SWOT Up On Strategy
Today’s edition of Unleash The Power is the second of two newsletters focusing on how you can get ahead of the competition. Last week I wrote about COMPETITIVE ADVANTAGE and why being different is crucial to your business beating your rivals. If you missed it, check out last week's blog Dare to Be Different, to find out more.
This week I share three straightforward frameworks that help you understand internal and external factors impacting your company. Often they can are used independently, but when combined, the whole is greater than the sum of the parts. They are essential for the modern organisation, regardless of size, and truly allow you to unleash the power in your business.
SWOT and PESTLE are pretty standard fare in the commercial world, being complementary frameworks that deliver a systematic and comprehensive evaluation of any business, project, or new idea. But if you don’t have a method of bringing the results together that creates clear strategic direction, they are often never revisited. The P-PLAN provides structure and focus, delivering clear accountability, action-orientated goals, and defined key performance indicators across the three key areas of People, Practices, and Profit.
More about the P-Plan later, but first, let’s focus on SWOT and PESTLE and how together they highlight where to direct energy to stabilise, grow, and in some cases, protect a business.
SWOT analysis focuses on a company’s Strengths, Weaknesses, Opportunities, and Threats.
PESTLE analysis helps businesses consider the external factors of Political, Economic, Social, Technological, Legal, and Environmental challenges. All of which require an appropriate course of action.
Both frameworks help businesses make better decisions, discover opportunities, and deliver innovative solutions to their problems. With a holistic view of the internal and external resources, threats, and challenges, you can establish your competitive advantage.
The complementary analysis SWOT and PESTLE offer provides a broader view of the environment, facilitating an understanding of how the external factors may impact the business while strengthening capabilities by highlighting internal strengths and weaknesses. Particularly useful when deciding whether a project is viable or if capital investment in a specific activity makes commercial sense. Such thorough evaluation results in a higher probability of a positive outcome, setting up the business for success.
SWOT and PESTLE analysis can inform corrective actions should a chosen strategy be at odds with the internal and external environment the business finds itself. For instance, companies subjected to legislative change may require adoption or investment in better technology or manufacturing techniques.
Benefits of Combining SWOT and PESTLE
- Provides a comprehensive evaluation
- Firms can identify potential threats and reduce the probability of negative impact
- Employees adopt a strategic thinking mindset at every stage of planning and implementation
- Find new opportunities
- Evaluate the impact of various decisions before implementation
- It can be applied to any organisation, large or small, aiding the identification of factors influencing successful outcomes
It is worth remembering that these two methods are not the same. PESTLE looks at external factors and SWOT, on the other hand, looks internally to identify strengths and weaknesses alongside attractive opportunities and potential threats.
While companies can combine both methods to provide quality output, the chance of positive results diminishes if no action follows. It is not in the knowing, it is in the doing!
Strategy Development – The P-Plan
A successful business strategy can be enhanced using both PESTLE and SWOT. The interrelationship between the internal (strengths and weaknesses) and external (opportunities and threats) environments results in these combined frameworks providing insight when developing a strategy to align with organisational goals.
Using the P-Plan model, you can focus on three core factors that impact the success (People, Practices, and Profits) and apply them to three fundamental areas of any business (Operations, Sales & Marketing, and Support Teams). When these functions and departments become aligned to a purpose, culture, and values of a business then a sweet spot is achieved, resulting in improved performance, engagement, and business growth.
By setting defined KPIs to measure success, you arrive at a nine-by-nine matrix of strategic actions that make specific departments accountable, empower innovation, and drive results.
Here is an example to illustrate how this may look in one section.
By involving all areas of the business in the discussion, action setting, and performance monitoring, you can truly unleash the power in your business.
Have a brilliant week!
Founder & CEO, Fuelled Fit and Fired Up Ltd