As the year winds down and we each get geared up for the opportunities in 2012, now’s the time to update that business plan — assuming you haven’t done so yet. Even if you don’t have 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. This is when a SWOT analysis can help.
What’s a SWOT?
A SWOT analysis is a structured group activity that’s useful for identifying the internal and external forces that drive your competitive position in your market. In the case of a department, committee, team, group, and so on, a SWOT can be used to assess your group’s positioning within the larger organization.
- Define “SWOT” for your meeting participants.
- Analyze the internal environment.
- Analyze the external environment.
- Clarify ideas.
- Narrow the list.
Step 1. Define what “SWOT” means for your meeting participants.
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats.
- 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 its capabilities as having a strong distribution network, intense employee commitment and loyalty, increasing profit margins, and so on.
- 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 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, and so on.
- Threats, meanwhile, have to do with 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 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 your organization or company.
Step 2. Analyze the internal environment: Strengths and Weaknesses
In this step, ask your participants to identify the strengths of the organization (or department, etc.). Questions you might consider asking include:
- What strengths are unique to our (company, organization, department…)?
- What differentiates us from the competition?
- What is it that we do really well?
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?
Consider also discussing any case studies, white papers, lessons learned, client projects that went particularly well, as well as those that didn’t go particularly well.
Step 3. Analyze the external environment: Opportunities and Threats
Reminding participants of the definition you gave in Step 1, ask them now 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 different generations?
Finally, ask participants to do a similar exercise in identifying threats. Questions to consider here might include:
- 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 that idea. Remember, the goal in this step is to clarify. Avoid debating or championing 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 previously on using Post-It notes to help gain meeting consensus.
The goal here 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 in the Post-It notes article 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.
Is this something you’ve done before? What other planning tools do you typically use to prepare for a new year?