SWOT’s the Purpose?

By Steven E. Sacks, CPA, CGMA, ABC

Professional service firms and businesses that seek to position themselves for the future must be brutally honest and self-aware. They might normally start with a top-down or bottom-up analysis of their operations. One tool that has been around forever is the SWOT analysis.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. There are benefits to this tool because it serves as a motivator to examine a situation (e.g., operational, cultural, financial), assesses core competencies and capabilities, identifies the need to (and key drivers of) change and enables—if conducted correctly– an organizational cross-section of input and insight.

There can be, however, a downside for a firm in conducting a SWOT analysis. Depending on what issue(s) your firm or business faces, this tool may not work if your practice or business is not scalable; does not have a distinctive market brand; has limitations in its geographic reach and a narrow band of service offerings; lacks the necessary depth of management; and cannot prioritize its “must dos.” And what happens when a laundry list of observations are generated? Each one sounds insightful in and of itself, but how relevant is it to the big picture?

Take off the Blinders

When you consider the strengths of your practice, be REALLY thoughtful and honest about what it does well (e.g., strong client/customer communication, timely and useful reporting, value-added services); its market position; a clear and succinct vision or direction; a culture that attracts the best and the brightest; and the tangible and intangible resources that can enable the firm to prosper.

In identifying weaknesses, no partner or C-Suite resident will readily admit that the organization has weaknesses. But as deliberate as you were to cite the strengths, be doubly discerning when you consider the weaknesses. This self-analysis can identify varied factors, such as a lack of a solid technology platform, a poor realization rate, higher than manageable turnover rate and an inefficient customer relationship system. Firms that want the unvarnished truth to get to the actual causes will conduct a client or customer assessment survey. This will help them learn how they are perceived by users of their products or services.

The potential upsides are the opportunities your firm can embrace. Again, this will be predicated on what your organization’s vision and values are. Development of a new niche, entrance into a new geographical market, upgraded technology (e.g., cloud-based computing), social media for business development, attracting better talent and refining your image can result from your efforts.

Last, when considering threats, go beyond the regulatory environment and the additional client or customer demands. Look at what your competitors are doing in terms of training, culture, mentoring, compensation and upward mobility.

Think Creatively

There is no one right way to conduct a SWOT analysis; the important factor is understanding that you must have a full appreciation of what can be done, what makes sense to be done and what the potential advantages or consequences of taking action — or none at all.

The elements of SWOT are not immutable. When you undertake this process, consider the chance that possibilities may exist within a weakness or threat. On the other hand, an opportunity may morph into threat if others notice and act on the opportunity, resulting in a more competitive marketplace. So what you thought you had a lock on now has become a generally recognized and accepted practice.

On the other hand, your SWOT analysis can validate your existing goals, and all that is needed is a tweak here or there to eliminate roadblocks or a slight refinement to your action plans.

Bottom Line: State Your Case and Prove It

Every day you need to ask the question: What makes your organization different and why? Once you can make a compelling case, then do the necessary analysis, undertake the required changes and implement the appropriate processes and protocols to ensure your strategies, goals and practices will reflect and prove your case.

 

About Steve

Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.