Julian Brower discusses how he used STEEP analysis to evaluate opportunities for his business idea of creating electronic advertising boards for local shops and pubs. He considered how factors like government policies on renewable energy and living locally, advancing solar technology, and social trends could impact his idea. While broad changes can seem irrelevant, Brower explains it's important for small businesses to understand how national and international factors specifically influence costs, regulations, and the external environment they operate within. STEEP analysis provided a structured way for him to comprehensively research unpredictable changes in the social, technological, economic, environmental and political landscape.
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Transcript - steep analysis
1. Investigating Entrepreneurial Opportunities
STEEP analysis
Colin Gray
Most entrepreneurs and successful managers use a number of routines or techniques to
make their sense of our very fast moving and complex world. Business academics have
analysed these different techniques. They try to break them down into simpler parts in order
to help students understand and learn how to spot opportunities and avoid risks in the way
that entrepreneurs do. A common first step is to systematically scan your external
environment. This involves trying to identify important and relevant changes to society,
technology, the economy, the environment, and politics, which includes regulations. This was
referred to as a PEST or a STEP analysis (depending on your preferred acronym) but with the
growing importance of ecological issues the business environment is now also often scanned
according to the changes in its STEEP factors, which is the approach favoured by Julian
Brower.
Julian Brower
I think using basic ideas like STEEP analysis – looking at a concept from multiple directions,
deciding on whether an idea – for instance my idea which was based on an advertising board
– how is that going to be affected by economic and political factors? It may not initially be
obvious but the fact is that mine was a very local type advertising so I need to get the
government to try and agree to become more local, to get people to live in villages and utilise
local communities. That’s a very important part. Had the government been deciding on
whether they want everybody to live in spread out all over the country er in conglomerations
or cities then my idea may not necessarily have been relevant. So I – it utilised in the
marketing side of my idea the fact that this was live and local. It was a local advertising,
government funded, pushing people into local communities. So you start to get to understand
the factors that affect you. And the other important one was the technology you know. The
fact is that I didn’t want mine to be running on mainstream electricity so solar energy or er
some – electrovoltaic power to be able to run my advertising system. I was waiting for
technology to come - to arrive and I knew that within a year or two my screen sizes would get
cheaper, more effective and the way I would be able to run them with power would become.
So had I not looked at STEEP I wouldn’t have even thought about those ideas.
Colin Gray
Looking at the social, technological, economic, environmental, political factors that are
changing which impact upon um businesses and customers and suppliers and so on and so
forth um how did you approach your environmental scan - the STEEP?
Julian Brower
I probably approached it very much like many students – baffled by the concept and thought
to myself how am I going to apply this and it looks pretty horrific to start with. I – it took a little
bit of time to think what it actually meant you know the technology – how was the technology
going to implement my e-boards and economic factors and - and I found it very difficult to see
where political factors – once again a little bit of thought, a little bit of research – ideas are
coming out all the time and you can apply them. In the technology side of things how is – in
the technology side of things how is my e-board going to be affected by technological factors?
There I'm looking for a green solution. I want my boards to be run on solar power so is the
government going to offer some kind of financial incentive for everybody to go solar power?
So I found that there are so I could actually say to village shops look, b the way there's a
scheme called a “this” that the government are running. So if you actually stick a solar power
on you they’ll pay for eighty per cent of it and that will run your e-board. So you know you're
paying 5.6 p per unit of electricity but you get it down to 1p and if you make anything more
you sell it back to the national grid. You see how by applying that technological factor I can
go back to the customers and stick it into the into their … and say look you can actually save
2. money by doing this. That was one idea I came up with. And there are many ways. There
are many technological things that customers can take advantage of that will allow me to sell
the boards into the shops. Um one of the areas that was of great concern was er bringing the
television sets over – the electroluminescence over from the far east – the cost of travel, the
carbon footprint because you know a customer – oh yea I'll take a board but I'm not paying
that price. And you know to get that one television set from China to here is going to cost
seven kilos of carbon. What you going to do about it? So I had to look for ideas around that.
