swot... so what?
Madhav Murti
Packs a punch, everyone knows it, many use it yet so few get any real benefit from it…
As an executive recently lamented, “what’s the point? Every planning cycle we do all kinds of analysis and scans to develop the SWOT analysis and then it is ignored as we move along the process. I wonder if anyone would notice if I just slipped in last year’s version…”
What’s your experience?
A properly prepared SWOT analysis gives a company a good sense of the key strengths and weaknesses within the organization and the opportunities and threats that the external market provides. Such insight is invaluable as guiding principles to shape business strategy. This is not rocket science so why is this an issue?
Let’s look at some ‘good practice principles’ to ensuring an effective SWOT analysis
1. Start Right
Your business context needs to drive the analysis to make sure that what you get out of this is aligned to your business objectives and needs. To set the right context, consider the following:
2. Make your analysis insightful and useful to your business
You get at Strengths & Weaknesses by looking within your organization over the past year at the following key factors:
You get at Opportunities and Threats by looking outside the organization. There are several approaches to doing this thoroughly so choose what applies to your business and at a minimum make sure the scan covers the following:
With a thorough scan of the above areas, you should have good material to start developing your SWOT.
As a general rule, every time you have an entry for the SWOT, check if it makes sense given your business context.
3. Use it
Use your SWOT analysis to guide your strategy and decide what makes good business sense for your chosen business context.
Following these principles will help ensure that you have an effective analysis that could make a positive impact to your strategy and mitigate the risk of getting caught off guard.
As an executive recently lamented, “what’s the point? Every planning cycle we do all kinds of analysis and scans to develop the SWOT analysis and then it is ignored as we move along the process. I wonder if anyone would notice if I just slipped in last year’s version…”
What’s your experience?
A properly prepared SWOT analysis gives a company a good sense of the key strengths and weaknesses within the organization and the opportunities and threats that the external market provides. Such insight is invaluable as guiding principles to shape business strategy. This is not rocket science so why is this an issue?
Let’s look at some ‘good practice principles’ to ensuring an effective SWOT analysis
1. Start Right
Your business context needs to drive the analysis to make sure that what you get out of this is aligned to your business objectives and needs. To set the right context, consider the following:
- What are the key client/market segments you want to be a player in
- What are the client needs you want to meet in the above segments
- What are your products/services that will help you meet above needs
- Who are you competing with in each of your segments
- What is your desired positioning compared to the above competition in the above segments
- clarity on key segments will allow you to look at materiality of market trends related to that segment.
- an assessment of your strengths or weaknesses will be different if you want to be the ‘lowest cost producer’ vs if you want to be ‘the most innovative’ player
- new client segments you want to play in would mean your team has to expand the scope of the traditional market scan in new directions
2. Make your analysis insightful and useful to your business
You get at Strengths & Weaknesses by looking within your organization over the past year at the following key factors:
- Organization & Structure: How well has this worked for you. Have there been any major changes to this and if so how has that worked out.
- Leadership/Management: How well does the team work together. Are there any key issues/challenges to be addressed.
- Managing business transformation/change: What has been the experience if any in this regard.
- Your Products/Services: How has your product portfolio been performing. If there are any new focus areas in your business context, is your current portfolio a source of any strengths or weaknesses.
- Business Performance: How have the business results been. Are there any major positive or negative outcomes & their reasons worth noting.
You get at Opportunities and Threats by looking outside the organization. There are several approaches to doing this thoroughly so choose what applies to your business and at a minimum make sure the scan covers the following:
- Your Clients: Understanding what your clients are facing is a rich source of guidance for your products/services , so use it to influence your own direction
- Competition: Needless to say, ignore this at your own peril. Many companies struggle with this as there is a tendency to make this very generic. If you’ve set out your business context correctly, then you should be able to assess the competitive landscape unique to each of those segments. Quite often your clients may use solutions outside the industry norm to meet their needs. Especially given the many innovative ways companies are leveraging technology today, your competition of the future may look very different from the conventional ‘we all look similar’ players of today.
- Emerging Trends in the market: This is a catch all for what’s new and coming or what’s old and going away.
With a thorough scan of the above areas, you should have good material to start developing your SWOT.
As a general rule, every time you have an entry for the SWOT, check if it makes sense given your business context.
3. Use it
Use your SWOT analysis to guide your strategy and decide what makes good business sense for your chosen business context.
Following these principles will help ensure that you have an effective analysis that could make a positive impact to your strategy and mitigate the risk of getting caught off guard.