Survival in today’s constantly shifting business world depends on a company’s ability to anticipate and adapt to external factors. One way to do so is by using the PESTEL analysis—a framework used to identify and monitor the macro-environmental factors impacting an organization. By analyzing these factors, companies can gain insights into existing opportunities and threats and use these insights to formulate their strategy to better align with the external environment.
Figure 1. PESTEL analysis framework | Adapted from slideteam.net
Recent global events have significantly impacted companies worldwide. Russia’s invasion of Ukraine led to worldwide food shortages, supply chain disruptions, and an energy crisis in Europe. The ongoing disruption in the supply chain coupled with geopolitical tensions have led to concerns about an upcoming recession, as evidenced by slow growth in the global GDP.
Persistent high energy prices have also contributed to inflation, which has resulted in central banks raising interest rates and causing currency devaluation worldwide.
The prolonged COVID-19 lockdown in China also caused a severe strain on the global economy due to China’s prevalence as a global supplier. Moreover, tensions between the US and China continue to add uncertainty.
Another external factor is climate change, which is posing new threats to businesses. Thus, regulations for climate protection are becoming increasingly stringent.
Meanwhile, technology is becoming increasingly integrated into a wider number of industries, leading to increased digital transformation around the world.
In the face of these fast-paced and unpredictable external conditions, the PESTEL analysis is now more valuable than ever for businesses to navigate the challenges that arise.
The PESTEL analysis is a simple framework that encourages businesses to consider the external environment in which they operate, prompting them to consider external factors that affect their operations and evaluate their potential impact. Furthermore, it provides valuable insights for decision-making, empowering organizations to make informed choices and adjust their strategies to better match the broader external landscape.
To sum it up, the PESTEL analysis enables businesses to foresee potential threats and proactively mitigate their impact while spotting emerging opportunities and capitalizing on them.
Mapping the food industry’s PESTEL landscape
The food industry is a complex network of businesses engaged in the production, processing, packaging, distribution, marketing, and selling of food and beverages.
Given their crucial role in feeding the world’s population, food businesses must ensure they are prepared to handle any external factors that may impact their operations. To illustrate briefly, a PESTEL analysis for the food industry may cover several factors (See Figure 2).
Figure 2. PESTEL analysis of the food industry | Adapted from slideteam.net
The aforementioned recent global events have led to reduced purchasing power and food price inflation. Sociocultural changes and a growing focus on wellness are also expected to shape the industry’s future. Moreover, technological advancements and environmental efforts are significant factors that will influence its outlook. Hence, conducting regular PESTEL analysis is vital for companies in the food industry to be future-ready.
Ultimately, the PESTEL analysis is an indispensable tool for businesses, regardless of industry. Current global developments have demonstrated the importance of monitoring macro-environmental factors. Companies that prioritize PESTEL analysis are more likely to thrive in the face of external challenges and emerging trends, and it is high time that all businesses recognize its value and incorporate it into their strategy formulation.
Like a captain steering a ship through a stormy sea, leadership plays a crucial role in shaping the organizational climate, which in turn affects the individual’s level of commitment to the organization, job satisfaction, and productivity (Oktem, 2022). Creating a positive organizational climate requires management to focus on promoting autonomy, freedom, and support. Organizations can use internal environment scanning methods such as employee surveys, focus groups, and organizational culture analysis to gain insights into how leadership affects the work environment—knowledge that can then be used to create a positive climate to enhance employee knowledge, behavior, and effectiveness.
Critical factors such as interaction with team members, behavioral patterns, and the quality of the leader’s information—which covers updates, decisions, and strategic plans that they need to communicate to their team—all shape the organizational climate. Leadership behavior can significantly influence employee attitude and behavior. Studies have shown that managers who acknowledge their team members’ accomplishments can improve the perception of the organizational climate and leadership quality.
