One of the more established business planning tools is the SWOT analysis, which stands for Strengths, Weaknesses, Opportunities & Threats. It is a simple and effective tool that empowers companies to assess their capabilities, or lack thereof, within a given business function. However, a complimentary tool is that of a TOWS analysis. The “TOWS” acronym simply reverses the order of the aforementioned SWOT headings. In this case, it’s Threats, Opportunities, Weaknesses and Strengths. The intention isn’t to substitute one strategic planning tool for the other. Instead, the idea is to use both together in order to improve the company’s strategic planning initiatives. So how is this done?
Most of us have used the SWOT analysis before. After all, it’s pretty much standard practice and a simple strategy within strategic business planning. However, despite its benefits, there are some inherent flaws of the SWOT analysis. For instance, have you ever noticed how you end up with a long list of items under some headings and not others?
The worst part of the entire exercise is not being able to move from your SWOT analysis to an actionable plan, a plan that provides you with insight as to how you should get started. Instead, you end up with a list of issues under some headings, not enough on others, and no call to action to prioritize any of the items. In this case, it's important to see the SWOT tool as more of an initial planning tool, one where participants can brainstorm ideas on a given business function or operation. While it does have its uses, there are issues that pertain to how individuals gravitate to strengths and opportunities, while largely ignoring their weaknesses and threats.
Standard “SWOT” Analysis
Another issue is that strengths and weaknesses typically correlate to a company’s internal parameters, while the threats and opportunities portion of the SWOT analysis relates to a company’s external parameters. For instance, the threats posed to a company typically come from its competitors or competing technologies – both of which are external. Consequently, a company’s weaknesses typically coincide with issues pertaining to its business model or its internal company structure. So, strengths and weaknesses are internal while opportunities and threats are external.
Summary of issues with a SWOT analysis:
- Uneven distribution of items under headings
- SWOT doesn’t provide an actionable plan to get started
- Strengths & Weaknesses are internal
- Opportunities & Threats are external
The above video is from the post: Assessing the Company’s Supply Chain with a SWOT Analysis
Improving Your SWOT Analysis with the TOWS Analysis
This is where the TOWS analysis comes in. It provides you with a “call to action” by addressing your company’s internal and external influences. The TOWS analysis forces you to concentrate on actionable items. It helps improve your SWOT analysis by forcing you to keep your items under each heading to a minimum.
Be clear, succinct and to the point. Avoid long lists of items. Long lists lack focus. Instead, keep your approach to a maximum of five or fewer items. Next, approach your strengths and weaknesses from an internal company perspective and your opportunities and threats from an external/market perspective. Don't deviate from this process. Don't try and view opportunities internally or weaknesses externally. Try to keep it as depicted in the following images.
- Keep items under each heading to a minimum
- Define internal versus external parameters
Now that you’ve separated your internal factors (Strengths & Weaknesses) from your external factors (Opportunities & Threats), you can now move your SWOT analysis to a new TOWS analysis. This allows you to match your internal strengths to your external opportunities & external threats, while matching your internal weaknesses to your external opportunities & external threats. Here are the questions you are now able to answer with your TOWS analysis.
Strengths/Opportunities Strategies: What strengths can you use to capitalize on your opportunities?
Strengths/Threats Strategies: What strengths can you use to better handle your threats?
Weaknesses/Opportunities Strategies: What weaknesses must be mitigated to capitalize on your opportunities?
Weaknesses/Threats Strategies: What weaknesses can be used by your external threats?
The TOWS analysis doesn’t replace the SWOT analysis. Instead, it compliments it by allowing you to think through the process of turning your areas of concern into actionable items within your overall strategic plan. Each of the internal grids above will provide you with insight into how to move forward. You’ll now have a list of strengths matched to opportunities & threats as well as weaknesses matched to opportunities & threats. This will force you to zero in on the best strategies to use your strengths, capitalize on your opportunities, confront your threats, and mitigate your weaknesses.
To read more about turning SWOT into a TOWS analysis, please read: Strategic Business Planning: Use TOWS to Move SWOT to an Action Plan
To read more about SWOT analysis and its applications, please read: Market & Competitor SWOT Analysis for Small & Medium Sized Businesses
Comments