I haven't come up with a solution yet because we don’t make TV’s in the UK. We don’t make
these screens in the UK. One of the biggest problems we have with the technology of this
side is the cost to the to the er planet of bringing all my technology, because every piece of
my technology will come from China. The political side as well I think I've mentioned that
before where you know what is on the political agenda that’s gonna help me grow this e-
board and I'm looking for everybody to live – to live local and I'm looking for little local
communities to all revolve around their village shops and their local garages. So an
awareness of how the government is promoting local living and I can add that back in to my
you know bring add to the local community and I think in my advertising spiel I did actually
talk about that
Professor Colin Gray
Another aspect of political of course it's where government regulations and industry standards
come in as well. Surely that would have had an impact on these sorts of things you're talking
about
Julian Brower
Well it did. Funnily enough one of the issues the legal side of this came out. What stops
some drunk guy deciding to advertise his girlfriend on this board in the middle of the night
without me … so that came out of the aspect of the um the legality of promoting posters
without any sort of --- anyway I have a fantastic piece of software that picks out words that
would prevent an advert from going on. So if somebody starts to type in I'm selling my wife’s
car for a hundred pounds – brand new Porsche Eleven Turbo I will stop them putting that
advert on the screen because I have a key word selector. So it's quite common – I say it's
quite common it's it's it's an expensive piece of software but it will stop you advertising if you
want to do something funny and anything that has any question about the integrity or validity
of it will come to me - well not to me but to a representative who will vet it first. So if you're
flogging logs ten pound a bag – no problem. But if you're selling your wife’s Porsche turbo for
five quid because you don’t like him anymore um it will come back to me and you wont be
able to do it. Anyway, going back to the political side of things that’s not directly related to
political – but there are political factors. I haven't fully established um which way the
government is going but um the the where the government is going on the green side of
things is very, very orientated towards my idea – where technology is going that’s very
government orientated. All sorts of schemes and incentives in the system now that the
government are promoting and the political factors being you know the next government are
now going to make all solar power panels free. Have an awareness of that. Add that back in
to your marketing system. If you buy them at the next election you’re going to get free power.
So once again they all pop out – STEEP
Professor Colin Gray
And what about the social side because you did mention remote Scottish villages and - and
the like. Often these people are quite conservative small c conservative you know in their
tastes and things. The idea of them having one of these flashing screens in their in their little
shop may not appeal. Is that something which you thought might influence how this might
succeed?
Julian Brower
The social one was a really interesting one because you know social -social – you know
people are quite lazy. People don’t like walking so if I'm going to have some issues in terms
of people actually going to village shops. I thought about people not really interested in going
to their corner shop therefore the local agent will say well I'm not really interested because
you don’t get many people in. Um people are buying less newspapers so why would they go
to a village shop? People are now reading newspapers on line. Um supermarkets –
3. Professor Colin Gray
On fluorescent screens even ---
Julian Brower
Yes. Supermarkets are taking customers away from local communities. So however much
the government want to move back everybody goes to Tescos because it is so much easier.
It's not cheaper. It's easier to shop in one place. So was there going to be a social
sustainability element to this to keep people still working in their community? So it's local
habits. But what came out of that was a lot of people go to shops – go to pubs – so the flat
screen pub idea popped out of it because theme pubs now are really, really big. So I thought
well I can obviate maybe the loss in the village shop by looking at other places that I could get
business like pubs, like car servicing departments where people are hanging around for a
long time anywhere where people sit around bored and they want something to do – so they
can look at the screen.
Professor Colin Gray
So STEEP is an essential part of your toolkit as well?
Julian Brower
It was an essential part that appeared further down the line from SWOT but an absolutely
critical bit to look at factors that I hadn't even considered from the five different sides –
Julian Brower
STEEP was an essential part. It didn’t appear as high up as SWOT but it introduced me to
factors that I hadn't even considered. I think that compartmentalising them into social,
technology, economic, environment, political, business was a brilliant was of just making –
focusing the mind. I think it's very important the mind is focused on particular areas and that
you can go off and research political factors without worrying about encroaching on the other
areas.
Professor Colin Gray
Julian Now you've actually taken us through very clearly I think how the different components
are very, very useful. How do you however make them very relevant to you because a lot of
these changes are very broad-brush changes? They're - they're not tiny changes and they're
ones that affect everybody. How do you make sure that it's very relevant to your business
and your business idea?
Julian Brower
A lot of the ideas in my business ideas may very well have had national or international
implications but the price of currency, the yen, or the governments’ involvement in
sustainability or um business courses business money that’s available from some business
communities is also relevant to small business as well. These factors have to be considered
even though they're national they are definitely- they can be very, very – they can be
considered on a very small basis to our own business as well. So you have to consider the
fact that when you're promoting stuff from China the cost of importing – the cost of importation
tax, the cost of licensing, the cost of production, the change in um pound/yen is very relevant
whatever size business you're dealing with. Um in smaller business it's more relevant
because you don’t have such big bargaining power so to get the - the advantages you have to
go to a company and you often have to offer them your soul. So you’re dependent on that one
company whereas in other companies you might have to spread that risk – if you're a bigger
company you just spread that risk more often. So it is quite relevant, very relevant to make
sure you know that you’re conscious of these factors because as a small company you may
be more susceptible to the risk than less.