This is the second post out of four, in this 4 week Christmas Challenge. We are building a small-scale strategy toolbox for small companies.
The first thing we need to do this week is finalize the SWOT, if you did not already do that last week. Filling out the SWOT does not mean writing down as many points as possible, but rather writing down 5-10 of the most relevant points in each category.
If your model from last week is still not complete, you need to look at the internal side of your company.
In strengths, write down what you do better than your competitors. Hopefully you investigated the competitors last week, meaning you have a fresh perspective and fact-based picture of how they operate.
Maybe you have a stronger brand, a stronger financial situation, better technology, or people with special competencies.
In weaknesses you search for those “showstoppers” that keep your company from performing at its best. Maybe you run a startup and your brand is still weak. Or you have high levels of debt due to the pandemic. Or you never managed to build a proper supply chain with preferred and second suppliers. Add those weak spots to the weaknesses.
Your SECOND tool
As I wrote in the first post, the SWOT analysis provides very little value by itself. It might be a great overview, but unfortunately not a very actionable one. It needs to be partnered up with a tool that helps you discover ways to improve or eliminate your company's weaknesses and capitalize on its strengths.
“Generally, when doing strategies, a lot of companies focus only on what to do (or opt-in). But for a strategy to be really valuable, you need to consider with just as much focus, what NOT to do”
Here comes the model. I call it for “opt-in & opt-out”, because to me, that is really what it is all about. Generally, when doing strategies, a lot of companies focus only on what to do (or opt-in). But for a strategy to be really valuable, you need to consider with just as much focus, what NOT to do. And this model helps you with that as well as with identifying relevant strategic options for your company to pursue.
Like last week, Santa Claus has given permission for us to use his input as an example:
As you can see, if you have read the first post about developing the SWOT analysis, we are now building on that model which means that all the great content you have put into it will now be utilized.
To see how, please download the PowerPoint file and copy in your own Strengths, Weaknesses, Opportunities and Threats on page 4 and 5. Get it here:
THIS is how it works
On the “Opt-in” side we are capitalizing on the strengths of the company to pursue the opportunities. A good idea when you are combining the strengths and the opportunities in possible strategic directions, is to immediately write down your ideas on how this can be done – just like Santa Claus did to the right on page 4.
The same approach with the opposite angel on it, applies when we are developing the “Opt-out” side. On page 5 we are trying to minimize weaknesses and avoid threats – or even more dramatically, avoiding something completely, like drawing out of a market because of threats that we cannot beat with our strengths and no possibility to improve the weaknesses.
In my experience, these two extremes are the most powerful tools to work on when concluding on logical directions based on the internal and the external factors.
That is why I will advise you to at least always develop those two on top of any SWOT analysis.
do you want more?
This method of combining the factors of SWOT is also called TOWS analysis. TOWS was published in a paper called “The TOWS Matrix A Tool for Situational Analysis” by Heinz Weirich in 1982.
The SWOT analysis was created already in the 1960s by Albert Humphrey of the Stanford Research Institute and maybe these few more years of history is the reason that SWOT is so much more well-known and used in most companies.
The original TOWS matrix also combines the factors in two other ways:
· Weaknesses and Opportunities: Strengthen weaknesses, utilizing opportunities
· Strengths and Threats: Minimize threats utilizing strengths
But common to these two perspectives is, that they are not really strong. In my opinion doing them very seldom leads to any strategic actions, as you would rather utilize opportunities by building on your strengths (= Opt-in), than your weaknesses. And likewise, rather mitigate risks where they are really serious due to your weaknesses (= Opt-out).
Anyways, if you have the time at hand, I recommend you do it. Just to be thorough and certain, that you did not miss out on any great possibilities. The last two perspectives are therefore included in the model page 6 and 7.