SWOT: What is the result?

Company stakeholders frequently need to make business decisions on whether to make supply chain adjustments, upgrade equipment, provide employee benefits, or a myriad of other situations, including dealing with declining sales. These company needs often fall somewhere along a spectrum that has two poles. At one end of the spectrum the change may be mandated, possibly via regulatory authority, and at the other end of the spectrum are changes described as ‘nice to have’. Since most of these changes have some ratio of benefit to risk, it behooves the organization to estimate as well as possible what that ratio is, and perform due diligence rather than just guess whether or not the results of a change will be good for business. Risks are often underlying or hidden from first glance; to a small business, errors in planning and judgment can be devastating.

Surprisingly, senior managers often fail to understand the extent of planning that is needed in order to fit a change into the overall strategy of the organization. They also fail to understand the difficulty in lining up the ideals of a change to meld with with the enterprise’s big picture. If a project has no real downside in practice then there is no problem, but the majority of undertakings do cost some quantity of resources, and those resources [cash, for example] can be limited. What if there are a dozen potential projects and only enough cash for one? In the same way that a single person decides which task they can accomplish during their lunch hour, an organization must identify the details of various objectives before they can select which ones to invest in. Enter the need for Strategic Planning Analysis.

By analyzing the advantages and disadvantages inherent to the company itself, and by studying the opportunities and hazards involved with a prospective project, stakeholders or managers can best protect the long term objectives of their companies. Many executives are tempted to shortcut this process, but the results can be very expensive and end up thwarting progress instead of advancing it. Simply purchasing a brand name ERP package and outsourcing the implementation to a local expert is one such shortcut (Schwalbe, 2006).

Successful companies use a structured process for analysis. Sony, Proctor & Gamble, 3M, DHL, Phizer, Boeing, DuPont, Metlife, to name a few, consistently use a calculating system to define the results that they want to measure or gauge. It includes benefits that they expect, articulations of their own ideas and key performance indicators and controls for timelines. One system used for project selection is the SWOT analysis: Strengths, Weaknesses, Opportunities and Threats. Many criteria are quantified in order to predict how well a development can help achieve the goals of the company including whether the people in the organization will back the project and whether the employees will be motivated to work together or carry out the tasks that will sustain the mission. Other metrics involve financial performance, such as whether the organization has enough capital, the opportunity cost of that capital, return on investment, etc. SWOT provides a coordinated method to manage the complexities of all the different options in project selection.

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