Conducting an internal environment scan can help assess the current state of the organizational climate and identify opportunities for improvement. Theorganizational culture analysis, a method of internal environment scanning, involves reviewing the values, beliefs, and behaviors of employees and aims to gain insights into how leadership is perceived and how it is influencing the culture of the organization.
One company that values itsorganizational culture and recognizes the significant role of leadership in shaping the work environment is Netflix. The company empowers employee decision-making by widely sharing internal documents, such as memos on title performance, strategy decisions, and product features.
Additionally, Netflix prioritizes open and direct communication by investing in coaching and modeling behaviors. To promote good decision-making, the company emphasizes the need for highly effective people and fewer management layers. The company encourages a “context not control” culture where leaders are expected to coach, set context, and provide feedback instead of micromanaging while employees make their own decisions. To foster this culture, Netflix values certain behaviors and skills in its employees, such as good judgment, selflessness, courage, communication, inclusion, integrity, passion, innovation, and curiosity.
The company employs a feedback system that includes surveys and focus groups to continuously improve its operations. A recentinitiative to promote work-life balance involved the implementation of an unlimited vacation policy, which was contingent on fulfilling job responsibilities and goals. To set a precedent, leaders take vacations themselves and urge their teams to do likewise.
As we can clearly see from Netflix’s example, leadership has a significant impact on the organizational climate. This highlights the importance of internal environment scanning to identify opportunities for improvement.
Improve your organizational climate by enrolling in ourCertified Strategy and Business Planning course. Gain valuable insights into the process of internal environment scanning and learn how to identify areas for improvement within your organization.
In 2016, President Abdel Fattah El Sisi exhibited tremendous support for Sustainable Development Strategy: Egypt Vision 2030. Since then, Egypt has undergone a major digital transition to modernize its economy, improve public services, and boost digital literacy. To attain such goals, the country has invested heavily in education, research, and technical infrastructure. This article will analyze Egypt’s recent technological developments across three main pillars.
The Egyptian government has invested considerably in the development of its digital infrastructure to provide reliable and high-speed internet connectivity across the country, such as expanding its fiber optic network to connect more households and businesses to the internet. As of 2020, more than 70% of the country’s population had access to the internet. Egypt has allocated more than $1.1 billion for the development of 5G technology and infrastructure. Adopting new technologies, such as 5G, will provide faster internet speed and improve connectivity across the country.
According to the ICT 2030 strategy, Egypt has made significant progress in digitizing its government services, which has made it easier for citizens to access essential services online. In 2020, the Egyptian E-Government Services Portal was launched, providing a one-stop-shop for government services such as applying for passports and IDs. The portal offers more than 100 services, and as of 2021, more than 6 million citizens have registered for the service.
Financial inclusion & e-commerce
Meeza card, a national electronic payment card launched in 2019, allows citizens to receive their salaries, pensions, and other government payments electronically.
Egypt’s digital transformation has paved the way for private companies to launch several mobile payment applications, such as Fawry, Instapay, and Vodafone Cash, allowing citizens to pay bills, transfer money, and make purchases using their mobile phones.
The following explains why Egypt’s case should serve as a model based on two main motives:
The digital sector has been one of the fastest-growing sectors in Egypt, contributing significantly to the country’s GDP. According to a report by the governmental statistics, the ICT sector contributed 5% to Egypt’s GDP in 2021, and digital exports reached $4.9 billion by 2022.
The digitization of financial services has increased financial inclusion among Egyptians. According to a report by the MCIT, 56% of Egyptian adults have a bank account. Moreover, the money wallet accounts are expected to reach 57.9 million in 2025, which is higher than the average for countries in the Middle East and North Africa. In conclusion, Egypt’s digital transformation has advanced due to government investments in infrastructure, education, and innovation.
Digitizing government services, increasing digital literacy, and the government is pursuing digital transformation to meet its long-term aims. Last but not least, a valuable resource for those seeking to enhance their knowledge and skills in strategy planning is The KPI Institute’s Certified Strategy and Business Planning Professional course. It is recommended to sign up for this course to learn more about strategy planning.
