A SWOT analysis is one of those analysis tools that helps you understand your business or team. The idea is fairly simple, SWOT stands for "Strengths, Weaknesses, Opportunities, and Threats." The SWOT analysis encourages you to identify those four things as an aid to planning.
A Quick Overview of the SWOT
Strengths and Weaknesses are internal. You might say that "our rapid turnaround time is a Strength, while our high quality control costs are a Weakness." Strengths and Weaknesses live inside your organization.
Opportunities and Threats are external. Opportunities are ... well, opportunities. Threats come from outside your business. For example, you might see an opportunity to expand in a new market, and you might find the weakness in demand for goods to be a Threat.
Managing Threats
I wanted to cover threats today, because they represent an area where people feel out of control. Weak demand, government regulations, legal changes, and recessions are all examples of "threats." Sometimes standing in the path of a threat is as effective as standing in the face of an oncoming train. So what can you do?
When I think of threats, I think of the idea of facing off with an opponent in a person to person battle. Just as a martial artist counters a punch, we too can counter the external threats to our business.
Strategy One: Stand Still
If you are strong, you can take a punch without flinching. If your company is financially strong, you may be able to take a couple weak quarters without hurting yourself long term.
Strategy Two: Fight Back
Once in a while, the best defense is a strong offense. An example of fighting back against a threat would be sending a lobbyist to congress to try and block negative legislation against your industry. You can't fight the economy though, so trading blows with your threat can only work in limited circumstances, and it may deplete your resources.
Strategy Three: Step to the Side
Just as a fighter might dodge a punch, your business might "dodge" a threat by stepping out of the line of fire. One example of this would be switching to another set of customers when one customer group stops buying. If you want to dodge a threat, you need to be agile, being ready to adjust before the need becomes obvious.
Strategy Four: Use your Opponent's Momentum
If an Aikido practitioner sees an opponent running at them full force, they don't resist. Instead, they use the momentum of their attacker and flow with it. Likewise, we can use the momentum of the threats against us to strengthen our businesses.
Consider the fact that spending is reduced during a recession. This creates energy around bargain hunting. Starbucks decided to "flow with" that force, offering inexpensive "breakfast + coffee" pairings to retain customers. They used the momentum of the recession to drive business towards them, instead of trying to convince people that spending $4.00 on coffee was a good idea.
The worst thing about considering a SWOT is that the threats sometimes make people feel powerless. Be a SWOT warrior, and you can put yourself back in control even when the forces aligned against you seem insurmountable.
Any other "moves" you'd like to suggest? :)
