By Nilooka Dissanayake
Recently* I came across an interesting definition for luck which I feel is useful for everyone, but particularly so in the context of business. “Luck is the result of our alertness meeting with the opportunities in the environment” says Santanu D. Sharma, Country Manager of Trident Corporation. We can define bad luck then, as our lack of alertness meeting with the negative aspects or threats in our environment.
At last, this definition brings luck—good as well as bad—within our own control. All you need to be lucky is to be alert and prepared.
To be alert of anything, we must understand what is likely to happen and how we will react to each different situation. The element of surprise, especially in business, can be fatal. Since most of us are unable to get a crystal ball to predict the future, our only resort is to try and understand the many forces at play and how they will affect the outcomes. Simply put, let us understand our business environment and be prepared and alert.
Have you heard of how an old woman taught the legendary Prince Dutugemunu the art of war? Right at the beginning of his now renowned military career, the young prince was returning from battle defeated, demotivated, tired and hungry. An old woman had offered to prepare a meal and served the prince with freshly prepared milk rice.
The prince was so hungry that he did not want to wait until the food had cooled sufficiently. So he picked a bit of rice from here and a bit from there and began his meal. The old woman watched this and later asked him a question. “Do you know why you lost the battle?” And the prince, quite surprised, said no. “You have been preparing and battling just like you ate your hot milk rice” said the old woman. “Without a proper plan and picking from here and there. If you want to win battles, go at it in a methodical way.” Young Dutugemunu took this advice to heart and–sorry about the cliché—the rest is history.
As in war, to get anywhere in business, we must go at it in a methodical way. How do we understand the highly complex business environment? We can use a tool that many have used to make sense of this complex subject.
As you know, the business environment that we operate in is a collection of many forces. Forces both far and near create whirlwinds and undercurrents that may have positive, negative or neutral impacts on our business. These can affect us directly or indirectly. On one side they create opportunities for us. On the other they pose threats to our survival and continuity. Some things do not affect us either directly or indirectly.
PEST analysis is a methodical way of understanding the external business environment. The four letters in PEST stand for political, economic, social and technological aspects that affect our businesses. It will help us answer questions like how is the world likely to change? What forces will go for and against us? What implications will they have?
Politics play a major role in the world of business. Government policy, laws, regulations, taxes and major thrust areas as well as pet projects of those in power affect us in many ways. Too many elections as well as too few elections are seen as bad. Being in Sri Lanka where people pay a lot of attention—perhaps more than necessary—to political forces and politicians, I do not need to spell out how politics affect your business. You know only too well.
Economic conditions, unemployment, cost of labour and industrial relations affect our business activities. Cost of living and standards of living determine how our customers and clients will react. Rates of interest affect how people save and invest. The many factor that affect the economic health and wellbeing of a nation also affect the businesses operating within it. Global economic factors also affect us because we are networked into the global economy.
How does society affect us? The way people feel, think and act will affect how businesses serve their needs in order to make a profit. To meet their demands, we have to be alert to see how their lifestyles and values keep changing over time. How will the changing society affect your business? What trends will create opportunities for you? What will threaten you?
On the technological side, again there will be negative, positive and neutral aspects. What will give you a competitive edge? What will force you out of business? What will make you a winner or make you obsolete? What technologies will make you more competitive?
You need to answer all these questions. Then, from among a multitude of forces, identify the key factors that will play a major role in the future of your business. PEST is just a convenient frame for you to use in thinking of the future. It will not help you deal with the implications. That is your own job. PEST will open your eyes and your ears. What action you take is up to you.
Whatever you do, try not to be caught unawares. Be alert and prepared. Use PEST to protect yourself. Use it to get lucky by meeting the opportunities well prepared and to avoid threats to your business.