The Plague of Misidentification

Causality Part 8

In today's TPOM, we will be looking at a few more mental models.

PEST

Pest stands for political, economic, socio-cultural, and technological. Harvard Professor Francis Aguilar is thought to have created the PEST model. In his 1967 book Scanning the Business Environment, he included a tool known by the acronym ETPS. It appears that this tool was later amended to PEST and has since become a highly used tool in business. 

Let's examine how the PEST model breaks out and how we can use it to better understand reality. 

• Political

• Economic

• Socio-Cultural

• Technological

Political Factors

It is critical to consider the political climate in which your business is situated. There are many factors to consider before you make vital business decisions. Here are a few:

• At what time are the next county, state, and national elections?

• Which party is likely to win on the county, state, and national levels?

• How will each of those likelihoods play out concerning policy change that can affect your business?

• What are the trends of the political climate leaning toward? E.g., pro-business and favorable business taxation or anti-business with more penetrating taxation.

• Is the climate filled with corruption?

• Is the climate firmly under the rule of law?

• How does the government at each level see corporate responsibility? Will this view positively or negatively affect your business?

• Is the current political climate stable?

• Is the current political climate unstable?

• Is there a looming war?

• Can the citizens of your county support themselves via their work?

• If your business is international, apply all of the above to each region in which you operate. 

• Will a neighboring county be altering policy such that your local competition will gain an advantage? If so, what can you do to level the playing field?

• If significant changes are coming that will affect your business, what is the timeline for those changes?

The political landscape is continually offering challenges, as well as solutions. The job of any good business leader is to correctly identify and manage all environments to a mutually beneficial state for the business, its patrons, and the society in which they exist.

Economic Factors

The economic factors are essential considerations if you wish to make an intelligent and informed choice for your business. Here are some factors to consider:

• What is the availability of your customers to credit?

• What is the availability of local businesses to credit?

• If there is little access to credit, how will this alter your business landscape?

• How might political factors change, and what will the impacts of those changes be on your business?

• How is the green movement affecting your business environment?

• How is globalization affecting your business environment?

• How might trucking and supply chain issues affect your business environment?

• How stable is the current economy? Would you rank it as stable, unstable, growing, or declining?

• What are the exchange rates? 

• How much does the exchange rate system’s fluctuation affect your business?

• How does international business practice in transport affect your business?

• What are the key indicators that affect your industry?

Socio-Cultural Factors

The socio-cultural aspects can have a considerable impact on business. Let's look at some of the key factors to consider:

• How much do the various belief systems practiced within your region affect your business? 

• How are the shifts in generational thought affecting your business?

• How do social taboos alter how you do business? Should they alter your business's practices more or less than they currently are in order to fine-tune to your environment?

• How have social attitudes changed since the start of your business, and can you fine-tune to take advantage of the changes?

• Is your business in a region that regularly undergoes socio-cultural disturbances? If so, how can you protect against loss of livelihood? 

• What is the age demographic that uses your product the most?

• What is the level of mobility in your society?

• What are the current job market trends? How are these trends altering your business, and what can you do to capitalize on the trends, if possible? If not, how can you best protect against loss during the trends?

• How has the current shift in attitude toward work altered your business environment? 

• Does your business benefit from population growth? If so, what is the current growth rate of the population? Does this growth rate apply positively to your customer base?

• How is your business seen by your local culture? Is it viewed as being positive or negative?

Socio-cultural factors are often complex and difficult to navigate. Look for areas of overlap where the common ground can be found because it is within the area of the shared concepts that you can find the most peaceful and generally accepted path forward for your business.

Technological Factors

The technological environment and your business's proper adaptation to that environment will be pivotal in the success or failure of your business. 

The following are critical factors to observe:

• What are the most beneficial technologies that can benefit my business?

• What are the technologies that can help me find those beneficial technologies?

• How technologically savvy are my competitors? 

• How can I use technology to outpace my competitors?

• Are there any new technologies or soon-to-be-released technologies that will alter my business landscape? If so, what are they? How can I adopt their usage to my advantage?

• Are my competitors planning to utilize future technologies in ways that will affect my business? If so, how can I stop that negative impact? 

• Are there any technological hubs that I can interface with that will enhance how I do business?

• How will the work-from-home movement affect my business, and what can I do to use it to my advantage?

• What can A.I. offer my business?

• How can I use technology to reduce error rates and increase dollars earned per second of operational business time?

• How can I use technology to reduce travel time?

• How can I use technology to increase employee functionality?

• How can I use technology to better train my employees?

Benefits

If we use the PEST model correctly, we can see that it will help us to:

1. Assess threats in advance.

2. Create action plans for dealing with those threats. 

3. Locate business opportunities. 

4. Capitalize upon the opportunities with intelligent planning and execution. 

5. Correctly assess all environments and generate solutions-based models to deal with those environments to benefit our businesses maximally. 

6. Assess for risk potentials and avoid environments of high probabilistic failure. 

7. Correctly assess multiple markets across various socio-cultural and political environments and how to deal with them in significant ways, yielding higher efficacy and profitability.

Reality and Global Business

In learning to see reality clearly, the study of the global business environment is absolutely essential. It is an old adage of the early twentieth-century newspaper reporter: "If you want to get to the heart of any story, follow the money." The international business world is a maze, and the international or global monetary system is doubly so. If you wish to understand it, you will need every thinking tool and mental model you can get your hands on, along with the tenacity of a pit bull latched onto his favorite bone and, of course, dedication, and nerves of steel.

