‘How about the stress testing of the rest of SWOT?’
Q: We’re the same group who asked you about how to make our SWOT analysis more meaningful. We’d like to try your stress testing Rx or prescription. But in your column last week, you gave the stress testing question for just the “S” of SWOT.
During lunch last Monday, we tried your stress test question on our list of strengths from last year’s corstrat planning. We actually felt embarrassed. Some of us even said we ought to be ashamed of ourselves about how we were just really congratulating ourselves when we so superficially brainstormed about our company strengths. Your stress testing question for short-listing our enumerated areas of strength made a lot of sense to us. We’re going to try your stress testing question next month when we hold our corstrat planning.
So in next month’s corstrat, we’d like to also stress test the rest of the SWOT after the “S.” So please share with us the stress test questions for the “weaknesses,” the “opportunities” and the “threats.”
A: You are not the only one who texted and e-mailed us about what you requested. So here are those stress test questions.
Here’s the stress test question for the “weaknesses” that your corstrat session may identify:
“What are the: (1) resources and (2) capabilities that competitors have but which your company does not have or does not yet have and so makes for its competitive disadvantages?”
Where the tendency to exaggerate prevails in the enumeration of “strengths,” the opposite inclination to minimize comes with the identifying of “weaknesses.” For this reason, the stress test question here tries to counter this by talking of both resources and capabilities. But the stress testing maintains a logical consistency with the basis of the strengths’ stress testing question. The inspiration is still Michael Porter’s competitive advantage book.
Next is the stress test question for “opportunities.” That’s this one:
“Who are: (1) the served customers, (2) the underserved customers and (3) the unserved customers where your company has or can have the competitive advantage to grow its revenue?”
Our stress testing question here shifts its essential source. That source is our 2010 book, “Segmenting, Self-Segmenting and Desegmenting.” This book’s theme makes this compelling argument: “The ultimate source of growing your business is market segments. Products and new products are only secondary sources. Even if you have the most interesting product from R&D, if there’s no market segment in need of it, you will have zero sales.”
Of course, there are many, many ways to segment the market. However, for business-growing opportunity seeking, nothing beats the segments that come from the consumers’ self-segmenting behavior. As identified in the stress testing question, these are the served, underserved and unserved consumer segments.
Finally, here’s the stress test question for “threats.”
“Who is the: (1) competition, (2) imitation and/or (3) entry with a unique product and/or inimitable process with potential to become your competitive disadvantage?”
For its fundamental framework source, we’re back to Michael Porter. We’ve also brought in Kellogg School Professor David Dranove’s concept of the second requirement for a strategy.
A strategy is not strategy, Professor Dranove says, unless it can specify “how it will depend its unique product or process from competition, entry and imitation.”
We’d like to close by raising this issue: “When you conduct your SWOT analysis session, should you proceed in that sequence: first strengths, then weakness, third opportunities, and last threats?” We don’t remember who exactly said it. It could be Philip Kotler or Tom Peters who said that if you’re small or medium, or when times are tough, it’s wiser to reverse and do a TOWS analysis.
Start with threats, then opportunities, and then weakness, and lastly with strengths. You mentioned that you’re a medium-sized company and next year will most likely be still hard times. So you might start and proceed in TOWS sequencing in your next month’s corstrat.
E-mail questions at [email protected].
