Strength, Weakness, Opportunity and Threat analysis
A Strength, Weakness, Opportunity and Threat (SWOT) can be a powerful tool in the management arsenal usable at all levels of the organization.
The value of conducting a SWOT analysis is to help identify risks and develop plans. As we come out of the pandemic, the landscape for construction market is going to change because of the pandemic.
Available skilled workforce, availability of materials, along with the lead and lag times for different industries returning to full production will be different. A SWOT analysis is a framework for helping managers identify their competencies and risks associated with a business.
The tool can be leveraged at the project, department, or organizational level and can provide valuable insight to the organization’s processes. Furthermore, the tool can illuminate unmitigated risks and identify latent strengths and opportunities. Those risks, once identified, can then be addressed with contingency planning, business process reengineering, or avoidance.
Those strengths and opportunities can be leveraged and capitalized. The use of the tool should take about an hour, longer for organizational level analysis and is dependent on the complexity of the project, business unit, or organization. At a minimum, the tool should be employed for every construction project prior to bid submission, and at least annually for departments. Moreover, the identification of risks can then be rolled into department objectives for annual evaluation of managers.
The classification of the SWOT is a two-classification system with two groups in each. The two classes are internal (Strengths and Weaknesses) and external (Opportunities and Threats). For the internal classes, the organization has direct control over those items. They can effect change or directly leverage within the organization with little to no external forces. The second class is external and is influenced by situations or events that are outside of the organization’s control. The foundation of the SWOT lies in the four areas of identification.
Strengths
Strengths are processes, values, skills, tools, or institutional knowledge that the organization can leverage when meeting objectives. These strengths can be unique organizational skillsets such as internal transportation competency, or experienced and knowledgeable bidding team, or in-depth customer relationships, etc.
Another strength could be organizational communication where there is free flow of information to leverage experts throughout the organization that can assist with unique problems faced by a team. Identifying the strengths of the organization can be a communication point for senior executives when addressing all hands meetings.
Questions to ask:
- What are our strengths?
- What do we do well?
- What are your key successes over the past five years?
- What lessons learned in the last construction project can be leveraged?
Weakness
Weaknesses are factors that need to be addressed to accomplish the organization’s mission. These internal issues can be lack of skilled workforce, limited internal knowledge, funds, or business unit issues.
Identifying the internal weaknesses of the organization is an important component of the SWOT as it allows managers to effect change that will directly mitigate the risk. It is the difference between using a laser or scatter shot. Creating a list of weaknesses gives the organizational members something to grasp when working on their day-to-day operational issues that can enhance and improve the organization.
Questions to ask:
- Why do/did we have difficulty communicating with the customer or stakeholder?
- Why were their deviations in the safety, environmental, quality or costing reports?
Opportunities
Opportunities are external such as time or circumstances that makes it possible for the organization to do something. This something is typically a quantifiable event that can result in additional revenue, cost savings, or relational cache.
For the pipeline construction company, opportunities can be turned into change orders that help with the overall project profitability. You can use your strengths to identify potential market opportunities.
Questions to ask:
- What new markets can we enter?
- How do we leverage our experience in being value add to the customer?
- How can reduce costs of execution?
Threats
Threats are external to the organization that will directly affect you, but you have little control over them. Threats can include potential for project disruptions from protesters, governmental and non-governmental organizations, compressed timelines, remote work areas, etc. Threats are an important component to unabashedly identify. Do not minimize threats. Threats can turn into issues that trigger contingency planning or expenditures. Because you have identified your strengths from above, you are better able to use your strengths to reduce the impact of threats.
Questions to ask:
- What will the market look like in 3, 6, 12 months?
- Does this owner have pending civil or contractual payment issues?
- How many other companies are bidding on this contract?
- Is rental equipment going to be available?
- Are non-traditional unit price items included in the contract?
- Are there additional warranty lengths or items for this project?
Benefits:
Using a SWOT, you can:
- understand the current state of your business processes;
- leverage your strengths;
- address organizational weaknesses;
- capitalize on opportunities;
- deter or mitigate external threats;
Limitations:
A SWOT is just one of the many tools in your management portfolio, therefore there are some limitations in its use. SWOT’s can be inherently bias resulting in an analysis that is subjective at best.
A SWOT will not:
- Help you prioritize;
- Does not provide solutions or offer alternative decisions;
- Can generate too many ideas but not help you choose which one is best;
- Can produce a lot of information.
How to conduct a SWOT
It is always a good idea to keep the organization in the know of any analysis or evaluation that is going on. Word travels fast, and any change in organizational behavior can make employees feel like they are in the dark and will gin up the rumor mill. Leaders should be upfront about why a SWOT is being conducted and what it will do for the organization. Some individuals may have never heard of a SWOT analysis, so it is best to be safe than sorry. A senior manager should explain what it is and why it is needed. Just as importantly, some individuals are naturally resistant to change. By taking the time out of the schedule to explain the rationale behind the SWOT, people are more likely to buy-in to the process. Here are some processes stages:
Identify participants
The participants should be from a cross section of the organization with different past experiences, various positions, demographics, and generally be a microcosm of your organizational makeup.
Designate a facilitator
You can involve people in a variety of ways, via in person or via a survey. But in both cases, you will need to assign a facilitator that will lead the discussion, consolidate and summarize the responses. Whomever you choose, this individual needs to be unbiased in conducting the role.
Brainstorm
The participants should be prepared to discuss their ideas of the four major SWOT groups. The facilitator is responsible for consolidating and summarizing the points made. The outcome should be a SWOT matrix with an additional column that records the percentage of people that brought the issue up.
For example: We have good client relations: 70%. This gives senior managers an idea of how prevalent an issue is in the organization and can assist with prioritizing a strategy.
Clarify and Identify
The facilitator should identify three to five items as the outcome of each section. This ensures there is a clear and a manageable number of items to pursue. This is particularly important when identifying the organization’s weaknesses and threats.
The organization can adopt several different strategies to address those items, ranking the weaknesses and threats on level of effort, significance of impact, resource availability, cost, time, or available personnel.
Assign Next Steps
The outcome of the SWOT should be a list of three to five items for which the organization will focus its efforts upon to reduce or mitigate. This feeds into an organizational strategy with management buy-in and priority.
Individuals are assigned the lead on developing and deploying the business process changes necessary to mitigate the threats and weaknesses and to leverage the strengths and opportunities. The strategy can be as simple as creating organizational knowledge, business process re-engineering, training, or as complex as a reorganization.
In closing, a SWOT analysis is an easy, cost effective tool in the managers toolkit. A SWOT can provide insight into what people perceive, identification of core competencies and weaknesses, along with external market, competitor, and industry threats.