by Verne Harnish "Growth Guy"
May 1st, 2013 07:00 AM ET
We’ve observed for decades how market-leading firms event-
ually fall behind startups because they just couldn’t see the future, in what Harvard Business School Professor Clayton Christenson labeled the innovator’s dilemma.
knesses, Opportunities and Threats. It’s time to update this methodology.
Almost by definition, the SWOT process drives leaders to look inward at both their company and industry challenges, creating what I term “inside/industry myopia.” While helping executives see the forest and the trees, it tends to lead them to forget that there’s a world outside the forest. With this introspective focus, the SWOT isn’t the right tool to spot the trends from other industries and distant markets that CEOs need to factor into their plans.
I don’t want to throw the SWOT away. It still has its place in the strategic planning process. It’s an excellent tool for gathering ideas and input from middle managers who are more internally focused and closer to the day to day operations of an organi-
For senior leaders I propose replacing the SWOT with the SWT -- an updated approach that identifies inherent Strengths and Weaknesses within the firm while exploring broader external Trends beyond their own industry or geography.
As I’ve mentioned in a previous column, the strategic planning process comprises two distinct activities: strategic thinking and execution planning. Strategic thinking is coming up with a few big-picture ideas. Execution planning is figuring out how to make them happen.
ever, for the senior team, the SWOT can be a trap. It tends to pull executives down into operational issues, distracting them from the much bigger forces around the globe that can take the company by surprise if they are not prepared.
To do the right kind of strategic thinking, the senior leadership team needs to use the SWT. What’s different about it?
In the SWT, senior leaders do a deeper dive -- and face the brutal facts of their reality, as Jim Collins puts it so well. They need to call out inherent weaknesses that will likely never change -- so they can say no to situations that would require the organization to be strong in those areas.
For instance, I’m leading the five-year strategic planning pro-
cess for Ben Franklin International School, which my children attend. It will always lack a large corporate or government base from which to draw funds and students, given its location in Barcelona rather than Madrid.
At the same time, leaders need to be crystal clear on the inherent strengths or core competencies of the organization that have been the source of its success. In the school’s case, its fashionable location has continually driven enrollment from Silicon Valley entrepreneurs, helping it thrive during one of the worst economic periods in Spain’s history.
Instead of sizing up a company’s immediate opportunities and threats, as they typically do in a SWOT, the senior team shou-
ld rise above this and look at the major trends - significant changes in technology, distribution, product innovation, mark-
ets, consumers, and society around the world that might shake up not only the business but the entire industry.
Forget about the competitor down the street. Is there a company on the other side of the globe that’s going to put you out of business? Is there a new technology coming onto the startup scene that could change the way all companies must do business overnight?
To feed the strategic planning process properly, the key is using different techniques to mine ideas from all levels of the organization. From frontline employees, ask one simple ques-
tion: “What should the organization start, stop, and keep doing?” From middle management, require a standard SWOT.
- A Five-Year Goal for All Companies
- A Formula For Economic Growth
- Build on What You Do Right
- Seven strata of strategy
- The Big Hairy Audacious Goal: Your Company's Most Important Long Term Decision
- Competitive Advantage: Juggling Six Balls
- Control the "Ink" in Your Industry: Write a Book
- Control the "Ink" Part Two: Blogging, Wikies, Squidoo and More
- 5 Big Ideas: Powering Your Business
- 5 Crucial Techniques to Double Revenues
- 4 Decisions That Will Help Your Company Grow
- 4 Imperatives for Marketing
- 4 Strategic Questions
- 4 Trends Shaping the New Decade
- Go Global
- Guerilla Marketing
- Hire the Right #2
- Ignore Economic Predictions
- Improving Markeing: 5 Techniques
- Improving Sales: 5 Techniques
- Is Going East in Your Plans?
- Market Intelligence
- Market Myopia: Blame the SWOT!
- Maximizing Your Return on Luck: The Key Strategic Insight
- Moral Character Wins
- Most Important Tool of the 21st Century
- More Sales Channels, More Sales
- One-Page Strategic Plan
- One-Phrase Strategic Plans
- Predicting the (Immediate) Future
- Profit from Employee Ideas
- 2 Critical Vision Decisions – Profit Per X and BHAG
- Revenue Per Employee
- Sales Fundamentals: Daily Meeting
- Scaling Up the Organization (Chart!)
- Selling the Business: Games Buyers Play
- Selling Your Business
- Strategy: Stay Focused and Open
- Strategic thinking vs. Execution planning
- Strategic Preparation: Three Critical Steps
- Where Good Ideas Come From