology) which is frequently used by corporate leaders and planners as a preliminary tool in tracking and analyzing environmental trends.
Consider that you are tasked by the top leader in your work organization to identify some of the critical external trends that could affect your organization in the near future.
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