What Is Impacting Your Innovation?

There are many factors that can affect your business and innovation. In this blog I am going to be looking at the PESTLE analysis, focusing on external factors that can heavily affect your business and therefore your innovation.

PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental.



This will include any influence the government may have or changes they make that will affect your business. These can include things such as political reform, new tariffs, tax policy, even things such as a new party in office.

One of the biggest political changes that will no doubt have an effect on how your business innovates is Brexit. Leaving the European Union has affected international trade agreements and increased the cost of exporting into Europe. The outcome of Brexit is still uncertain and certain industries may continue to struggle to innovate as a result of it.



Economic factors can include inflation, economic growth, wage rates, working hours, unemployment, anything that affects the economy’s performance that can directly impact your company and therefore your innovation.

Changes to the economy can cause you to raise or lower the cost of your products and services. The pandemic heavily impacted businesses as some have struggled to meet their sales targets and needed to cut costs. This means there would have been less money to invest into new innovations and employees may have been made redundant decreasing the number of innovative people in your company.



Social impacts change the way a business plan their marketing strategies. Population growth rates, age distribution, cultural norms and expectations all are social factors that can affect a business’s innovation process.

Social factors impact a marketer’s ability to target certain customers and segmentation tactics. They affect how people behave and their attitudes, and therefore can affect their buying habits. This will change the way a business innovates and how they market their innovations to their customers.



In today’s world, digital developments and increasing advances in technology are affecting more and more businesses. These advances change how companies innovate and the way they try to keep up with competitors. Technological factors include artificial intelligence and the Internet of Things.

If a company doesn’t keep up with these developments, they can lose their position in the market and end up losing customers. Not keeping up with technological change can affect a company’s ability to innovate and make it harder for them to stand out in the crowd.



Changes in legislation and company regulations can impact business innovation. Countries can introduce new laws that affect how your company works as well as the internal rules set by your business that employees are bound to follow.



Environmental factors and changes can cause difficulties when it comes to innovation. Global Warming and Climate Change are major issues affecting businesses as amplified by the recent COP 26 Summit, which have led many companies to start using sustainable resources and ethically sourced products.

Changes in the environment and the influence of ecological aspects will impact a business’s innovation. These can include environmental disasters such as hurricanes and earthquakes or even the coronavirus pandemic, that result in changes to business location, their people and everyday business processes. Companies struggling to return to day-to-day practices, may fail to commit to developing future innovations.


Planning in case of these changes can help you overcome problems that might impact your business’ innovation. Performing a PESTLE analysis and working out how they impact your company’s strengths and weaknesses will help you identify new opportunities for innovation to overcome the challenges your business may face.

For more information on innovation and what options you have available to you read our Innovation page.

Categorised: Innovation

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