Saturday, November 15, 2014

Gap Analysis - the Key to effective SWOT

We will wrap up the SWOT Analysis today through a process I call Gap Analysis. While purists may dislike my use of the term, for the rest of you this should make sense by the time we are done.

If you haven't yet completed the collection of Strengths, Weaknesses, Opportunities and Threats for you business, you will want to do this first. See my previous blog for some suggestions and guidance for assessing your current state.

Capturing the current state of your business is critical, but collecting your SWOT snapshot is really only the first step in planning your new strategies. The Gap Analysis is the tool I use to help identify where you should be spending your time over the next period (typically 12 months).

Organizations cannot address all their opportunities, threats or weaknesses simultaneously...we just cannot effectively focus on that many different areas. When we try to simultaneously address too many critical issues, we end creating too many strategies and actions items and we push hard on all of them. Unfortunately, it is like one of those circus guys spinning plates; we just run around keeping plates from falling instead of actually seeing how fast we can spin one or two.

First, make an effort to prioritize your threats. Which of these "out-of-your-control" circumstances have the most potential to disrupt your business? Which ones are most likely to actually occur? Listing threats such as, "the economy goes back into recession," might have a highly negative impact on your business, but the likelihood of this happening in the next 12 months seems rather small sitting here on Nov 15, 2014. It doesn't hurt to have some contingency plans in place, but I don't suspect this threat to loom large in 2015.

Next, prioritize your opportunities. Which have the most potential for success? Criteria you might consider are Time to Capitalize, and Return on Investment or Net Present Value estimates. You should also consider strategic fit (how well the opportunity fits within your organization's skills experience and mission), availability of resources, long-term sales growth, payback time, and ability to leverage your technical and marketing resources.

Now line up your strengths and weaknesses on the left side of a piece of paper or whiteboard and your opportunities and threats on the right side with enough space in the middle to make some assessments. The center is the gap area. The question you want to ask is how can you leverage your strengths and improve your weaknesses in order to capitalize on opportunities or counter threats. Draw connections between each strength and the opportunities or threats that this strength can help address. Do the same with weaknesses. Which weaknesses could prevent you from capitalizing on opportunities and countering threats? As an example, you might have an opportunity to pursue a new market if you can modify a product quickly. However, if you have identified that your product development process is slow, or that your technical resources are limited, these would be weaknesses you need to address in order to take advantage of the opportunity you have identified. In fact, being realistic, you might determine that you do not have the ability to pursue this opportunity. Performing the assessment of opportunities and threats in light of your current strengths and weaknesses will allow you to more clearly determine the areas where you will now want to build strategies.

These steps are designed to help you Fill the Gap between your external state and your internal state. Next we will talk about tools that can help you establish more effective strategies.  Whether you are a collaborator by nature or not, I would like recommend you not do this analysis and planning work in a vacuum. Your team needs to be part of the planning process if you expect to secure the buy-in needed to move your organization forward.  To that end, we have a terrific workshop on "Building Great Teams @Work" scheduled for December 5, 2014 at the Lansing Country Club in Lansing, Illinois. This is a great opportunity to sharpen skills designed to help you strengthen your teamwork. Use the code word: Today and receive 20% off this terrific workshop.

Feel free to contact me directly at jvonthaden@solutions-industrial.com or 630-403-8326 if I can answer any questions.

jvt