Leaders of organizations would love to know what the future has in store. They know that no matter how hard they work to build a successful organization, many factors are outside their control.

Fears of recession, bear markets, and inflation often dominate business news. Such drives fear, speculation, and overthinking, leading millions of executives and entrepreneurs to have sleepless nights.

I spent years doing a bachelor’s degree in economics and a master’s degree in finance. Then I worked in consulting. In these environments, I learned that no matter how much a business wants to grow and profit, something always gets in the way. Sometimes these challenges are internal; other times, they are external.

The best executives and entrepreneurs know how to scan all the relevant factors and act strategically.

Academics and business strategists create models and frameworks to help us manage the inevitable and complex changes that all organizations face.

Bottom Line Up Front

STEEPLE is a tool for strategic planning. It helps organizations identify the external macro-level factors that affect them.

STEEPLE is an acronym for Social, Technological, Economic, Environmental, Political, Legal, and Ethical.

When doing a STEEPLE analysis, you research and brainstorm to identify the data, events, and policies which fall under each of the seven categories. You can do this analysis solo, but it is better to do it with a solid and knowledgeable team to get diverse and in-depth opinions.

The results of a well-done STEEPLE analysis can help you know which decision to take and to manage change. It also highlights outside threats that you may or may not have expected.

What is STEEPLE Analysis?

The STEEPLE analysis is an extended take on the STEEP (Social, Technological, Economic, Environmental, Political) analysis. It adds legal and ethical factors. These frameworks evolve as strategists’ perspectives on the global and national events and policies that impact organizations.

Both analyses’ roots are the PEST (Political, Economic, Social, Technological) analysis, developed in the 1960s by American strategic planning scholar Francis Aguilar.

In the past few decades, business leaders, strategists, and scholars have grown to accept that climate-related events can devastate supply chains. Many also know that their businesses have impacts on the environment. So, scholars added the environmental factor.

S in STEEPLE Stands for Social

In a nutshell, the social factor looks at how people think, feel, and behave at a given period. These factors are not constant. You can get insights about this through market research which provides current trends and patterns.

Some exciting and crucial variables to identify include lifestyle changes, spending habits, population growth, age, population age structure, consumer attitudes, and social media trends.

The possibilities are endless because the culture and structure of society are constantly changing.

T in STEEPLE Stands for Technological

Nowadays, the relevance of technology as an external factor impacting organizations is undeniable. Organizations cannot escape the impact of technology on their bottom line.

Gone are the days when brick-and-mortar stores and shopping malls housed the consumer experience. Much of our shopping now happens online on sites such as Amazon and eBay.

Technology provides opportunities to change how you run your business and production methods. Understanding the technological options available to your business allows you to develop strategies that take advantage of technology.

E in STEEPLE Stands for Economic

The economic situation will continually change. Under this category, you should identify factors such as economic growth, unemployment, inflation, interest rates, and international trade policies.

If your business operates in multiple countries, it is also helpful to understand those countries’ economic trends and global forecasts.

For example, if your research shows that unemployment rates are low, you get the general idea that finding workers for your business may be difficult. Reduced labor availability often means you have to pay high wages and salaries.

E in STEEPLE Stands for Environmental

The environmental factor was not in the original PEST analysis developed in the 1960s simply because even the best minds were not fully aware of the impact of pollution, waste, and climate change.

You may have a business in the United States that sells a product, but the manufacturers are likely in China, Bangladesh, or any country abroad. Extreme climate events caused by climate change can disrupt supply chains for weeks or months.

On the other hand, this factor also looks at how your business affects the environment. For example, do the organization’s activities increase waste or pollution, and do you have any strategies and policies to minimize the impact?

P in STEEPLE Stands for Political

Government policies, either domestic or international, are considered political factors for this analysis. These policies could be economic, social, legal, or a combination.

Taxation is a classic example of a political policy affecting for-profit organizations. Increases or decreases in taxes have a direct impact on profitability.

Another example is if the United States Federal Reserve increases interest rates, making borrowing money more expensive. That translates to higher interest rates for credit cards and loans. Therefore, getting investment financing can be more difficult in that economic climate.

L in STEEPLE Stands for Legal

The legal factor looks at the regulations that your business has to follow. Unfortunately, in some cases, increased regulations can increase business costs in specific industries.

The legal factor is essential to this analysis because you need to know specific business endeavors’ limitations and regulatory costs.

Examples of these regulations include competition, safety, health, and employment. But there are many other regulations, and some may be specific to your industry.

Failure to comply with legal regulations often results in hefty fees.

E in STEEPLE Stands for Ethical

Many consumers worldwide want to know that they are giving their money to companies that share their social values.

This new addition to the STEEPLE analysis helps businesses to reflect on where they stand on various social issues. In addition, it allows them to assess better how they treat their employees and society.

I suggest that you take a look at the social media presence of your business. It is a great way to analyze the values and ethics that your organization is communicating through its messaging and posts.

It will have substantial brand implications if your organization is out of step with the dominant social ethics or values.

