Probably since the beginning of strategic planning, business owners and their key leaders have been sitting around tables talking about Strengths, Weaknesses, Opportunities, and Threats.  Maybe you’ve even done engaged in the SWOT process with your team.  The primary reason for a SWOT analysis is to identify and deal with the critical issues affecting your business.

The key phrase here is “critical issues”.  Generally when planning teams sit down to work on a SWOT analysis, they develop a long list of pet peeves (the small stuff) rather than a short list of the truly critical issues (the big picture stuff).  As a result, they spend a disproportionate amount of time talking about how important it is to have Coca-Cola versus Pepsi machines in break rooms.  Really?  How is that – or whatever your peeve happens to be – going to affect your ability to achieve business success?  To reach your mission?  To energize your vision?  

A SWOT analysis uncovers critical issues; and critical doesn’t necessarily mean negative.  “Critical” simply means important; and you can’t really know whether an issue is important or not unless you know how that issue influences your personal and/or organizational success – how it makes it easier or more difficult to execute your mission and vision.

If you and your team have tried to develop a SWOT analysis and have just given yourselves headaches, here are a few simple guidelines for helping you avoid the small stuff and concentrating on the big picture:

      1. Get agreement on your mission, vision, and values.  You may have to go back to a discussion of Owner Motivation and Perspective (why did you go into business in the first place) to reach an agreement or, in some cases, re-education on what the business is all about.  

      2. Remember that the SWOT analysis is designed to help you identify critical issues that can make it easier or are currently making it more difficult for you to accomplish mission and vision objectives.  Put the trivial “peeves” in a parking lot and focus on the truly important.

      3. Strengths and Weaknesses (the S & W) are all about business models, practices, policies, and procedures that the planning team has control over.  The four fundamental areas that you control are:

        • Internal capabilities – policies, procedures, practices, traditions that make it easy to be successful or increase the degree of difficulty and make work hard;

        • Financial capabilities – cash flow, profitability, credit continuity, payables, lease terms and other financial documents;

        • Products and Services – what you offer the public.  Do you have products and services in search of a market; or do you have a market in search of the products and services you offer?

        • Human Resources – do you have more people wondering how they can add value than you have people wondering how little they can do and still keep their jobs?  Do you have a deep bench or no bench?

      4. Opportunities and Threats (the O & T) are all about factors operating outside the scope of your immediate control.  The four fundamental areas here are:

        • The Market direction – unless you got there first, you probably don’t own the market.  Do you react or respond to market shifts?

        • The Industry – how are mergers, acquisitions, and dissolutions going to impact your organization?  Several once big names are now historical footnotes. 

        • Disruptive innovation – what new aspect of technology will revolutionize your business?  Is there something lurking around the corner that will forever change the way you do business?

        • Government – the organization that’s always ready to help you.  What are the elected legislators, the courts, and the administrative czars thinking about that will make easier or complicate your ability to do business?

So, the next time you and your team decide to talk about Strengths, Weaknesses, Opportunities, and Threats, you might want to take this into the meeting with you.  If nothing else, it gives you a model to use in setting up your meeting.

And one other thing.  At some point, someone invariably wants to refer to something as both a strength and a weakness or as an opportunity and a threat.  Don’t you believe it!  It’s one or the other, not both.  It may be possible to have your cake and eat it too, but the mind cannot accept something as being true and false at the same time.  In the words of an old Country/Western song, it’s playing a fool’s game and hoping to win.

 

Sign up for our monthly e-newsletter to stay informed on how to overcome related succession planning issues.