A highly motivated and inventive business manager or entrepreneur can generate a number of business opportunities for his or her company. The best chances of success, however, evolve from pursuing a strategy that is a good fit for the company. In this article, we will review the types of actions generated by an Action Oriented SWOT analysis (aka TOWS) and how you can determine which ones are likely to be the best fit for your business.
What is an Action Oriented SWOT Analysis?
An action-oriented SWOT analysis generates forward thinking strategic options by pairing internal factors (Strengths and Weaknesses) with external factors (Opportunities and Threats). Refer to this video for information on how to generate an Action Oriented SWOT. This pairing creates 4 different types of strategic options: Offensive, Conversion, Utilization, and Defensive Strategies. Refer to the diagram of the Action Oriented SWOT framework is shown below. (Click hotspots to see additional information.)
Figure 1. Action Oriented SWOT Framework with Strategy Hotspots
What choices should you factor in?
While conducting an Action Oriented SWOT analysis can help to generate strategic options, it is important to note that this analysis does not provide guidance on which ones to pursue. The right choice for your business is based on the opportunity's context and your company's collective values, biases, experiences, advantages, and needs. So, let's continue on to discuss how you might filter and prioritize options.
Context
The first critieria for determining whether a strategic action is the right one for your business is to circle back to your reasons for doing the analysis. Was it in response to actions taken by a competitor? Did a customer opportunity trigger your response? Is a global trend or new law the trigger for making a change? Review the options generated in the SWOT analysis and filter out options that don't address the need that triggered the analysis.
Company Values
Another key indicator of whether a strategic option is a good fit for your business is whether it is aligned with the company's values. These values can be formally stated, such as in a mission or vision statement, or informally implied based on what the company chooses to spend money or recent decisions made. For example, consider a company that is very steeped in tradition yet careful about having each next quarter be better than the last one. When faced with new challenges and opportunities, they may more included to pursue a Defensive Strategy. They may see this approach as a means of making sure that they stay on track. Based on this reasoning, they may opt to shore up their weaknesses and stave off market factors that are not in their favor.
Biases
The biases of a company's employees can also influence fit. For example, a company with an energetic, new leadership team that values out of the box thinking or “winning” may be open to taking risk. They may be inclined to invest in business cases with a strong ROI (Return on Investment). Thus, this company will likely be receptive to an Offensive Strategy.
Beyond leadership biases, there may be biases within the implementation team. An easy way to stop team biases is to review the lists within the SWOT analysis itself. Generally speaking, if there is a list that is much, much longer than the rest, this is an indication of where the team tends to focus the most. An example of this is a very long list of Weaknesses or Defensive Strategies as compared to the other sections of the Action Oriented SWOT analysis entries.
Experiences
The past experiences of a company can color it's views of future opportunities. Insights from these experiences will likely surface during the generation of the analysis and may continue to arise during the vetting of the options generated. While bad experiences can be overcome and look-backs can be discouraged, it should be noted that the strategies that trigger these reactions may not be an easy fit when it comes to deciding upon a path forward. Companies that are focused on a set-back that they have experienced in the past may be more receptive to an opportunity that avoids the weaknesses, such as, a Conversion or a Defensive Strategy.
Advantages
Deciding upon the best strategic option to pursue may also be based on its advantages. One advantage would be the company's strengths such as core competencies, relationships, and reputation. Another way to look at advantages is the upside potential for the strategic options under consideration. As an example, consider a case where a competitor is building a new plant to increase capacity. A company may choose to respond by pivoting to a Utilization Strategy, that is using their strengths to overcome weaknesses, by marketing their products as hand crafted and premium. This approach may help to maximize their advantage as they may be able to drive home the rarity and special nature of their products and increase their prices in the face of this new competitive threat.
Needs
The underlying driver for any business change is its needs. The needs of a business may be to drive growth, profits, or lower costs. This may exist through a range of situations and heavily influence what types of moves the company feels that it should focus on – directly or indirectly. An indirect need that can influence a company's decisions is a lack of market information. If the company does not have access to market research or does not have the ability to dive in and make sure that the company managers are aware of and responding to change, then this need may drive the company to reject strategies that it does not recognize the need for. Companies that are internally focused may opt to focus on internal needs, like addressing its own, known strengths and weaknesses rather than any of the strategies of the Action Oriented SWOT analysis which seeks to pair the companies internal strengths and weaknesses with external opportunities and threats. In this case, it is likely that the company will not be receptive to a future looking perspective at all.
Author Information
Felicia Littlejohn, Ph.D., is Learning and Development (L&D) professional, leadership coach, and former commercial business leader who empowers others to achieve their goals. Her work in leadership development, coaching, and strategy consulting has helped businesses, teams, and professionals to upskill, cultivate leadership potential, enhance performance, and overcome growth hurdles. Felicia is a Certified Professional Coach (C.P.C.) who holds a Ph.D. in Engineering, an M.B.A. in Marketing, and is currently pursuing an M.Ed. in Instructional Design.