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The lessons that Dr. Weick taught me then still guide me today.
For instance, her obsession with business strategy frameworks is now my own obsession. As the name suggests, a framework provides structure in analyzing and solving business problems.
Frameworks allow me to address a client’s business issue in an organized, thorough and efficient manner. From Porter’s Five Forces, to Blue Ocean Strategy and SWOT, I can’t help but get excited when learning a new framework.
One of the most common and easiest to understand frameworks is the SWOT analysis in which organizations list out their Strengths, Weaknesses, Opportunities and Threats. Strengths and weaknesses are resources and capabilities within an organization currently.
Examples of internal factors include financial resources, technical capabilities, human resources and product lines. All of these are controlled by the organization. Competitive positioning can also be a strength or a weakness since positioning is something that an organization can control.
Opportunities and threats are factors outside of the organization. A company may be able to influence, or at least anticipate, but not fully control these factors. Examples of external factors include, government policies, regulation and legislation, industry innovations, competition and economic and social trends. While a company can control how it positions itself relative to the competition, it can’t control competitors’ actions or strategies.
While conducting a SWOT analysis, an organization must be willing to be honest in their assessment of their company’s strengths and weaknesses. Unfortunately, it’s natural to focus too much on what we do best and not enough on what needs to improve. If your organization conducts a SWOT analysis, do not allow that to happen. Take the time to be honest with where your company needs to improve.
SWOT analysis can be very subjective — two people rarely come up with the same version of a SWOT analysis even when given the same information about the same business and its environment. Accordingly, SWOT analysis is best used as a guide and not a prescription. Adding and weighting criteria to each factor increases the validity of the analysis.
Unfortunately, there are some limitations to the SWOT analysis. Most importantly, the SWOT analysis doesn’t define separate action items, or define a total strategy; it merely states what variables should be considered. Don’t get me wrong, understanding the current external and internal landscape is an important step in developing strategy, however many organizations complete a SWOT and don’t know where to go from there.
This is where TOWS analysis comes in. It’s fair to say that the TOWS analysis is simply a reconfigured SWOT analysis. As you can see from the graphic, the top right-hand portion includes an organization’s internal strengths and weaknesses, while the lower left-hand portion includes the opportunities and threats outside of the enterprise. If your organization has developed a SWOT, your lists would go in these outside sections.
The main difference between SWOT and TOWS is the middle four boxes allow an organization to consider specific action plans, to match internal strengths to external opportunities and external threats, while matching internal weaknesses to external opportunities and external threats. This helps you identify strategic alternatives that address the following questions:
SO Strategies: What strengths can you use to capitalize on your opportunities?
ST Strategies: What strengths can you use to better handle your threats?
WO Strategies: What weaknesses must be mitigated to capitalize on your opportunities?
WT Strategies: What weaknesses can be used by your external threats?
SWOT analysis is a great tool to get ideas down on paper and TOWS analysis compliments it by allowing you to think through the process of turning your areas of concern into actionable items within your overall strategic plan. Each of the internal grids above will provide you with insight into how to move forward. This will allow you to focus in on the best strategies to use your strengths, capitalize on your opportunities, confront your threats, and mitigate your weaknesses.
– Dan Natividad, a Stockton native, is a partner at Port City Marketing Solutions and learned about TOWS analysis from his mentor, the recently retired Dr. Cynthia Wagner Weick at the Eberhardt School of Business. Dan can be reached at [email protected]