Adel Ali Mreer, a strategy expert with more than 15 years of experience in various industries, believes that organizations should invest in people, technology, and time to drive performance and a data-driven culture with clear, consequence management.
What are the key trends that have shaped the public sector in recent years?
Many new trends have shaped the public sector in recent years, such as macroeconomic and Microeconomic, Social and Environment, Technology, business, and industry restructuring.
Sustainability: It has become a global imperative with the introduction of the United Nation’s 17 Sustainable Development Goals (SDGs) or the (ESG) Environmental, Social and Governance Index (ESG).
Branding and Non-tangible Assets: Moving to increase the non-tangible assets, such as the city or country branding. Deploying a lot of effort and resources to improve the quality of life, the citizen happiness, and visitors’ satisfaction. It is becoming a critical element in attracting foreign visitors and investment.
Funding structure: Funding new initiatives efficiently made the public sector move toward Public Private Partnership (PPP) and more collaboration with non-profit organizations. In addition, privatization in some cases and creating state-owned companies and later listing them in the stock- market with IPO.
The Efficiency of Government Expenditure: The need to enhance government expenditure, such as the Average cost per Bed in Healthcare, Average Cost per Student in Education, etc.
What do the public services of the future look like?
The following three approaches will shape the future of public services:
Whole of Government Approach (WoG-A): Ministries and government agencies work together and align all related activities to provide reliable and efficient public services
One-Stop-shop Approach: Beneficiaries will compare the public services ( G2B or G2C) to the services they receive from the private sector (B2B or B2C)
For example, beneficiaries in G2C will be looking for a One Stop Shop where they finish all the public services during their life journey from birth to death in one virtual place. These public services will be provided in the One Gov portal or by downloading only one App. There is no need to juggle different portals and apps; each has a different user experience and credentials.
Customer CentricOrganization: Public agencies will be more customer-centric organizations in the future. Cx will play a significant role since the public agencies are sole-source provider of a service. Beneficiaries from public services in most cases do not have the luxury and the freedom to churn or go to a different service provider.
What role will strategy planning and KPI usage play in this futuristic scenario?
They play a vital role in the futuristic scenario. Having clear strategic objectives and KPIs shows all the stakeholders where the future direction and North Star is.
More importantly, they show how to reach that future state and what success looks like.
How is technology impacting the performance of government entities?
Technology and systems are important to enhance the performance of government entities. Government entities must be equipped with data-driven decisions, insights, analytical tools, and techniques. On the other hand, let us not forget that one of the main mandates for government entities is to regulate their related industry. Fulfilling this mandate is becoming more challenging with the rapid change in technology and emerging technologies. They changed the traditional boundaries of the business industry. The unpredictable business models that rely on emerging technologies in Fintech, AI, cryptocurrency, drone, data, and others keep evolving quickly and shifting from one regulatory category to another.
What are your recommended best practices in strategy planning for government agencies?
I would say the strategic planning principle is the same regardless of the industry or organization. Therefore, the recommended best practices during strategy planning are the following:
Conduct the internal and external environment screening very well
Consider national and international benchmark
Review success and failure stories and lessons learned
Consider historical data and future trends
Define clear long-term strategic objectives with a clear way to measure them
Communicate the strategy in a three-minute video or one-page infographic for stakeholders. Otherwise, your strategy is so complex, and it will create confusion more than shaping the direction.
What key performance indicators should be reported for the successful delivery of public services?
I would not jump to a conclusion quickly and just select a KPI. I would first identify what the strategic objective is. Then, I would have a 360 assessment of the full experience from Initiation until Delivery to Delivery Services. In addition, I would study different aspects and parameters, such as average service delivery time, customer satisfaction, number of complaints, average resolution time (ART), etc. Finally, I would select the KPI that will move the needle to achieve the strategic objective or develop an index that captures the full customer experience Cx.
