It is that time of year when some companies begin to develop plans for 2014. When I speak with leaders in small and mid-sized companies I find they often confuse “planning” with “budgeting”. And if I ask what strategies have been successful this year, they sometimes don’t know how to answer.
Since I’m offering a Webinar on Strategic Planning – Converting SWOT into Action on September 25, I thought I would share four questions that will help you develop strategies.
I’m sure many of you are familiar with the basics of a S.W.O.T. analysis, which you will need to use when you ask your team the four strategy questions. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
Strengths and weaknesses are the attributes of your organization that give you either a competitive advantage (strength) or put you at a competitive disadvantage (weakness.) To list your strengths and weaknesses you would generally look at such attributes as your team of employees, quality and selection of products and services, locations, prices, financial condition, and level of technology your firm uses.
Opportunities and threats are forces in the outside world, over which you have no control that will impact your business. Generally, opportunities are forces that could provide you with greater sales and threats are forces that could hurt you and potentially reduce your sales. External forces are usually demographic, social, economic, political, governmental, legal, or geographical.
You can start the process by asking your team to list your strengths and weaknesses. Be sure to refine this list into true strengths and weaknesses. Then list the forces you believe represent opportunities and threats. This is where organizations often need help and should engage in deeper discussions with their customers. Why? Because organizations can’t effectively identify opportunities in a vacuum. You may be able to identify threats, but many of your opportunities are sitting out there undiscovered.
Four Strategy Questions. Once you have developed your four lists (SWOT), you then lead your team through a creative process when you ask these four questions that should lead to specific strategies:
- How can I use this particular strength to take advantage of this specific opportunity?
- How can I fix this particular weakness and take advantage of this specific opportunity?
- How can I use this particular strength to reduce the impact of this specific threat?
- How can I fix this particular weakness and reduce the impact of this specific threat?
If, for example, you have five strengths, five weaknesses, five opportunities, and five threats you will ask a total of 20 questions because you are matching each strength with each opportunity and so on. Of course the team won’t be able to come-up with a strategy for each question, but usually several new strategies do emerge.
A Milkshake Example
I was fascinated to read Clay Christensen’s piece about how businesses should understand what “job” a product or service does. In this piece he writes about the “job” of the milkshake and how and why consumers buy it in the morning. Since I drove by Dunkin’ Donuts this morning I thought I would use them as an example here. So let’s explore the four question process.
Step One –
SWOT List. While there are many SWOT attributes for Dunkin’ Donuts, I will use only a couple here to help you understand the process.
- Strength – 1. Many great locations with a drive-thru; 2. Great product development team
- Weaknesses – DD not known for healthy food products
- Opportunities – Morning commuters want something quick to eat that is also easy to consume. (Had DD used Christensen – they would have learned that the majority of milkshakes consumed in the fast food industry are purchased during morning commutes.)
- Threats – Consumers are becoming more health conscious
Step 2 –
- How can we use our great locations to take advantage of morning commuters?
- How can we improve our healthy food image and take advantage of these morning commuters?
- How can we use great product development to reduce the impact of consumers becoming more health conscious?
- How can we improve our healthy food image and reduce the impact of consumers becoming more health conscious?
If Dunkin’ Donuts went through these four questions and obtained outside information, from Christensen, for example, they likely would develop a strategy to sell healthy milkshakes. Their strategy could be either to develop it themselves or, perhaps, sign a licensing agreement with Evos, who already sells healthy milkshakes, but doesn’t have the market penetration Dunkin’ Donuts has.
I hope this example has given you food for thought!
On Wednesday, September 25 from 9:00-10:00am, I will show you how to easily complete a SWOT analysis and create strategies and objectives for a new year. Space is limited so register early. This program has been approved for 1.00 (Business Management & Strategy) re-certification credit hour toward PHR, SPHR and GPHR re-certification through the HR Certification Institute.