Investigating Entrepreneurial OpportunitiesSTEEP analysisColin GrayMost entrepreneurs and successful managers use a number of routines or techniques tomake their sense of our very fast moving and complex world. Business academics haveanalysed these different techniques. They try to break them down into simpler parts in orderto help students understand and learn how to spot opportunities and avoid risks in the waythat entrepreneurs do. A common first step is to systematically scan your externalenvironment. This involves trying to identify important and relevant changes to society,technology, the economy, the environment, and politics, which includes regulations. This wasreferred to as a PEST or a STEP analysis (depending on your preferred acronym) but with thegrowing importance of ecological issues the business environment is now also often scannedaccording to the changes in its STEEP factors, which is the approach favoured by JulianBrower.Julian BrowerI 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 beobvious but the fact is that mine was a very local type advertising so I need to get thegovernment to try and agree to become more local, to get people to live in villages and utiliselocal communities. That’s a very important part. Had the government been deciding onwhether they want everybody to live in spread out all over the country er in conglomerationsor cities then my idea may not necessarily have been relevant. So I – it utilised in themarketing 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 understandthe factors that affect you. And the other important one was the technology you know. Thefact is that I didn’t want mine to be running on mainstream electricity so solar energy or ersome – electrovoltaic power to be able to run my advertising system. I was waiting fortechnology to come - to arrive and I knew that within a year or two my screen sizes would getcheaper, 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 GrayLooking at the social, technological, economic, environmental, political factors that arechanging which impact upon um businesses and customers and suppliers and so on and soforth um how did you approach your environmental scan - the STEEP?Julian BrowerI probably approached it very much like many students – baffled by the concept and thoughtto myself how am I going to apply this and it looks pretty horrific to start with. I – it took a littlebit of time to think what it actually meant you know the technology – how was the technologygoing to implement my e-boards and economic factors and - and I found it very difficult to seewhere political factors – once again a little bit of thought, a little bit of research – ideas arecoming out all the time and you can apply them. In the technology side of things how is – inthe technology side of things how is my e-board going to be affected by technological factors?There Im looking for a green solution. I want my boards to be run on solar power so is thegovernment 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 theres ascheme called a “this” that the government are running. So if you actually stick a solar poweron you they’ll pay for eighty per cent of it and that will run your e-board. So you know yourepaying 5.6 p per unit of electricity but you get it down to 1p and if you make anything moreyou sell it back to the national grid. You see how by applying that technological factor I cango back to the customers and stick it into the into their … and say look you can actually save
money by doing this. That was one idea I came up with. And there are many ways. Thereare many technological things that customers can take advantage of that will allow me to sellthe boards into the shops. Um one of the areas that was of great concern was er bringing thetelevision sets over – the electroluminescence over from the far east – the cost of travel, thecarbon footprint because you know a customer – oh yea Ill take a board but Im not payingthat price. And you know to get that one television set from China to here is going to costseven kilos of carbon. What you going to do about it? So I had to look for ideas around that.I havent come up with a solution yet because we don’t make TV’s in the UK. We don’t makethese screens in the UK. One of the biggest problems we have with the technology of thisside is the cost to the to the er planet of bringing all my technology, because every piece ofmy technology will come from China. The political side as well I think Ive mentioned thatbefore where you know what is on the political agenda that’s gonna help me grow this e-board and Im looking for everybody to live – to live local and Im looking for little localcommunities to all revolve around their village shops and their local garages. So anawareness of how the government is promoting local living and I can add that back in to myyou know bring add to the local community and I think in my advertising spiel I did actuallytalk about thatProfessor Colin GrayAnother aspect of political of course its where government regulations and industry standardscome in as well. Surely that would have had an impact on these sorts of things youre talkingaboutJulian BrowerWell it did. Funnily enough one of the issues the legal side of this came out. What stopssome drunk guy deciding to advertise his girlfriend on this board in the middle of the nightwithout me … so that came out of the aspect of the um the legality of promoting posterswithout any sort of --- anyway I have a fantastic piece of software that picks out words