SKEPTIC Environmental Scanning

by Paul Simister on April 13, 2011

I thought this SKEPTIC acronym for environmental planning from Stephen Haines was pretty neat when he mentioned it in an email.

I use PESTER and Michael Porter’s Five Forces but SKEPTIC environmental scanning combines them both if you’re not going to venture into detailed scenario planning.

What is SKEPTIC Environmental Scanning?

SKEPTIC stands for

S = Social Demographic (the S from PESTER)

K = Competition and Substitutes (two of the five forces)

E = Economics and Ecology (the two Es from PESTER)

P = Political/Regulatory (the P and R from PESTER)

T = Technology (the T from PESTER)

I = Industry/Suppliers (supplier power and new entrants from the five forces)

C = Customers and Citizens (the buyer power from the five forces).

Thoughts On SKEPTIC Environmental Scanning

OK SKEPTIC may not introduce much new into environmental scanning (although citizens doesn’t directly translate) but if you’ve used PESTER (or PEST, PESTEL or STEP) and the Five Forces in the past, then using SKEPTIC may freshen things up a bit and get your top team thinking again.

I see some cynicism towards both the five forces and PEST analysis because they are often not used well by management teams working on their strategy.

For more details on SKEPTIC, see Future Environmental Scanning Assessment

SKEPTIC Is A Strategic Planning Model

SKEPTIC Environmental Scanning is one of the frameworks included in my Strategic Planning Models guide.

Click the link to find out what other models could help you to develop a winning business strategy.

Have You Used The SKEPTIC Environmental Scanning Strategy Tool?

Have you used SKEPTIC as a way to combine PEST analysis with the five forces or do you know of any other similar tool which combines them both.

I’d like to know so please leave a comment.

Paul Simister is a business coach who helps small business owners to profit from differentiating their businesses, being distinctive in the eyes of their customers and standing out in a crowded marketplace.

You too can move past your profit tipping point (free report) by answering the seven big questions of business success.

{ 2 comments }

Clive Viegas Bennett September 20, 2011 at 3:12 pm

A really useful model (no fancy name, I’m afraid) I use sometimes, which combines the two, is to use PEST to see what might be the long term trends in the five forces.

So, for example, start with a 5 forces analysis:
Buyer P. = H
Supplier P. = L
Thr.N.Entrants =M
Thr.Substitutes = L
Rivalry = M

Insert these in the left hand column of a table

Then do your PEST (or PESTER or PESTM or whatever). Each of columns 2-5 (or more if PESTER etc) is headed with each of these factors

For each combination (e.g. Buyer Power/Economic) decide whether the PEST trend is likely to make that force increase (+), stay the same (blank) or decrease (-) over time.
In the end the P, E, S, T columns will be filled in with +’s, blanks or -‘s

Then add a new column at the right “Overall change”. Add up the +’s and take away the -‘s. In theory you could get any result from +++++, though blank (neutral total) all the way to —–. In practice you’re rarely going to get more than say ++ or –.
Finally add that result to the original five forces, so, for example “L” plus ++ = “H”, “H” plus – = M and so on (Of course the max is H and the minimum is L) and fill in the final right hand column (“Future five forces”) with those results

The seems like crude arithmetic but H/M/L is pretty crude anyway and is only intended to give a general picture. If you wanted you could use a more sophisticated scoring system, with weightings for the different environmental factors etc but I don’t think this is that kind of tool. What it does do is give you a very good sense of what your competitive environment is going to look like in a few years time – and which forces are most important for you to fight.

This is nowhere near as effective or thorough as (well done) scenario planning but if nothing else it is great to answer the question “So what?” to a PEST analysis.

Hope this is useful.

Paul Simister September 20, 2011 at 4:29 pm

Clive, thanks for such a detailed comment about how you combine PEST and the Five Forces. Shame you can’t combine it into such a neat acronym as SKEPTIC.

I was also taught to look at the Five Forces through a PEST lens. I like the simple H/M/L assessment and the +/- future prediction. I’m not sure about L++ turning into a H but I get the gist.

Scoring can be a useful way to identify which areas of the mix to delve more deeply into although I usually don’t bother. That may be because my business health check picks up broad ratings. I’m looking for insight into what might change and what can be done about the opportunity or threat.

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