Uninformed decision making can cost your advisory firm greatly. And while there are plenty of ways to collect, analyze and present information in support of strategic thinking, we focus the below on leveraging the SWOT model.
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This type of analysis can be leveraged for a variety of uses but is typically reserved to assess how well an enterprise is aligned with its goals. In advisory firms, a SWOT analysis can be utilized to help inform decision–making about new projects or other efforts, such as whether to pursue a new client or serve a new industry. It also can be used to determine competitive threats and to uncover market opportunities.
Broadly, the elements of a SWOT are typically classified as internal or external. Strengths and weaknesses are meant to represent internal information and analysis, while opportunities and threats are often used to describe external and competitive forces.
Breaking Down the SWOT: Looking Internally
Often, we work in a world of silos where different practices and people don’t know what’s going on with the other side of the business. A SWOT analysis is a great chance to gain internal knowledge that can be shared across the enterprise.
When developing your lists of strengths, you’ll want to document the things that your advisory firm does well. What do you do better than anyone else in the market? On what unique resources and talent can you draw? What do your customers love about you? You’ll also want to give some thought to your unique selling proposition, which should be the thing that makes your organization thrive and stand out from your competitors.
Assessing your strengths can broadly include thinking critically about how your firm performs in areas such as:
- Intellectual property
- Other internal resources
- Selling proposition
- Competitive positioning
On the flip side of this component of the SWOT, is a critical thinking activity that takes a fair bit of honesty. You’ll want to look at many of the similar items listed above and ask yourself, “What can we be doing better?” Where can and should your organization improve? What procedures could work better? What systems do you wish were in place?
The answers to these questions might not come easily, which is why it’s important to engage multiple people within your business when incorporating this portion of the SWOT analysis. Consider interviewing people in IT about technical resources, reading customer reviews, and chatting candidly with management about company culture and talent.
Breaking Down the SWOT: Looking Outside
Once you’ve gotten a clear picture of what your organization does and doesn’t do well, you’ll want to focus on external forces – both those that create opportunity and those that could threaten your firm’s success or growth.
Finding opportunity and identifying threats isn’t always easy and it requires your firm to have the capacity to foresee what certain events could mean for its service lines. The good news is that your firm can leverage competitive intelligence software to help with this. Tracking industry news, market developments, regulatory proceedings and developments at companies that operate in the same industry as yours can help your company gain real-time insight and apply that insight to strategic thinking.
The components of this portion of your SWOT analysis will likely include factors that are outside of your firm’s control. Cast a wide net here, as you might be surprised by how an event or trend could ultimately impact your business. The University of Kansas provides a good summary of items for consideration while completing this portion of your analysis:
- Future trends in key markets
- The state of the economy (consider local, state and national)
- Funding sources (credit markets, stock market, bonds)
- Demographics, to include changes in the types of businesses/customers you serve and how the people they serve are changing
- The physical environment
- Legislative and/or regulatory developments
- Local, national and international events (including natural disasters, pandemics, elections)
This also is the portion of your analysis where you’ll want to identify key competitors, their offerings, and their strategy. By identifying competitive threats in this manner – perhaps a similar firm is looking to grow into your market – your firm can better position itself to prepare and react accordingly.
What Next? Turn it Upside Down
You’ve completed your SWOT and are ready to engage in some critical and strategic thinking!
Not so fast.
We live in a world where, as Harvard Business Review noted in 2019, “big companies are brought down by their supposed strengths or toppled by smaller and seemingly weaker rivals. Small companies find ways to turn deficiencies into advantages or to leverage the scale and capabilities of larger competitors against them.”
You don’t have to look far to see this in action. The taxi industry enjoyed a huge competitive advantage for years, with near monopolies in many large cities. That grasp on the market meant investing in new technology and staying innovative likely weren’t top of mind. When mobile-based ride sharing companies emerged, the taxi industry quickly lost its competitive advantage.
When evaluating your strengths and weaknesses, and those of your competitors, be sure to gather as much data as possible and apply it to your entire enterprise. Competitive intelligence software offers quick, curated access to information and trends that affect your firm and your industry. Having this data at your fingertips provides a clearer picture of opportunities on the horizon, risk factors you may have overlooked, and up-to-date information about your industry and competitors.
Competitive intelligence software like Manzama can help your advisory firm ensure its SWOT analysis presents the full picture your firm needs to succeed and win.