By Mike Loughrin, CEO of Transformance Advisors
Have you ever been at a planning retreat or brainstorming session and feel the team get bogged down with too many ideas driving everyone crazy?
This chaos of too many ideas happens in many situations and can often be alleviated by using one of the various problem solving tools that helps people quickly organize ideas and reach consensus.
For this article, we will focus on the annual planning retreat where the imperative is to understand the current reality before jumping into deciding what needs to change. One of the best methods for gaining consensus on the current reality is to examine the organization in terms of strengths, weaknesses, opportunities, and threats; commonly called a SWOT analysis.
Applying SWOT Analysis
SWOT analysis can be applied to an entire organization, a specific product family, a single department, one individual, and just about anything else you can think of.
During the annual planning retreat, the executive leadership team should leverage SWOT analysis to gain consensus on the current reality for the entire organization. This understanding of the current reality can then be compared with the 5 year vision and help with defining those 3 to 5 strategic initiatives required to close the gap.
- Strengths and weaknesses should be internal factors as they relate to your competition.
- Opportunities and threats should relate to external factors in terms of what is happening around you.
In addition, identifying the factors in all four categories should be done with a focus on the facts. Defining your current reality is not about speculation, wishful thinking, or avoidance of uncomfortable situations.
Let’s look closer at each of the categories in a SWOT analysis.
Develop your list of strengths in relation to your competition. For example, if most of your competitors have great websites with product availability and order tracking features, then your “great” website is probably not a strength.
You need to be careful and not over-rate yourself. Most of your competitors have great people and loyal customers.
It’s best to have quantifiable and verifiable facts vs. feel good proclamations.
Admitting your weaknesses can be difficult, but this is the time to “put the moose on the table.” For example, if your meetings always end with unanimous decisions that no one really agrees with, then get this cultural defect on your list of weaknesses.
What causes you to lose prospects and customers to better offers from your competition?
Be honest about areas where your competitors are better and where you know improvements are required.
Assessing best practices, emerging trends, competitor successes, and external changes can help you identify opportunities. For example, new technology, government programs, and changing demographics can open up new markets or provide you a technique to improve your competitive advantage.
Can you leverage your strengths or eliminate your weaknesses in terms of external opportunities that are now available to you? Think big, but also be strategic.
Of course, social media is an opportunity. But is it an opportunity for creating raving customers or should you leverage it for attracting new employees?
List those external factors that keep you awake at night. For example, the boom in natural gas production has done more damage to coal producers than the impact of environmental concerns.
What could change your market or cause your products and services to become obsolete? Extend your thinking to suppliers, partners, and employees.
While there are all sorts of threats on the horizon, approach them with the sense of what “is” happening and what “could” happen.
The Power of 3 to 5
You don’t need and can’t do much with a massive collection of strengths, weaknesses, opportunities, and threats.
The best SWOT analysis will include open discussion to clarify, modify, combine, and eliminate items from your initial list.
The next step is to prune and prioritize your factors to no more than 3 to 5 for each category. One of the best techniques for pruning and prioritizing is the 100-point assessment tool.
The Next Step
When complete, your SWOT analysis should have 3 to 5 factors for each category. Then you are ready to craft plans that:
- capitalize on your strengths
- minimize your weaknesses
- take advantage of opportunities
- apply risk management to threats
Read how SWOT analysis supports effective strategy execution.
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