What are the key performance management tools that any government entity should use to ensure performance improvement?
Any tool that would capture the real performance with less lagging time and has reliable data and business insights. I would go even with a simple Excel sheet and PowerPoint slides if the integrity is higher and provides the outliers with insights.
What are the biggest challenges that government entities face during the implementation and usage of a performance management system? Please provide your suggested solutions.
The integration of the performance system and other management systems
Lagging time to provide accurate, reliable data
Lacking business insights and scenario analysis
What are the crucial success factors in building performance and data-driven culture in the public sector?
The management should invest in people, technology, and time to drive performance and a data-driven culture with clear, consequence management.
Which government entities would you recommend to be observed due to their successful approach to strategy and performance management? Why?
I would recommend observing the Saudi Vision Realization Programs (VRPs). I choose them for the following reasons:
Having a clear strategic direction and a way forward to measure the execution
Adopting the Whole of Government Approach (WoG-A), where multiple government entities work together to overcome a national challenge, such as housing, quality of life, and health
Included in the strategic plan are players, such as the private sector, non-profit organizations, society
Measure the output clearly and measure the impact from different perspectives: contribution to the GDP, job creation, and local content.
What are the key competencies of a successful business leader in a government entity?
The key competencies of a successful business leader are strategic thinking, communication, being motivational, resilience, partnering, and relationship building.
What are the processes and tools you look at when differentiating a successful Performance management system from a superficial one?
First, I would look at having a clear translated strategy in a measurable term. Then, I would check their ability to conduct continuous monitoring and learning. Third, being resilient and agile through periodical tests and adapting methodology. This is done by testing the strategy’s robustness and using decision analytical tools. Finally, the overall organization’s fitness and capability.
About the Expert
Over 15 years of experience in Strategy Formulation & Execution, Corporate Development, Transformation, Organization Excellence, GRC, Process Mapping & Re-Engineering, Quality Management & Performance, Organization Management, Marketing research and marketing Strategy. Multi industry experience in Banking, petrochemical, semi- government and government, ICT and Telecom
Executive Leadership Program (LEAD), Stanford University. 2021 – 2022.
Executive Leadership Program, Ross School of Business, Michigan University. 2019 – 2022.
Master, Business Information Technology (BIT), DePaul University, Chicago USA 2009
Bachelor in Accounting, KAU, Jeddah, KSA 2004.
This interview was first published in the 24th printed edition of PERFORMANCE Magazine. You can get a free digital copy from the TKI Marketplace here or purchase a print copy from Amazon for a nominal fee here.
The public sector and government entities, especially in the UAE, tend towards excellence and global pioneering through participation in various excellence programs and awards and participation in measuring global competitiveness indicators. It has also become competitive with the private sector in the quality, efficiency, and excellence of providing services comparable to the quality and efficiency required by the highest international standards. The goal is to reach the highest levels of customer happiness,
The public sector has gone a long way. Among the main directions it is treading are the following:
Future shaping. It is what is related to the possible and the preferred in the future, along with expectations and trends that have few possibilities but have significant impacts that can occur. There is a need to analyze the extent of their impact on government work, build future models, seize opportunities, and ensure strategic ability that will affect the operations and services of government entities as they work towards achieving customers’ and society’s happiness.
Government innovation in services and processes. When services are provided innovatively, it reduces the time of their provision and measures the added value from them. Innovation is the actual translation of creative ideas and transforming them into products, services, processes, and systems that interact with and serve society. It is necessary to measure the global innovation index, which measures the level of innovation at the level of different countries by studying a number of indicators that make up the overall index. It includes seven main criteria categories that represent innovation inputs and outputs at the state level: institutions, human capital and research, infrastructure, market development, business environment development, innovation outputs of knowledge and technology, and creative outputs.
