Part 2 of this series focuses on your company’s strengths, weaknesses, opportunities and the threats to your success.
This is the second in a series of columns offering some proactive steps that can be taken as we begin to navigate through what promises to be some of the most challenging years any of us have experienced.
Last month I suggested that top management personally visit its largest customers and have a meaningful dialogue to build up their confidence. This time was to be used to identify their immediate concerns and needs as a critical first step in a situational analysis. Having gathered this information from your customers, the next step is to look at your own company’s current state and begin sorting your strategic options.
Determining Your Current State
It is time to add to the input that your customers have provided and determine your own current state so that you can then develop a workable business plan for 2009/2010. Hopefully, you are well into this process. It would be naïve to commit to every customer’s demand without looking at your own requirements and determining if there is a strategy that will allow you to satisfy the majority of customer needs while still meeting yours — such as making a profit. However, every decision you make must include a consideration of your customers needs because this is a customer-driven industry.
Each wood products sector has sources that provide trends and forecast data that can help you look at ways to meet customer needs and your own goals and objectives. Along with this input, you must take a fresh, unbiased look at your company and identify opportunities and the strengths that will help you capitalize on them. You must then identify your weaknesses, internal and external threats, and minimize or eliminate them altogether. The better you accomplish this, the greater your probability for success.
This process is basic but is so overlooked that it is the root cause of failure for many wood product businesses. All it takes is time and an objective mindset to look at the Strengths, Weaknesses, Opportunities and Threats (SWOT) of your company given your customers’ requirements. You must not try to do this alone, but with your leadership team, because you need a diversity of talent from your company to obtain objective and meaningful input.
Begin With Your Strengths
When looking for your company’s strengths, begin by analyzing the customer requirements that you meet virtually all of the time. Anything short of this must be defined as a weakness and a potential threat to your company. Next, review your core competencies and determine if you are leveraging them to the maximum extent possible. If you are not, you have found a weakness and a corresponding opportunity. When you list each of the SWOT elements, make sure you include footnotes that will define each issue adequately, so you can remember the specifics required to put the information to use.
Your strengths may be the same as some of your competition, but look for those that offer a competitive advantage. Your strong points form the foundation of your company and should serve in forming strategies to combat the effects of the weak economy. Thus, some positives also can become opportunities to further leverage their attributes.
Admit Your Weaknesses
Unless there is a diverse team from throughout the company, it will be difficult to paint an accurate picture of your weaknesses. Although you will not have a competitor in the room during this analysis, look at your company through their eyes. Weaknesses can be areas that are inferior to those of your competition, or areas in which you should be performing better.
It is possible that someone in your organization may suggest an area of strength and be wrong. For example, assume your production manager says that a strength of the company is the ability to manufacture a diverse custom product line. However, the sales manager may say that this is actually a weakness due to the excessive time and hassle necessary to customize a product. The perceptions within your team may not be in agreement in many areas.
When identifying weaknesses, always look for ways to eliminate or minimize them. The goal is to identify those flaws in your company that may become your Achilles’ heel. This exercise will not be fruitful if weaknesses and threats are not transformed into opportunities for rapid positive change. In my simple examples on page 24, you will note several weaknesses in the orange box that have a corresponding opportunity listed in the green box.
Identify the Threats
Threats are vulnerabilities that give competitors the opportunity to grow stronger, while you grow weaker. Sometimes it is hard to determine the difference between a weakness and a threat. The essence of a threat is that it is a hazard to the very health of your company. If it is not addressed, the risk is high that the company will not survive.
The list of examples in the red box in the chart is subject to debate as to whether they would be threats or weaknesses in your company. Hopefully, your list of threats is small, but no matter how short the list — these represent the most critical perils your company will face during these difficult times.
Every threat should have a corresponding antidote listed as an opportunity. After all, the purpose of this exercise is to identify ways to make you stronger and more successful, and this must result in corrective actions.
Opportunities for Change
While I have mentioned opportunities resulting from looking at your strengths, weaknesses and threats, you must also look outside your walls. You have talked with customers and looked at market trends and forecasts. Now it is time to look at what your competition is doing. Why are they successful or not, and does this suggest opportunities for you?
The future belongs to those who can identify opportunities. The further out you can look, the better prepared you will be, but to leave opportunities behind is to abandon your business.
As mentioned previously, the importance of the SWOT analysis as a management tool cannot be overstated. If you go through this exercise with focus and objectivity, you will have the tool for avoiding many risks during these economic times. The chart to the left illustrates some of the issues that might be identified during a SWOT analysis. While not inclusive, they hopefully will serve to illustrate the results that can come from this exercise.
NOTE: In December 2007 I wrote about how to conduct a SWOT analysis to plan for the future. Click here to read it again to further equip you for this exercise.
Next month we will look at how to envision the possibilities and define your company’s future state. In April we will discuss bridging the gap between your current state and what you see as your future state.
Tom Dossenbach is the president of Dossenbach Associates Inc., a Sanford, NC-based international consulting and research firm. Contact him at (919) 775-5017
or e-mail [email protected]. Visit his Web site at www.dossenbach.com. Past Management Matters columns are archived here.
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