PESTEL Trend Analysis
This page covers the different types of trends that can help you identify strategy options. You may find multiple solution options from each trend. For example, a technology trend that could be used for cost reduction and new features. Trends are important, some can significantly impact or destroy your market position. For example, a new technology that could replace your current solution. Trends can be applied across the other strategic inputs, such as the Customer Journey Maps, Service Blueprints and the Business Model Canvas.
Introducing PESTEL analysis
PESTEL analysis gives you a strong starting point for the types of trends to study. This was initially developed in 1967 by Francis Aguilar. Questions have been provided for each trend that will help you maximise its value.
Strategic direction
PESTEL analysis can be run standalone or within the Commercial Product Framework’s (CPF) Strategic Direction process. As shown below, it is run during CPFs research stage.
There are five potential strategic priorities below that PESTEL analysis can feed into. With a strategic priority, you can now look for trends that can support it. For example, with the Increase market share strategy selected, you would ask, “How do I increase market share by leveraging a new Generative AI trend that enables personalised customer experiences?”.
Process and PESTEL
The following instructions will help you maximise the value from PESTEL analysis.
Process
This maps to the Research stage of the Strategic Direction process. Trends can be applied across the other strategic inputs, such as the Customer Journey Map.
Trends - Use PESTEL analysis (provided in the page tabs) to identify relevant trends to your organisation.
Opportunities - Consider the types of impact you can make with the trends. You can apply these trends to a Customer Journey Map, Service Blueprint, and Business Model Canvas.
Mandatory work - You must take these forward, and they should be automatically prioritised. For example, a new data storage standard is coming in.
Reduce costs - To increase profit or protect against competitors lowering prices.
Reduce sales loss & churn - Some trends may present a future threat, leading to these.
Increase market share - Opportunities to strengthen differentiation. Win customers new to the solution type. Target weak competitors.
New markets/products.
Prefilter - Outside of mandatory work, the trends must result in solutions that:
Solve a big enough problem.
Meet basic desirability, feasibility and viability criteria (see this guidance).
Align with your prioritised strategic direction. For example, if your priority is to reduce costs, then focus on these items. This does not mean you have to filter everything else out.
Strategy Items - Create Strategy Items ready for prioritisation (example below the grids).
Capture trends
The grid below can be used to capture trends and their details. For example, Artificial Intelligence (AI) is a significant technology trend. Capturing AI as a trend is not helpful, as this is far too high-level to use. Consider a more appropriate level, AI data anomaly detection. With this trend, we can automate data clean up and avoid support calls. We may be able to apply this across many areas of a system, from an application process to an automated data migration.
Starting with benefits
When capturing trends, it is essential to highlight the business benefits. Let’s consider an older technology trend, cloud computing. This should improve scalability, accessibility (through being available everywhere securely), and be more cost-efficient (by only charging for what you use). Now you can check your idea against the expected benefits. For example, if you are trying to be more cost-efficient with storing data, does this really bring those benefits? In some cases, it may not. Without this consideration, we may create work based on trends that harm the organisation.
Technology drawbacks
Introducing new tools can have additional support requirements, make development more complex and slow down your time to market.
Upskilling
The person working on trend analysis may need to upskill a wider group. Using the previous example of AI data anomaly detection, this may be helpful across numerous areas of a software product. Upskilling more people improves the chances of identifying opportunities. This is particularly true when analysis activities are split. For example, a user researcher creates a customer journey map and, with their knowledge of this trend, can identify new opportunities.
An Excel spreadsheet containing the following grids can be downloaded here. You should augment the grids with more detailed training when the trend is complex to understand:
| Trend type | Trend | Problem(s) this trend can solve |
|---|---|---|
The grid below can be used to capture high-level opportunities. The impact column captures the primary reason for the change. Problems should ideally be quantified to ensure there is a high impact.
| Trend type | Trend | Problem/opportunity based on trend |
Impact: - Mandatory work - Reduce costs - Reduce sales loss & churn - Increase market share - New markets/products |
|---|---|---|---|
You may not know the expected results. In this case, doing some basic research to determine them is advisable. For example, if you are implementing the machine learning trend (MLOps) on to your Google cloud, what is the typical cost saving that Google claims?
Examples
Here are some examples that contain the different types of strategy (impact column). A trend may lead to several solutions. This grid is best viewed in a browser.
| Trend type | Trend | Problem/opportunity based on trend |
Impact: - Mandatory work - Reduce costs - Reduce sales loss & churn - Increase market share - New markets/products |
|---|---|---|---|
| Legal | New refund regulation must be adhered to | This work must be completed by 2025 | Mandatory work |
| Technological | Machine learning to reduce cloud storage costs | Implement MLOps on our Google Cloud to reduce costs by 20% | Reduce costs |
| Political | Competitors in the USA are about to pay less tax, lowering their costs and increasing their ability to lower prices | Offer a 24/7 service level free for this country to convince customers we are still good value | Reduce sales loss & churn |
| Social | 20% of customers are actively switching to environmentally friendly organisations | Obtain Carbon Neutral Certification and market this to potential customers | Increase market share |
| Technological | AI chatbot that can interrogate data and provide insights | Create a new reporting engine using AI that we can sell | New product |
Strategy Item example
Here, you can see a completed strategy item where a grid row was prioritised.
Political
These are changes driven by the government, e.g. tax policy, funding and grants, elections, and bureaucracy.