Digital transformation. This refers to providing electronic and smart government services with a high degree of excellence, pioneering, comprehensiveness, and integration among government entities and interrelated and integrated systems to achieve the “one government” concept.
Metaverse and government use. This is a system that will provide many virtual spaces on the Internet and will also allow the integration of everyday life into virtual life. Metaverse will provide immersive and exciting experiences in various fields, such as education, health, tourism, travel, service provision, shopping, transportation, and others. This involves using advanced technologies, such as virtual and augmented reality, artificial intelligence, blockchain, cloud computing, 5G network, and other technologies. Such technology can make government administrative services efficient. For example, people can meet with virtual officials without visiting municipal offices or any government department.
Sustainability in the social, economic, and environmental fields. Programs, initiatives, and policies that support sustainability are implemented, such as applying and measuring performance indicators of the extent of the impact of operations on health, safety, and the environment. This should ensure minimizing negative impacts on society and the environment and contribute to the rationalization of energy, water, and other resources consumption.
The future of public services
Government services in the future will depend heavily on the provision of digital services that will be more efficient and will also rely on the standards and requirements of a single platform for customer data. An example is the digital identity (UAE PASS) adopted in the UAE. It is used as a primary and unified mechanism to obtain digital services for all categories of customers.
The future of government services as stated in the global star system for rating services, issued by the Prime Minister’s Office in the Ministry of Cabinet Affairs and the future in the United Arab Emirates, represented by the Emirates Program for Excellence in Government Service, as this integrated system is the first of its kind in the world. The Emirates Program for Excellence in Government Service was launched  in the United Arab Emirates, it sets a world-class standard that helps government and private entities measure, improve and transform the field of service delivery. This program aims to improve the quality of government and private services by focusing on customer-centric services, employee happiness, and operational efficiency to provide services at a seven-star level.
Strategic planning will play an important role in assessing the quality of government services. This happens through the awareness of senior leadership, in participating in strategic planning that focuses on developing services, linking it to strategic objectives, and supporting the government entities’ strategy to improve customer experience. In addition, these strategic goals related to services must be measured and monitored through efficient and effective performance indicators, such as: the percentage of services’ customer happiness, the average time taken to provide the service, and the average waiting time to obtain the service.
The most important characteristic of government entities is how they provide services quickly and efficiently. For this purpose, they must proactively adopt advanced technologies, such as chatbots, artificial intelligence, big data analytics, and the Internet of Things, to support the provision and management of services to continue improving customer experience and reaching the highest levels of happiness for them.
In this field, government entities should provide a central database for all customer data. It should be possible to securely access the central database for customers from all service delivery channels and to manage the security of this data. There should be special security measures to deal effectively with data breaches if they occur and training for employees on how to proactively reduce security breaches. In addition, government entities must evaluate their electronic and digital security and build a culture of enhancing the importance of data privacy and security, recognize the possibility of using the Secure Sockets Layer (TLS) protocol, and ensure secure access to service and electronic payment procedures through digital channels.
One of the best practices that we recommend in strategic planning for government entities is strategic planning based on the Balanced Scorecard developed by Norton and Kaplan: It is a framework for translating the organization’s vision into a set of performance indicators covering the following four perspectives: financial aspect, customers, internal process, learning, and growth. Through this system, the organization monitors its current performance (financial, customer satisfaction, and business results) as well as its efforts towards developing operations, motivating and educating employees, enhancing information systems, and honing their ability to learn and develop.
It is considered an administrative system that enables the organization to clarify its vision and strategic goals and translate them into reality. It is an auxiliary tool used to measure the performance of organizations in order to lead them to continuous development and improvement as it focuses on gaps in performance and alerts work teams and senior management.
The Norton and Kaplan methodology for managing and executing strategy consists of six main steps:
Preparing and developing the strategy: This includes benchmarking with best practices, formulating the vision, mission and values, conducting internal and external analysis, identifying the value gap and defining the vision, defining the change agenda, and formulating the strategy.
