There are several steps involved in getting a product or service to market. You need to identify your customer segment, identify + understand their problem, refine your product and the marketing message and deliver effectively.
Doing that requires assessing the road ahead, which can be done with a SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The purpose of SWOT analysis is to help you figure out internal and external factors that could have positive and detrimental effects on your business/innovation project. It is a commonly used business decision making tool for ventures of all sizes.
The purpose of SWOT analysis is to help you:
- Build on strengths (S)
- Minimise weaknesses (W)
- Seize opportunities (O)
- Balance threats (T)
To ensure the true purpose of SWOT analysis is met, you must do it with a clear business objective or goal in mind, whether it’s getting your business off the ground or launching or revamping an existing product or service.
Use the Jobs To Be Done Template to identify the job before conducting SWOT analysis
Why is SWOT Analysis Important?
If you already know your customer segment and their problems, why do you need a SWOT analysis? Why is SWOT analysis important?
A SWOT analysis is an integral part of the strategic planning you must undertake when you manage or launch an innovation project or business. It can help you in a number of ways:
- Gain a better understanding of your business
- Gain a better understanding of the marketing and your competitors
- Dig deeper to uncover your customer’s unmet needs
- Identify customer’s unmet needs and pain points better
- Identify your pain points and areas of improvement
- Predict changes that may crop up in the future and work to address any problems that may crop up as result
SWOT Analysis: Applicable to All Businesses
SWOT analysis isn’t just for startups, new products or new ventures. It can be applied to any business at any stage. The purpose of SWOT analysis is to examine internal and external factors that can affect your business. Internal factors = your strengths and weaknesses. External factors = threats and opportunities. This is better explained below.
| S Strengths | Capabilities Competitive advantages: product USPs, assets, people Experience, knowledge, data, financial reserves and likely returns Marketing reach, distribution and brand awareness Geographical location, price, value and quality Accreditations, qualifications and certifications processes, systems, IT Communications; cultural, attitudinal and behavioural management cover Succession plan philosophy and values |
| W Weaknesses | Poor USPs or gaps in articulating them well Lack of competitive strength Limited reputation, low brand awareness, low footprint, financial constraints Known internal and external vulnerabilities (eg suppliers, logistics) Timescales, deadlines and pressures low cash flow Lack of continuity and supply chain robustness distraction from core activities Unreliable data, unpredicted results, low morale, commitment Lack of of strong leadership and talent Insufficient processes and systems Lack of management cover or succession plan |
| O Opportunities | Market developments Competitors’ weaknesses Industry and/or lifestyle trends Technology advancements Global influences New markets Niche target markets Geographical location of core and/or peripheral activities New USPs Business and product development Information and research Partnerships, agencies and distribution Volumes, production and economies Seasonal trends Economic climate |
| T Threats | Political instability in the markets you operate in New commerce laws and/or rules Environmental disasters and effects Technological advancements Competitor intentions and pivots Market demand Internal capabilities that cannot sustain or grow Glaring internal weaknesses/inefficiencies Attrition among key staff Unstable financial backers/lack of working capital Economic uncertainty (domestic and global) Seasonality in economic cycles, weather, trends etc |
Conducting a SWOT Analysis
- Find a lead: Select an individual, employee or consultant to take the lead and facilitate the SWOT analysis. This figure should have the respect of all key stakeholders and should be able to work across teams to facilitate the brainstorming process.
- Find participants: Select the people who need to participate in the SWOT analysis based on their ability and willingness to contribute ideas and organisational/project knowledge. You may need to take on a consultant based on the scope of work and size and scale of your operation.
- Find worthy ideas: A key purpose of SWOT analysis is to zone in on ideas worth developing and strengths worth building upon. Brainstorm on your company’s strengths. Solicit ideas and thoughts from all participants. Review any data that may be helpful. The agenda could include leadership ability, innovation, quality, customer service, decision-making, use of technology, etc. Record all ideas on a whiteboard, chart or other tool, so that all participants can see the list. Avoid duplicate entries. Some ideas may appear in more than one list.
- Find a flow: Consolidate and refine those ideas by asking the group which items can be combined under the same subject. Be sure to segment, but do not over-consolidate and combine data and ideas that may not be connected or are only broadly connected.
- Find clarity: The other purpose of SWOT analysis is to gain clarity. Clarify ideas by re-examining your list and discuss any ideas that participants have concerns about. Reiterate the meaning of each item before discussing it. Refrain from discussing solutions at this stage and stay focused on identifying strengths.
- Find your strengths: The purpose of SWOT analysis is to find your strengths. Identify the top three strengths by asking the group to choose. Sometimes the choice is obvious, but when it’s not, give the participants time to think through the issues and cast their vote. Decide how many votes it takes to win based on the size of your team.
- Find the key: Summarise the organisation’s strengths and record them on a separate chart.
- Find weaknesses: Repeat the same process outlined in steps 3–7 for weaknesses. Areas to consider may be similar to the things considered under the strengths heading, e.g. leadership ability, innovation, quality, etc.
- Find opportunities: Repeat the same process outlined in steps 3–7 for opportunities. Areas for consideration may include emerging markets, new technologies, new products, cost reduction, etc.
- Find threats: Repeat the same process outlined in steps 3–7 for threats. Areas for consideration may include new competitors, a declining market, new regulations, etc.
Purpose of SWOT Analysis: To Innovate with A Clear Goal
At NewLedge, we use the Jobs To Be Done theory to understand and study the market and possibilities to innovate and improve business performance. Using the NewLedge Capability Driven Innovation along with SWOT analysis helps you better identify the core functional job to be done and the customer’s core problem build on your offering to fit their unmet needs better.
The NewLedge CDI framework is Australia’s only tried, tested and validated (by the CSIRO, no less) innovation framework that can be used to assess the potential of an idea, business, project or venture.
If you are working in STEM and are looking to move beyond a cookie-cutter job role or have an idea that you want to turn into a business, join the NewLedge 15-week online course in innovation implementation and commercialisation. We take the purpose of SWOT analysis and combine it with entrepreneurship and business lessons to make you an innovator in 100 days.
Visit www.newledge.io to learn more.
FAQs
What are the benefits of a SWOT analysis?
The purpose of SWOT analysis is to see how ready your business or innovation is for the market. By conducting a SWOT analysis, you analyse your business from various angles and can build on your strengths (S), minimise your weaknesses (W), seize the opportunities (O) that appear in front of you, and balance and counteract threats (T) that may crop up along your business journey.
What is the purpose of SWOT analysis in strategic management?
SWOT (an acronym for Strengths, Weaknesses, Opportunities and Threats) is a business tool used to evaluate how ready you are to get your product into the market. Using this tool, you can study and identify your key differentiators and build upon them. The purpose of SWOT analysis is to also predict changes and foresee any threats you may face ahead.