A PESTEL analysis is a strategic tool coming from marketing used to identify external forces in the environment that faces an organization. By completing the tool, the team analyses the Political, Economic, Social, Technological, Environmental and Legal forces that make up the external environment. The exercise provides a situational analysis that allows organizations to anticipate threats and opportunities, gain contextual awareness and process external trends. In order to be an active and strategic operative tool, internal assessment needs to be done to translate the insights into actionable strategies for the organization’s future opportunities and operation. The insights coming from this analysis are useful towards a SWOT analysis as well as in activities regarding future scenarios and strategic direction.
Challenges
The tool addresses in a single canvas the different environmental factors that can drive or hinder the development of a social innovation. As a mapping activity, it highlights different elements that factor into tackling specific challenges, highlighting insufficiencies, barriers and threats, but also available resources, drivers and opportunities. It is a great way to map the ecosystem and current context within which social innovations will develop and to align them with strategic directives and on the basis of different prospective threats or opportunities. It is also a great horizon scanning tool for scenario building and futures work. For this purpose, there is also a values element that has been added to the environment analysis.
Problem, Purpose and Needs
The tool aims to help teams get aligned on the context of innovation in order to better design solutions that can be effective, feasible and long-term. It helps to visualize and bring to the surface also the tacit knowledge that each member has of the specific challenge area.
Relevance to Climate Neutrality
Challenges
Thematic Areas
Impact Goals
Issue Complexity
Issue Polarisation
Enabling Condition
Essential Considerations for Commissioning Authorities
The tool can be useful for quickly assessing the fit of a solution to local needs and strategic directions before further investment.
Engagement Journey
Governance Models and Approaches
Enabling Conditions
Democratic Purpose
Spectrum of participation
Communication Channels
Actors and Stakeholder Relationships
The activity is best done in a small group composed of main representatives of the different stakeholders and value creation areas. It can also be done by a small group or project leader who consults with different actor groups through interviews. In subsequent iterations, different actor groups can be informed, consulted or engaged in refining specific parts. The activity has the potential to create new relationships and connections (of mental models) between actors while working on the model.
Participant Numbers
Actors and Stakeholders
Participant Recruitment
Interaction between participants
Format
Social Innovation Development Stage
Scope
Time commitment
The time needed to complete the activity depends on the level of detail and thoroughness desired, as well as how many actors are involved in the task. It can take anywhere from 2 hours and upwards.
Resources and Investments
Typical duration
Resources and Investments
In-house
Step by Step
The first step is to gather together a working group of key actors across the organization to brainstorm ideas and conduct the research. The team should work together to map out the trends in each area of the matrix (political, economic, social, technological, environment/values, legal), starting a reflection and discussion on how these trends frame their current activity and open up possibilities of different future horizons of development. Based on the initial mapping, ethnographic, field and/or action research strategies (e.g. interviews, focus groups, immersive observation, etc.) should be used to gain further insight of each focus area from the perspective of key stakeholders (See Stakeholder mapping tool). Next, the group should collect evidence for each insight to then evaluate and score based on ‘likelihood’ and ‘impact’: how likely it is to happen and what kind of impact it could have on the organization (similar to impact and feasibility analysis tool, substituting feasibility for likelihood). In the final stage, the group should refine insights and make strategic recommendations on a path forward.
Evaluation
The tool should be shown to relevant actors (beneficiaries, customers, supply chain actors, employees, etc.) for feedback and iteration.
Connecting Methods
The canvas can serve to conduct a SWOT analysis, as well as Scenario Building with Futures Table and Backcasting. The activity can be completed with information and insights coming from other tools, namely: stakeholder map, ethnographic interview, ethnographic field notes, and observation of context. These tools can provide content for the model, but are not necessary for the completion of the canvas.
Flexibility and Adaptability
The canvas could be translated into the local language. More context-specific terms and questions could be used in the supportive text and questions in each box.
Existing Guidelines and Best Practice
Witcher, B.J. & Chau, V.S. (2010). Strategic Mangement Principles and Practice. UK: Cengage Learning EMEA.
Issa, T., Chang, V., & Issa, T. (2010). Sustainable Business Strategies and PESTEL Framework. GSTF International Journal on Computing, 1(1), 73-80.
References and Further Resources
Witcher, B.J. & Chau, V.S. (2010). Strategic Mangement Principles and Practice. UK: Cengage Learning EMEA.
Issa, T., Chang, V., & Issa, T. (2010). Sustainable Business Strategies and PESTEL Framework. GSTF International Journal on Computing, 1(1), 73-80.
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