A DESTEP Analysis is a framework used to understand the external environment and the issues that may impact you. DESTEP stands for Demographic, Economic, Sociocultural, Technological, Ecological and Political/Legal. These are the six categories you use to list factors that could impact your business. It’s commonly presented as a six pillar structure or a 2x3 matrix, and can be applied to any business in any industry. As you've maybe noticed, it's very similar to PESTLE but with a more refined focus on Demographics.
The structure of a DESTEP allows you to easily view all of the key external factors influencing your business in one diagram.
Demographics covers the traits and characteristics of the population. Factors such as age range, geographies, education levels, gender, and family structures.
Economic considerations include economy stability, currency strength, recession, exchange rates, disposable income, inflation, and any factor that relates to the financial conditions of the market. These are often outside of your control, but you can plan accordingly.
Sociocultural is the topic for any social or cultural factor. Topics such as beliefs, risk tolerance, values, or behavioural trends are covered in this area. Note that, unlike in PESTLE, no demographic factors feature in this section.
Technological considerations are the factors around innovation, usage, knowledge and future. Include cybersecurity, analytics, mobile usage, IoT, AR, VR, Blockchain, and other technologies that may change the way you or your customers do business.
Ecological covers everything in the environmental. It’s a larger topic in recent years, including areas around climate change, carbon footprint, recycling and waste management.
Political/legal is the final part of DESTEP and covers everything that relates to regulation, laws and policies. This section greatly impacts every company regardless of how large or small. For example, tax relief for R&D may help a start-up, whereas the UK sugar tax has impacted Coca-Cola.
They’re very similar and you’re unlikely to use both at the same time. DESTEP gives more focus to the Demographic, which in PESTLE is covered in Social. Conversely, DESTEP combines Political and Legal, which are separate in PESTLE. DESTEP also has no geographic version, whereas PESTLE has a LoNGPESTLE variation.
DESTEP Analysis has a number of advantages:
DESTEP has a few limitations:
DESTEP is a really helpful framework. When you complete it fully, you can find opportunities and threats that often can be missed externally. You don’t need to take action on them, sometimes just knowing they exist can be enough to influence your subsequent decisions.
To make sure you get the most out of DESTEP ensure you:
In advance of developing your DESTEP it’s good to have the following:
If in a group, these can be shared via an email or a tool (like Lucidity!) beforehand or presented on the day.
You’ll get the best DESTEP Analysis from working in a cross-disciplined team. The mix of different people, backgrounds, roles and experiences will result in the most detailed and helpful analysis on your external environment and ensure you capture all the factors that will impact your strategy and business.
Many example DESTEPs can be found in the Lucidity strategy software such as:
Your external environment is changing all the time, so it’s best to do a full review your DESTEP Analysis on at least an annual basis. Running smaller reviews every few months will keep it useful and relevant.
The other benefit to an updated DESTEP is it remains a useful onboarding tool. New team members joining your company will be able to quickly see the external factors impacting the business.
A DESTEP Analysis will complement your SWOT Analysis and your Five Forces Analysis.
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