That said, as you may infer from the above paragraph, there is a large portion of the unseen reality lurking in that maze, and once navigated and understood, it can be shockingly eye-opening and freeing. To be sure, there is a stupendous amount of data to understand, but remember, we have systems and lots of them to help us gain a functional understanding. That is a critical concept, functional understanding. It means that we have a fundamental grasp of a thing such that we can functionally operate within its framework well enough to traject forward with a high degree of accuracy. 

PEST and Its Variants

The PEST model has several variants. They are as follows:

• PESTEL or PESTLE: Political, Economic, Socio-Cultural, Technological, Environmental, Legal.

• PESTLIED: Political, Economic, Socio-Cultural, Technological, Legal, International, Environmental, Demographic. 

• STEEPLE: Social/Demographic, Technological, Environmental, Economic, Political, Legal, Ethical. 

• SLEPT: Socio-Cultural, Legal, Economic, Political, Technological. 

• LONGPESTLE: Local, National, Global, Political, Economic, Socio-Cultural, Technological, Environmental, Legal.

Environmental Factors

Many businesses are profoundly impacted by environmental factors that can show up unexpectedly. Let's take a look at the environmental factors:

• The green movement and its regulatory practices will impact many businesses. How might the green movement impact your business?

• How is your business geolocated? Are you in a floodplain? 

• What are the environmental risks of doing your business?

• What are the environmental governing bodies in your community? Get to know them and understand what it takes to do business in your community.

• Is your business located in an area likely to be significantly altered via global warming and its legislation?

• What is your business's proximity environment? Do you keep everything up to code, and are you practicing safe business practices? Not only can fines add up, but you can also lose points in your community and with your employees if you do not operate with their safety and general well-being in mind. This can lead to catastrophic circumstances far beyond business, extending to the loss of human life.

• Is your business likely to undergo any significant environmental changes? If so, what is the timeline for those changes? 

• What are the repercussions for failing to meet any of the current environmental change timelines?

Legal Factors

It should go without saying that the legal aspects of any business should be well-understood if one does not want to risk a complete catastrophic failure of the business. One needs to consider many legal factors to operate their business safely and effectively. Here is a list of several important areas of concern:

• Consumer law

• Copyright law

• Discrimination law

• Employment law

• Fraud law

• Health & Safety law

• Import/Export law

• Pyramid Scheme law

Each of the above requires an in-depth study to be genuinely informed regarding the safe legal practices within your field of business. 

The Legal System & Mega Structures

The study of the legal system is another essential undertaking in our quest to see reality clearly. It is critical to grasp the deep structural components that underpin the legal system.

When it comes to reality and gaining an understanding of it, we need to always look for the most ubiquitous elements. The items in the following list are meant to be understood as mega-structures that have incredible influence and are, therefore, essential topics or concepts to understand deeply. The following are worthy of your time and attention: 

• Environment

• The Legal System

• Societal Structures (core underpinnings)

• Medicine

• Governmental

• Religious

• Economic

• Construction

• Foundations

• Special Interest Groups

• Technology 

• Agriculture

• Geography

• Science

• Communications

This list is nowhere near complete. That said, if you endeavor to understand as much as possible about the above structures, how they function, why they function, how they are used, in what ways they alter your reality, and who controls them, for starters, then you will need the thinking systems, thinking tools and mental models being made available to you through this writing. Otherwise, the task will be too great to grasp all that is required to truly see the mosaic. Each field of study above is a significant piece in the mosaic, and without an understanding of the above questions regarding them, and frankly, many more, you will be shooting from the ditch. Fear not; it is doable, and we are making headway, and consistent headway at that, my friends. All that is required is that we continue.

Encouragement

You may find yourself having difficulties grasping various aspects of these essays. I want to encourage you to sit with them and contemplate them by using the systems I am teaching through them to help you deepen your understanding. You have only to get slightly better tomorrow than you were today. Do not lose confidence in yourself or your capacity just because you are encountering something that is not familiar, easily graspable, or that challenges you in multiple ways that feel uncomfortable. The most significant, most valuable aspects of our character are quite literally forged by the struggle against that which we do not yet comprehend. 

An Observation

We learn little by victory, especially via heuristics, fallacy, and bias. This type of victory sets us up for a far greater defeat that is all too soon to visit us as we sit mightily in the arrogance of our ignorance, and the ignorance of our arrogance, all manifest through the vanity of a fool's dream of egoic superiority. I want to leave you with something I find to be utterly profound and something I have thought intensely about for many years: If our victories do not enhance our humility, then they cannot be victories. In this case, they are nothing more than self-aggrandizement that will surely erode our humanity while slowly nudging us ever closer to the ultimate fall. A fall from which we shall not recover, and one that is directly proportional to the arrogance with which we lived out and inflicted upon all of those within our reality. This is the plague of misidentification writ large. 

In a society that equates victory to dominance and dominance to superiority, each citizen exists only to enhance the egoic image of the mentally deranged as each individual preens themself in the mirror of violent superiority and elitism. In such a society, love is the rarest of commodities; truth is an offense, and the vain die of dehydration without ever knowing thirst.

Never quit unless quitting is the just thing to do. Do not give up unless you are giving up that which you or others use to bind you. Move forward continually, and for others who will come after you are long gone. Be encouraged.

We will continue. 

B.S.R.