Strategic Case Blog
|Posted on June 27, 2016 at 10:50 PM|
In the immortal words of Kevin O’Leary a.k.a. “Mr. Wonderful”, of the hit TV series Shark Tank, “Your dead to me.” captures our sentiment of SWOT and after a few “aha” discussions, our clients seem to agree.
"Strengths may have waning demand in the market, and Opportunities may be fraught with costs and risks."
The GOOD- Simple, Easy to build consensus
When I first heard of SWOT in the 80’s, it sounded great. What a simple and succinct way to organize and galvanize random thoughts in a board room about significant factors and traits of a business and it’s environment. I still hear company leaders many of whom are very intelligent discussing SWOT as part of their strategic planning efforts. I can’t blame them, I used SWOT extensively through the 90’s.
When I engage executives about SWOT, they quickly admit that “it’s a tool that helps us organize the basics then we fine tune our plans afterwards”. But why use a tool at all that can unilaterally generate pitfalls that need to be shored up afterwards if they are spotted at all?
The BAD- Random, Sets up hidden hazards within your strategy
Strengths, Weaknesses, Opportunities, and Threats form nice neat quadrant cells that tend to oversimplify and trap anything placed in each respective box. I don’t take issue with Weaknesses and Threats so much. I take issue with the misleading coronation of Strengths and Opportunities. Strengths are immediately assumed as something we need to run with, same goes for Opportunities. But Strengths may have waning demand in the market, and Opportunities may be fraught with costs and risks.
Perception can set up an organization to be blind-sided by business risks that they didn’t explore because their strategic planning efforts were flawed with over-confidence in their Strength and Opportunity boxes.
If a process is random and rife with hazards then use a better process.
The UGLY- Overconfidence, Hidden hazards hurt your business
So here’s what happens. Optimism reigns for Strengths and Opportunities, meanwhile there are overlooked risks that aren’t considered deeply. Tactical problems that were never contemplated bubble up when the strategic plan is executed.
It happens all the time. Problems surface. People get frustrated, embarrassed, productivity tanks and business takes a hit. Time for damage control, hopefully customers and significant stakeholders aren’t impacted. Distractions from productive activities are everywhere. The SWOT based strategy is looked at as a failing strategy and possibly for the wrong reasons. There may have been some great parts of the strategy that will be cast out with the bath water. Time for a new strategy, let’s pull out SWOT again!
A Better Way
SWOT never clearly calls out risks, only Weaknesses (things you don’t do well), and Threats (presumably attacks by outside sources). A SWOT analysis never even examines why customers like your products or services. So don’t use it, its’s dead because newer and better strategic planning technology is available.
IRA investigates and quantifies why your business is successful, what makes it tick, why it’s appealing and what a great acquisition might look like. It examines how customers behave and what they value. Then it systematically seeks risks that can undermine your business, by challenging the 9 essential parameters of a successful business. It highlights and scores those aspects of your business that can go wrong, that are not well understood, or that can generally inhibit growth.
The 9-point score that results clearly shows where improvements and innovation are needed and the path for growth. Your strategic plan comes to life.
It’s fundamentally a different approach from SWOT, it’s not just a tool it’s a system. It’s been in practice for over a decade creating high value offerings that the market needs while identifying and reducing hazards to achieve goals.
For more information please visit www.ai-strategy.com