As 2009 winds down and we each begin getting geared up for the opportunities in 2010, now's the time to start in on updating that business plan. Even if you don't own your own business, it's still immensely helpful to take a milestone assessment of your department, company, team, or what have you, as you plan budgets and resources for the coming year. Here's where a SWOT analysis can help.
What's a SWOT?
A SWOT analysis is a structured group activity that's useful in identifying the internal and external forces that drive an organization's competitive position in its market. (Or, in the case of a department, committee, team, group, etc., it can be used to assess its positioning within the larger organization.)
Materials:
- Flipchart
- Markers
- Masking tape
Procedure:
A SWOT analysis involves seven steps:
- Define "SWOT" for your meeting participants.
- Analyze the internal environment.
- Analyze the external environment.
- Clarify ideas.
- Narrow the list.
- Develop a strategy. (Discussed in a follow-up post.)
- Write action plans. (Discussed in a follow-up post.)
Step 1. Define what "SWOT" means for your meeting participants
SWOT is an acornym for Strengths, Weaknesses, Opportunities and Threats. For purposes of this exercise, we define each as follows.
Strengths identify any existing or potential resource or capability within the organization that provides a competitive advantage in the market. For example, an organization might define it's capabilities as having a strong distribution network, intense employee commitment and loyalty, increasing profit margins, etc.
Weaknesses point to any existing or potential internal force which could serve as a barrier to maintaining or achieving a competitive advantage in the market. For example: lack of a clear company strategy, lack of training opportunities for using new technologies, inability to rapidly indoctrinate new employees, and so on.
Opportunities are existing or potential forces in the external environment that, if properly exploited, could provide a competitive advantage. For example: high customer satisfaction ratings, raving fans, proprietary technologies, new technologies, and so on.
Meanwhile, Threats pertain to any existing or potential force in the external environment that could inhibit the maintenance or attainment of a competitive advantage. Here, examples might include: a new competitor, a recession, rising (or even lowering) interest rates, tight credit lines, etc.
The thing to notice is from the definitions above is that Strengths and Weaknesses are inward-looking. You generate ideas and gather feedback within the context of your organization or company. Meanwhile, Opportunities and Threats are outward-looking. That is, what's happening in the environment that will (or can) affect our organization or company.
Step 2. Analyze the internal environment. (i.e., Strengths, Weaknesses.)
o Ask participants to identify the Strengths of the organization. Questions you might consider asking include:
- What strengths are uniqie to our (company, organization, department...)?
- What differentiates us from the competition?
- What is it that we do really well?
o Next, ask participants to identify the Weaknesses. Questions to consider include:
- What knowledge do we lack?
- What skills do we lack?
- What systems do we need to change?
For each of the dimensions above (i.e., Strengths and Weaknesses) you might also consider discussing any case studies, white papers or lessons learned documents discussing client projects that went particularly well (to help list Strengths, for example) and also those that discuss projects that didn't go particularly well (to help list Weaknesses).
Step 3. Analyze the external environment. (i.e., Opportunities, Threats.)
o Reminding participants of the definition given in Step 1 for the Opportunities dimension, ask participants to help you list Opportunities. Questions to consider include:
- What additional services can we offer existing clients?
- How can we engage our highly satisfied customers and raving fans to expand our offerings?
- What new markets are we positioned to enter?
- What new markets are we positioned to create?
- Are there any service offerings we have that can be leveraged to appeal to the tidal wave in "Generation Y"?
o Finally, ask participants to do a similar exercise in identifying Threats. Questions to consider:
- Who are our closest competitors?
- What new companies are poised to enter our market?
- What environmental or regulatory issues might affect our industry?
The resulting list might look something like this:
Step 4. Clarify ideas.
Review each idea within each of the domains; ask clarifying questions while discussing the underlying drivers of each idea. It will help to ask members who presented an idea to help clarify and explain to the rest of the team what they meant about the idea. Remember, the goal in this step is to clarify. Avoid debating the importance of any particular idea.
Step 5. Narrow the list. (If needed.)
This step will likely require the use of some kind of facilitative "narrowing" technique to help combine similar ideas. One such technique could be your own variation to an approach I wrote about before that uses Post-It notes to help gain consensus. The goal in this step is to reduce the quantity of ideas listed under each domain without (and this is important) outright discarding any one idea. It's important that each participant feel that her/his idea was included. It's also unnecessary to discard ideas, given the easy techniques available for combining, voting and narrowing.
By now, you can see that conducting a SWOT analysis with a group can be a bit time-consuming. Due to this fact, you may want to conduct the SWOT over a span of time (over a span of days, for example). You might also consider focusing on the internal dimensions with one group, while reserving the external dimensions for another day with another group.
SWOT is also a technique that can help sole proprietors and small business owners conduct business planning for the new year or new quarter.
Step 6 (Develop a Strategy) and Step 7 (Develop Action Plans).
The key thing is not to stop after you've narrowed your list into tight little bundles of Strengths, Weaknesses, Opportunities and Threats. As far as that goes, it's interesting, but not very actionable. You can take a break after Step 5, but at some point you'll want to take your lists and go an extra couple of steps to develop strategies and action plans.
Strategy development and Action Planning are meaty topics in themselves. I'll reserve those for the next post. But, I also don't want to leave you hanging so let me offer a couple of resources that I found helpful. For Strategy Development, take a look at TechPolicyBank's Develop a Strategy. And, for Action Planning, you might want to visit Wested.org for a nifty PDF document on Construcing an Effective Action Plan. (PDF download.)
Feel free to bookmark this post for future reference. Or, if you want, you can also download the e-book I'm putting together for you to get free in the next few weeks. I'll be including many of the facilitation tools and tips I've used and written about here and in past posts. Sign up below and I'll let you know when the e-book comes out. (No worries. I think you know I don't spam and won't sell your information to any third-parties.) Give me a few weeks to get it put together, though.
If you liked this, or any of the articles on this site, please subscribe!
Are you a fellow "Tweep"? Follow me on Twitter (@melaclaro)
Or, connect with me on LinkedIn: LinkedIn.com/in/melaclaro.
Got friends? Forward this post or save it to any of the bookmarking sites below.
