Go-to-Market Action Plan: SWOT vs TOWS and how to take action

Introduction: Strategy Formulation

Conceptually (I hate anything conceptual) strategy formulation is simple: Look at the current and expected future environment, determine the direction of the business and develop a means for achieving the end result you require. In reality, however, this can be a very complex activity in any organisation.

When identifying the present and future external environment, this requires an analysis of the business’ threats and opportunities within their target market.

Looking internally to identify the businesses strengths and weaknesses is also required to ensure we know what to use to our advantage and what to strengthen, if necessary, or, what to stop doing.

Most large business firms prepare strategic plans. At the centre of the strategy planning process is the identification of strengths, weaknesses, opportunities and threats (SWOT). This has traditionally been referred to as a SWOT analysis.

However, this analysis usually lacks substance and almost always is built on opinion subjectively by those who can assert their point of view the best. i.e. not backed up with evidence, science based data backed objectivity. Furthermore, this does not show the relationship between external and internal factors.

Therefore, the TOWS matrix, since its publication back in 1982 by H Weihrich, has been used in many different countries and industries. This article will demonstrate how external factors (Threats and Opportunities) can be integrated and aligned with internal factors (Strengths & Weaknesses) to take action optimising the business’ resources. By using the TOWS Matrix, taking action on growth strategies can be systematically integrated into the business.

Go to Market Action Plan: The Starting Point

There is a whole article on Holding Up The Mirror to understand your starting point in strategic planning. This article can be found here:

Crafting a Robust Go-to-Market Strategy: 1st - Hold Up The Mirror (thestrategysmith.com)

Your business profile is the starting point determining the current position of the company and which direction it should go. Looking back 3-5 years, the company’s history will reveal what kind of company it is.

Knowing your current target market, your market share within it and also your competitors will start to highlight threats and opportunities within the target market.

Understanding from your people and customers as to what drives customer value will highlight the business’ strengths and weaknesses.

The values, culture and orientation of top leadership and management will highlight the company direction and determine the purpose of the business and what success looks like – ideally backed up by customer value and what this is for the customer or consumer base.

This can be evaluated by simply asking 4 questions:

1.       What is our business?

2.       Who are our customers?

3.       What do our customers want?

4.       What should our business therefore be?

When asked and answered for the target market – it should provide enough, even then, to take strategic action.

The External Environment: Threats and Opportunities

The present and future external environment must be assessed in terms of threats and opportunities.

Understanding the wider environment can be established by using TheStrategySmith framework DIRECT.G. This acronym is a great way to look at the external environment for factors that are affecting your target market:

DIRECT.G.

• Dynamics of the Industry (DI): Looking at social, political, legal, demographic and geographic factors; what are the:

• Risk within the industry sector you are in (R)?: External Threats and Opportunities derived from the dynamics of the industry.

• Ethics (E): Are there any ethical barriers or boundaries that must be adhered to or taken into account that contribute to the threats and opportunities?

• Customer value & Competitors (C): Looking outward to what customer value is in the industry sector and target market will validate and provide valuable evidence for threats and opportunities.

• Technology (T): Are there technological factors and advancements that you can leverage as opportunities, are there technological barriers or advancements in products or services that pose a threat to your business model? An opportunity could be that in the future, developments in electronics or Ai could be more important in the delivery of services – which if proven to contribute to value will be an opportunity to act upon.

• Growth (G): Economical factors of your industry sector and target market that pose threats or opportunities.

These factors should be taken into account when understanding external threats and opportunities.

Internal Factors Weaknesses & Strengths

The organisations internal environment must be evaluated in terms of its weaknesses and strengths. Some key internal factors in your business could be, R&D, production, operations, procurement, marketing, products, services. Other important internal factors to consider to create actionable strategic plans are the understanding if human resources (talent), financial resources such as current profit, cash flow, business capital.

The key validation and evidence for what is a weakness and what is a strength can be derived from your current customer and employee base. This relationship of driving towards customer value will determine if your strengths are of value or are a hindrance to creating value.

To understand weaknesses and strengths, one must simply ask the question of each activity/factor above, where applicable to their own business: Where’s the value in that?

Utilising the VRIO framework can help frame this into four questions:

1. Question of Value: Do the internal factors contribute to the top line(revenue) or bottom line (profit)? This, again, can be validated and evidenced by asking your customers what and how they determine the value in your product / service. Asking your people what aids them to create this value for customers and what they do during the day/week/month that prevents them from adding value. Once the perception of value is clarified and proven from your customers – your weaknesses will be what prevent you from delivering value or don’t directly contribute to it, and your strengths are what contribute directly to adding value. It should be noted that there are processes and procedures that take place within business that must be done, which don’t directly contribute to value – this will highlight these factors that should be made as efficient as possible, as there will be a cost to the business which doesn’t contribute to value.

2. The question of Rarity: Is what you do Rare in your industry? Can this product or service only be provided by you or your business? You can increase rarity by understanding customer value and focussing on delivering this as well as the outcome your product or service delivers to customers or consumers. If you do not have rarity – usually ‘flagged’ by customer churn / lack of customer loyalty, this is a weakness. Therefore, customer retention is a key strength to have and can be proven if what you deliver, as well as the outcome, something of value and can’t be found anywhere else.

3. The question of Inimitability: Is what you do protected by copywrite, IP, Patents etc? can it by imitated by substitutes?

4. The question of operations/organisation: Can what you deliver be organised and/or operationalised to enable and embed maximum sustainable value? The nature of the business will come into play here. For example, some businesses have a project manager or even a whole change department to operationalise change. If your speed to change and react to external threats and opportunities is slow, this is a weakness – if you are able to be agile and innovative, move at pace and make decisions quickly this is a strength.

Making Choices: Strategic Action with the TOWS matrix

Based on your findings of external and internal factors you can then start to make choices based on strategic alternatives. As can be seen in the TOWS matrix – four groups of distinct strategic choices are available.

Conclusion:

The SO strategy is to demonstrate that it is justified and proven that developing new products, or services could maximise customer value, and maximise the value to the business in seizing the opportunities.

The ST strategy and choices build on the business’ strength to cope with external threats. This combined with the SO strategic choices and actions will also help to deal with competitive threat in your industry.

The WO strategy aims at transforming the business’ weaknesses into strengths to take advantage of opportunities. For example, an internal weakness may be high over-head costs or you may not be fully equipped to mobilise and seize on the external opportunities proven through your evaluation. Therefore, a decision could be to recruit and/or invest in a change or optimisation consultant or lean-six sigma specialist to increase productivity. Thus, turning WO into SO strategies, choices and action.

The WT strategy aims at minimising internal weaknesses and mitigating external threats. Change direction or withdraw (not-to-do list). Partnerships could be considered at this point also if necessary – joining forces with a partner who has an ST where you have a WT strategy.

The TOWS matrix can be a vital tool for commercial and cultural due diligence also.

After the development and evaluation of the strategy, decisions and action can be take after consideration and appetite for risk within the business.

Also competitors should be ‘kept an eye on’ when implementing the strategy (remember the R & I in VRIO) – they will copy you if you’re having success where they are not.

These choices and actions should be aligned to the business’ ambition, which will then create the Go-to-Market Action Plan.

The TOWS matrix is a great tool to frame internal strengths and weaknesses and their relationships to external threats and opportunities giving the SO, ST, WO & WT strategies. These choices must be made with the decision makers within the business and match to the vision and goals of the business.

Acknowledgements: H Weihrich.