Regulatory change – Legal and regulatory frameworks changes.
Government compliance – Increasing oversight and compliance demands in your sector.
Public sector priorities – Changes in government investment (e.g. healthcare, infrastructure, tech).
Fiscal policy – Tax rates, subsidies, or incentives.
Government intervention – Nationalisation, privatisation, or direct intervention.
Political stability – Changes in political leadership or regime stability.
Policy alignment – Current or future political agendas.
Geopolitical relations – Trade tensions, diplomatic shifts, or sanctions.
Political risk – Government actions or instability that could disrupt your strategic goals.
Government risk – Risks from changing international regulations or cross-border political shifts.
Economic
For example, interest rates, exchange rates, economic health, and availability of finance.
Inflation and interest rates – Fluctuations that affect costs, pricing, and consumer demand.
Consumer confidence – Shifts in household sentiment that influence spending behaviour.
Labour market trends – Wage pressures, skill shortages, and employment dynamics.
Supply chain costs – Volatility in material, transport, and logistics expenses.
Currency fluctuations – Exchange rate movements impacting international operations.
Growth performance – National or global economic performance and market expansion.
Access to capital – Credit conditions, borrowing costs, and investor appetite.
Global trade dynamics – Tariffs, trade agreements, or restrictions across borders.
Public spending shifts – Changes in government expenditure priorities.
Income inequality – Economic disparity affecting the customer base or workforce.
Social
Consider social trends, e.g. a move away from using cash and demographic changes, e.g. an ageing population or more people moving to the countryside.
Workforce expectations – Evolving needs around flexibility, wellbeing, and work-life balance.
Demographic shifts – Ageing populations, migration, and changing workforce composition.
Cultural change – Shifts in norms, values, and identity that influence social behaviour.
Health awareness – Rising concern for physical and mental health across society.
Education and skills – Gaps in training, reskilling, and access to quality education.
Diversity and inclusion – Expectations around representation, equity, and workplace fairness.
Social mobility – Structural barriers or opportunities for upward movement.
Consumer activism – Public scrutiny, campaigns, and expectations for corporate ethics.
Digital social trends – Shifts in how people engage through social platforms and technology.
Trust in institutions – Decline or recovery in confidence toward business, government, and media.
Technological
Technology innovation can reduce costs, improve customer experience, create new differentiators and be the basis for new products.
Start with benefits
The big anti-pattern for technology trends is jumping onto them regardless of Return on Investment (ROI). To counter this, we start with the benefit the technology is supposed to bring rather than focus on the technology itself. For example, you look at a cloud solution to reduce hosting costs and discover it is not cost-efficient:
What are the expected benefits of a new technology trend that could help you?
Which gives you sufficient benefit versus the cost?
Be careful of drawbacks. Introducing new tools can have additional support requirements, make development more complex and slow down your time to market.
Architectural Innovation
Opportunities to reconfigure technologies to create value. Here are some examples:
Cloud microservices
Improved scaling.
Allows for pay-as-you-go models after the isolation of specific services.
Embedding your tool into other products
Allow other parties to use your back-end processing
Marketplace for third parties - Allow other organisations to build on top of your product (plug-ins, extensions and apps).
Other factors
AI and automation – Integration of artificial intelligence and process automation.
Cybersecurity – Digital threats and the need for robust protection strategies.
Data privacy – Regulations around how data is collected, stored, and used.
Digital infrastructure – Cloud, broadband, and connectivity foundations for business.
Emerging technologies – Disruptive innovations like blockchain, quantum, or biotech.
R&D intensity – Investment in research and innovation for long-term advantage.
Remote and hybrid work tech – Technologies enabling flexible and distributed workforces.
Digital customer experience – Personalization, engagement, and online service delivery.
Tech obsolescence – Risks from outdated or legacy systems.
Regulation of tech – Legal frameworks governing use, fairness, and access to technology.
Environmental
Aspects like global warming, ethical sourcing, and pollution.
Climate change impact – Physical and operational risks from extreme weather events.
Sustainability expectations – Pressure from stakeholders to meet ESG commitments.
Carbon regulation – Emissions limits, reporting mandates, and pricing mechanisms.
Circular economy shifts – Push toward reuse, recycling, and resource efficiency.
Resource scarcity – Availability and competition for critical raw materials.
Green investment – Capital and incentives for renewable or sustainable projects.
Environmental litigation – Legal consequences tied to environmental harm or negligence.
Biodiversity and land use – Risks related to deforestation, habitats, and ecosystems.
Water and energy access – Reliability and cost of basic utilities.
Reputation risks – Public and media backlash tied to environmental performance.
Legal
Aspects like consumer law, international trade legislation, and employment law.
Labour and employment law – Rights related to hiring, working conditions, and flexibility.
Data protection law – Rules governing personal and organisational data use.
AI and algorithm accountability – Regulations on AI fairness, transparency, and liability.
ESG disclosure mandates – Requirements to report on environmental, social, and governance metrics.
Corporate governance – Standards for board conduct, accountability, and transparency.
IP and copyright law – Protection and enforcement of intellectual property.
Consumer protection law – Regulations ensuring fairness and safety in products and services.
Tax transparency and reform – Obligations for financial disclosure and ethical tax practice.
Antitrust and competition law – Restrictions on anti-competitive practices and market dominance.
Global compliance complexity – Challenges of navigating multi-jurisdictional legal obligations.