[Management Strategy] (2) PEST is not an "analysis." It is a structure for fixing "unchangeable premises." ~Strategy begins with what you cannot control~
*This series consists of 6 parts in total
Click here for the previous part
Is that premise really correct?
- The market is growing
- This business will work
- The competition is not that strong
Is that premise really correct?
Many strategies are built upon
"vague premises"
However,
If the premise is off, the strategy will inevitably fail
This is what is important
Strategy is not determined by "what to do," but by
"what premise you fight on"
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1. What is PEST?
PEST is
- Politics
- Economy
- Society
- Technology
A framework for organizing the external environment
However, that is not the essence.
PEST is not an analysis tool.
It is a structure for fixing premises.
--
2. Why is PEST necessary?
There are two types of things in management.
- Things you can control
- Things you cannot control
The most dangerous thing in strategy is
thinking about things you cannot control
under the premise that you can control them.
For example,
- The premise that the market will grow
- The premise that regulations will not change
- The premise that technology will evolve
All of these are things
you cannot do anything about yourself.
That is precisely why
they must be fixed first.
---
3. How to use PEST
There is no need to do PEST comprehensively.
What is important is,
"extracting only the premises that affect the strategy."
For example,
- Will regulations be tightened?
- Will the market expand or shrink?
- Will customer values change?
- Will it be replaced by technology?
Among these,
look only at what is fatal to your company
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4. Common mistakes
These are common failures with PEST
- Listing information and stopping there
- Being satisfied with being comprehensive
- Feeling like you have analyzed it
That is meaningless
PEST only has value when used for decision-making
---
5. The relationship between PEST and 3C
This is important
PEST → External environment (premise)
3C → Where to compete
SWOT → How to compete
Only in this order does it become a strategy
If you do 3C without doing PEST,
you will end up deciding on a battlefield with misaligned premises
---
6. Strategy begins with "constraints"
Strategy is not something you think about freely
It is about finding the optimal solution within constraints
What you are looking at with PEST is,
the constraints themselves
- Market constraints
- Social constraints
- Technological constraints
A strategy that ignores these will inevitably lose to reality
---
Think from what cannot be changed
The first thing you should do in strategy is not,
"what to do"
It is to know "what cannot be changed"
- Market
- Regulation
- Society
- Technology
Fix these as premises,
and choose a place where you can win within them
That is what strategy is
[Management Strategy] Series Structure
1. 3C
→ Decide the "place" to fight
2. PEST
→ Fix the "premises" that cannot be changed
3. SWOT
→ Define your company's "winning path"
(4) Marketing
→ Designing "moves" for the market
(5) Narrowing down the target
→ Deciding who to win against
(6) Sales strategy
→ Implementing how to secure the win
Strategy is not analysis.
It is about designing a path to victory within the scope of what you can control, based on premises you cannot control.
Strategy is not something you think about freely.
It is about finding the optimal solution within constraints that cannot be changed.
To those who have read this far:
Has your company
organized its "unchangeable premises"?
The reason many strategies fail is
because they are not based on variables that cannot be controlled.
・How will the market environment change?
・How will regulations and systems have an impact?
・To what extent can your company change things?
If this remains ambiguous,
any strategy will continue to waver.
If you:
・Want to organize your company's prerequisites
・Want to apply PEST to practical work
・Want to build a foundation for your strategy
please leave a comment or send me a DM.