Imagine being asked to read newspaper stories and analyse them to understand their impact on the Business world. It was unusual and entertaining way to learn about Business strategy and the need for constant renewal to survive in a competitive marketplace.
It seemed an exaggeration then but the world truly is changing at a far more rapid pace than ever before in the past and surely the nimbler players survive better in it than the stronger or even smarter ones.
The model was called PEST-E representing the strands of Political, Economic, Social and Technology factors that impact ones strategy. An overarching principle of increasing importance was ecology or environment that was then a newly evolving factor. Over the years I have heard more complicated versions including PESTLE, STEEPLE, STEEPLED but the original paradigm was the first one to make an impact on me.
What is like a second nature to me nowadays was quite a challenge in those initial days. So any story in the newspaper was easily slotted in one of the above mentioned slots or so it seemed. But there was nothing without a context or subtext and the moment you set about unravelling it, you realized the interconnectedness of these factors that interacted in complex ways to create a story that was never quite that simple and not without intricate ramifications.
The ‘5 Why?’ model was a useful mechanism to drill down the story further in an objective manner. And if one had multiple strands it soon evolved in a ‘Fish-Bone’ structure and usually the dominant strands could be identified. Biases, information arbitrage, misinformation, and subterfuges too came into play to make the analysis all the more interesting.
And the mind has an inherent trick of learning lessons and creating memory. And so in our everyday lives we apply the above mentioned precepts possibly without being formally familiar with the framework. And the speed at which we process information and do this analysis too is quite startling.
The ‘pot-of-Gold’ lies in picking the trend early and cashing on it before it becomes everyday knowledge. The most common application of specialist knowledge or information arbitrage is seen everyday in the way the stock market performs a complex performance of a variety of factors to reflect the inherent value of the stock in its price. Undoubtedly it is messy and unscientific at times and the ‘Boom-to-Bust’ cycles to are enshrined into folklore to reflect the hubris of man driven by his own misplaced conviction.
But the paradigm helps us understand the complex world we live in and gives us tools to navigate the risk v/s return trade offs that are inevitable even in the simplest of transactions.
If anything can beat the above clutter, it is the path-breaking innovation that shifts the entire existing paradigm. It is like quoting Henry Ford saying that while planning his Ford T model car he did not care for what people wanted.He explained it by saying,“If I had asked people what they wanted, they would have said faster horses.”
And that reminds me of our term assignment and a creative answer that gave one of our projects team a free joyride to glory. Back in 1998 our professor asked teams to create a fictional ‘Economic Times’ newspaper dated 1 Jan 2010. He expected us to give a free run of imagination of popular stories based in the PEST-E framework and what was reasonable to expect to happen in India after a decade. We all racked our brains wanting to win a Permanent Member seat on the UN Security Council, win an Olympic Gold Medal, launch a mission to Mars etc. It was fun but the cake was taken by a team who published the briefest of the papers stating –
“Our offices are closed today on account of the New Year holiday. There will be no edition of the paper today.We will resume our services from 2 Jan 2010.”
Our Prof was a good sport so gave them a good credit for showing creativity and innovation in their assignment.