thatwould prevent an advert from going on. So if somebody starts to type in Im selling my wife’scar for a hundred pounds – brand new Porsche Eleven Turbo I will stop them putting thatadvert on the screen because I have a key word selector. So its quite common – I say itsquite common its its its an expensive piece of software but it will stop you advertising if youwant to do something funny and anything that has any question about the integrity or validityof it will come to me - well not to me but to a representative who will vet it first. So if youreflogging logs ten pound a bag – no problem. But if youre selling your wife’s Porsche turbo forfive quid because you don’t like him anymore um it will come back to me and you wont beable to do it. Anyway, going back to the political side of things that’s not directly related topolitical – but there are political factors. I havent fully established um which way thegovernment is going but um the the where the government is going on the green side ofthings is very, very orientated towards my idea – where technology is going that’s verygovernment orientated. All sorts of schemes and incentives in the system now that thegovernment are promoting and the political factors being you know the next government arenow going to make all solar power panels free. Have an awareness of that. Add that back into 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 – STEEPProfessor Colin GrayAnd what about the social side because you did mention remote Scottish villages and - andthe like. Often these people are quite conservative small c conservative you know in theirtastes and things. The idea of them having one of these flashing screens in their in their littleshop may not appeal. Is that something which you thought might influence how this mightsucceed?Julian BrowerThe social one was a really interesting one because you know social -social – you knowpeople are quite lazy. People don’t like walking so if Im going to have some issues in termsof people actually going to village shops. I thought about people not really interested in goingto their corner shop therefore the local agent will say well Im not really interested becauseyou don’t get many people in. Um people are buying less newspapers so why would they goto a village shop? People are now reading newspapers on line. Um supermarkets –
Professor Colin GrayOn fluorescent screens even ---Julian BrowerYes. Supermarkets are taking customers away from local communities. So however muchthe government want to move back everybody goes to Tescos because it is so much easier.Its not cheaper. Its easier to shop in one place. So was there going to be a socialsustainability element to this to keep people still working in their community? So its localhabits. But what came out of that was a lot of people go to shops – go to pubs – so the flatscreen pub idea popped out of it because theme pubs now are really, really big. So I thoughtwell I can obviate maybe the loss in the village shop by looking at other places that I could getbusiness like pubs, like car servicing departments where people are hanging around for along time anywhere where people sit around bored and they want something to do – so theycan look at the screen.Professor Colin GraySo STEEP is an essential part of your toolkit as well?Julian BrowerIt was an essential part that appeared further down the line from SWOT but an absolutelycritical bit to look at factors that I hadnt even considered from the five different sides –Julian BrowerSTEEP was an essential part. It didn’t appear as high up as SWOT but it introduced me tofactors that I hadnt 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 its very important the mind is focused on particular areas and thatyou can go off and research political factors without worrying about encroaching on the otherareas.Professor Colin GrayJulian Now youve actually taken us through very clearly I think how the different componentsare very, very useful. How do you however make them very relevant to you because a lot ofthese changes are very broad-brush changes? Theyre - theyre not tiny changes and theyreones that affect everybody. How do you make sure that its very relevant to your businessand your business idea?Julian BrowerA lot of the ideas in my business ideas may very well have had national or internationalimplications but the price of currency, the yen, or the governments’ involvement insustainability or um business courses business money that’s available from some businesscommunities is also relevant to small business as well. These factors have to be consideredeven though theyre national they are definitely- they can be very, very – they can beconsidered on a very small basis to our own business as well. So you have to consider thefact that when youre promoting stuff from China the cost of importing – the cost of importationtax, the cost of licensing, the cost of production, the change in um pound/yen is very relevantwhatever size business youre dealing with. Um in smaller business its more relevantbecause you don’t have such big bargaining power so to get the - the advantages you have togo to a company and you often have to offer them your soul. So you’re dependent on that onecompany whereas in other companies you might have to spread that risk – if youre a biggercompany you just spread that risk more often. So it is quite relevant, very relevant to makesure you know that you’re conscious of these factors because as a small company you maybe more susceptible to the risk than less.