What is SWOT and how you can beat the competition!
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. How many times have we heard that a business needs to do a SWOT analysis, so they sit down in a room with their favourite employees and talk about what they are good at, bad at, what the opportunities are (usually to improve what they are bad at) and the threats, which normally involves a discussion about their competition. Sound familiar? Well no wonder nothing good comes from using this framework in this manner.
he good news is, SWOT is a very useful tool. The bad news is, that it takes more than two hours some whiteboards followed by high fives at the pub.
SWOT can be divided in to two parts. SW is everything internal to the organisation. What is your organisation really good at, and where are the unique selling propositions. To find this out, it is best to go and talk to your customers. Find out why the customers use your product, or why they didn't use your product. What internal intellectual property do you have that others don't? Keep a hold of all these things, we will use them later.
Weaknesses, these are the areas that your organisation needs to improve. Often you will uncover these by having someone interview your team members and get some open honest feedback. This feedback can often make you more aware of the things that cause frustration. This could be computer systems, cash flow, culture or skills within the team.
Now for Opportunities and Threats. These are things that are in the macro environment. That is to say, things that may cause an influence on the industry you work in, and will impact your competitors the same way it impacts you. The difference is how you react to these influences. To determines these the PESTEL framework is often used, this looks at Political, Economic, Socioeconomic, Technological, Environmental and Legal changes that will create a force on your organisation. There may be other influences, but usually they will fall into one of these categories. If it does not impact your industry, then don't include it. For example a shift to electric cars will influence the local mechanic and it is definitely a technology change and arguably a socioeconomic change. And while this shift is happening, it is not much use to include it in your analysis if you are a hairdresser (unless you are a mobile hairdresser). So while there are a lot of trends happening, they don't all impact your business.
With these threats and opportunities identified, it is time to make plans to minimise the threats, and use your strengths to leverage the opportunities. This is where the gold can come in. Revealing a future trend, and focusing your business strengths to maximise the opportunity, or shifting to reduce a threat can mean the difference between success and failure for a business.
To get a working session on SWOT, contact us.