Why Use STEEPLE Analysis

A successful business is often the product of excellent strategic planning, great timing, luck, or a combination.

It would help if you used the STEEPLE analysis as a tool to do strategic planning. Here are some instances when it is a great idea to pull this tool out:

• Starting a new business
• Entering a new market with an existing business
• Deciding how much money to put into a business idea
• Deciding to scale a business down
• Strategic planning for an upcoming financial year or quarter
• Making decisions between multiple business opportunities

There are many more situations for which using STEEPLE analysis is a remarkable tool. Whenever you need to decide on your business’s future, this tool helps broaden your perspectives on various external factors.

How to Use STEEPLE Analysis

Below are some of my tips for doing a STEEPLE analysis effectively.

• Get a team together: I recommend you do a STEEPLE analysis workshop. The benefit of doing this is that you get many unique insights and perspectives.  
• Pick team members with niche knowledge: A great team can include those with unique experiences and perspectives on finance, human resources, social media marketing, etc. But you don’t need a team of experts. They need to be willing to think critically and analytically. Also, team members can be informal members of the organization.
• Use good quality data for good quality insights: You need good data to identify the factors. One major tip for this tool is to ensure that your data is up-to-date and from reputable sources. For example, for macroeconomic data, the World Bank database is phenomenal. 
• Know your industry: It is important to analyze factors specific to your industry. IBISWorld is great for getting industry-specific data, trends, and reports. For example, if you are in the fashion industry, you need to look at social factors such as changes in fashion taste.

Or if you are in the manufacturing industry, having a critical and in-depth analysis of legal factors such as safety regulations is crucial.

Benefits of STEEPLE Analysis

There are a lot of benefits to using the STEEPLE analysis for your strategic planning. It makes it easier for you to understand the wider business environment.

• Simplicity: The framework is simple to understand and easy to use.
• Identifies opportunities: It helps you to identify business opportunities and how to take advantage of them.
• Excellent threat detection: It helps you to anticipate future and current threats to your business so you can take action to prevent or eliminate them.
• Strategic thinking culture: The framework supports a culture of strategic thinking within your organization which encourages forward-thinking when making decisions.

Limitations of STEEPLE Analysis

With every framework, there are some limitations. It is crucial that you recognize this framework’s weaknesses so you can know what it will do and not do for your strategic planning efforts.

• Paralysis by analysis: Whenever we have too much data or information, it is easy to get into the state of “paralysis by analysis.” There will always be other factors to look at, and the amount of data is endless.
• Not enough data: On the other hand, some users oversimplify the amount of data. If you aren’t thorough, you could make decisions with limited data.
• Incorrect data: It is possible that one day you discover that the data you used for each factor is unfounded, outdated, or irrelevant. To get over this limitation, you have to think critically about the relevance and quality of the data.
• Need to repeat: For the analysis to be effective, you must do it regularly. Such is because there is always new data and new information to consider.
• Only examines external factors: STEEPLE is not enough to make strategic decisions; you need a tool like SWOT (Strengths, Weaknesses, Opportunities, and Threats) to assess the internal capabilities of the organization.

Using SWOT with STEEPLE

STEEPLE analysis only reviews external factors. But, of course, you should not make strategic decisions for your organization based on these factors alone. Several internal factors will make or break the organization.

My favorite tool for looking inwards is the SWOT (Strengths, Weaknesses, Opportunities, Threats). It helps does an excellent job at looking inwards and outwards. Here is why:

• It helps you to see what your organization does well now, so you can keep doing it.
• It allows you to see what internal issues could keep your organization back so you can develop strategies to minimize them.
• SWOT looks at external and internal factors, meaning that it can help you recognize some strong and impactful external factors when used with the STEEPLE analysis.

STEEPLE Analysis Explained (FAQs)

Conclusion

Doing a STEEPLE (Social, Technological, Economic, Environmental, Political, Legal, Ethical) analysis on an organization helps its executives know the specific external factors that impact its destiny.

These factors constantly change. If you can observe them keenly and use strategic thinking, it is possible to mitigate the bad and take advantage of new opportunities.

The overarching benefit of using the STEEPLE analysis is that it is easy to understand. However, a major drawback is a detrimental need to use good and accurate data when making decisions.

The social factor helps the organization to know the behaviors, attitudes, and lifestyle changes that society is going through at any moment.

Among the factors, the technological factor sometimes provides the most opportunities for growth because it presents technologies that the organization can use to produce and perform better.

The political and legal factors tend to directly impact the organization, regardless if the executives are aware of them. Such includes taxes and regulations, which undeniably impact business costs and profitability.

I recommend using the STEEPLE and the SWOT(Strengths, Weaknesses, Opportunities, Threats) analyses together. Doing so gives a more holistic look at the internal and external factors that impact your organization.

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Kenique Ivery

With an advanced degree in finance, Kenique is currently an economics teacher. In his former role at Ernst & Young, he also did some blockchain and crypto training, to keep on top of new advancements. Here, at Business Chronicler, Kenique loves delving deep into the core business principles of others, learning a lot as he grows his own career and helps teach the next generation of entrepreneurs.

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