Translating the strategy: It refers to defining the strategic pillars and objectives, the indicators and targets, the strategic initiatives, the responsibilities, and the general framework for the process of translating the strategy.
Cascading and alignment of the strategy: This is about distributing objectives according to roles to the main and supportive organizational units, communicating the strategy for all employees, aligning the strategy with the individual performance of the employees, aligning with incentives, aligning the strategy with external parties and partners.
Developing the main processes and linking the strategy to the institution’s budget and operations to ensure implementation: This involves defining priorities for strategic operations, using processes and driving models to activate the strategy, creating an operations dashboard, integrating financial planning and resource capabilities, managing initiatives, integration with and planning for intangible properties.
Institutional review and learning by transforming the strategy into a continuous process and establishing a formal performance-based follow-up to the strategy: This is achieved by conducting strategy review meetings, and conducting operational processes review meetings).
Testing and adaptation: This means monitoring and evaluating the strategy and adapting to the strategy based on the results achieved. It includes testing cause-and-effect relationships using data analytics, testing the robustness and solidity of the strategy, and using business intelligence and big data).
Challenges and successes
Among the biggest and most important challenges that government entities face during the implementation and usage of a performance management system are:
The inability to obtain the information needed by government entities from the performance measurement process. The solution is to adopt performance indicators that are closely related to the strategic objectives. Measuring performance indicators that are not linked to the objectives is a waste of time.
Lack of results and data to help make decisions. The solution is to establish a reliable database to obtain the data based on which accurate performance is measured to help make sound decisions at the right time.
The inability to take effective measures to achieve goals. The solution lies in the use of analysis and improvement tools that lead to the root of the problem, based on which effective measures are taken to improve performance and achieve goals.
Not knowing what exactly is important to measure. The solution is to measure a few indicators that serve the purpose of achieving the goals.
Not knowing the purpose of the measurement and that the indicators are meaningless. The solution is to adopt the performance indicator card. From the outset, the purpose of its measurement are determined.
Employees refuse to be held accountable for performance. The solution is not to punish employees for bad performance. Motivate and honor outstanding performance and good results.
No improvement in performance. The solution is to measure performance indicators over long periods of time to follow up on the improvement in performance in a phased manner. Acknowledge the possibility of taking improvement measures before the end of the performance management cycle.
Indicators are imposed on employees and are not discussed with them. The solution lies in the participation of employees in setting performance indicators and defining the responsibility of each of them for the details of the indicator, such as collecting data, monitoring improvement, measuring the indicator, and developing improvement initiatives.
In terms of building performance- and data-driven culture in the public sector, it is necessary to develop a culture of reliance on shared and open data and to measure indicators of the extent of the participation of government departments.
For the success of any performance management system:
Performance must be monitored, evaluated, and adapted to the strategy based on the results achieved;
The testing of cause-and-effect relationships must use data analytics;
Artificial intelligence and big data must be employed.
To succeed as a leader in a government entity, he or she should have behavioral competencies, the set of knowledge, skills, and behaviors necessary to achieve effective performance. These competencies play an important role in employee performance and work teams for the tasks assigned to them and often appear when employees interact with each other and with clients.
Behavioral competencies include core and leadership competencies. Successful leaders must have leadership spirit, futuristic, achievement, and influence. The leadership spirit refers to empowering employees and delegating powers, promoting accountability and responsibility, setting a role model, and opening up to the world. The efficiency of the future requires the leader to see the future, be an innovator and a catalyst for radical change, be familiar with advanced technology, and be a continuous and lifelong learner. Meanwhile, achievement and impact competence means being flexible and quick, making smart, effective, and efficient decisions, and being focused on the higher goals of the government and achieving results.
This article was written by Dr. Hisham Ahmad Kayali and was first published in the 24th printed edition of PERFORMANCE Magazine. You can get a free digital copy from the TKI Marketplace here or purchase a print copy from Amazon for a nominal fee here.