Weihrich added a marketing focus to the SWOT matrix, which created the TOWS matrix. The TOWS matrix is designed in a way that will help you analyze your Strengths, Weaknesses, Opportunities and Threats with an eye on your marketing needs.
I’m introducing the TOWS matrix here so you can will start to understand how to analyze the Strategy you have selected, the Business Model you have developed, and the Tactics you are looking at. With it, you can develop your own feedback to tie them all together, and monitor your choices over time.
After a few sessions where I show you how to look at the factors in your environment that affect your marketing, I’ll give you some guidance on how to use the TOWS matrix.
SWOT analysis originated by a team led by Dr. Albert S Humphrey back in the early 60’s at the Stanford Research Institute as the SOFT analysis, where what is good in the present is Satisfactory, good in the future is an Opportunity; bad in the present is a Fault and bad in the future is a Threat. The analysis was composed of seventeen steps and included a complete corporate strategic study. This was called the SOFT analysis.SWOT analysis originated by a team led by Dr. Albert S Humphrey back in the early 60's at the Stanford Research Institute as the SOFT analysis Click To Tweet
SOFT became the SWOT analysis in 1969 when Urick and Orr presented it at the Seminar on Long Range Planning at the Dolder Grand in Zurich, Switzerland. They omitted much of the internal and external research, changed the F to a W and called it SWOT Analysis. It became a simplistic tool and of little value without the underlying corporate strategic planning.SOFT became the SWOT analysis in 1969 when Urick and Orr presented it at the Seminar on Long Range Planning Click To Tweet
What Weihrich did in 1982 was add a couple of dimensions to the simplistic SWOT, which made the TOWS simpler than the SOFT analysis, and a lot more effective than the SWOT analysis. He also added the ability to include competitive analysis.Weihrich added a couple of dimensions to the SWOT, which made the TOWS analysis simpler than the SOFT analysis Click To Tweet
Before we get into the upcoming sessions, where I’ll give you the tools you can use to do a TOWS analysis of your Strategy, Business Model, and Tactics choices, go ahead, Click Here and download the Rainmaker TOWS Matrix and Worksheet.
When you start your TOWS analysis, you need to identify your key success factors and estimate the relative importance of each. Then you’ll need to evaluate your competitive strength or advantage in each of these factors. Thus, only a careful analysis of the current competitive position provides an indication of the company’s future growth and profits.
As you’ve gone through this course, you should have started the process of breaking out of the box your college professor put you in. Now, you’ll learn to break away from that traditional SWOT analysis where you simply identify your strengths and weaknesses, and the opportunities and threats in the external environment.
You, my dear friend, are going to learn how combining these four factors creates distinct strategic choices when you use the TOWS Matrix. The TOWS Matrix has a wider scope and has different emphases than a simple SWOT analysis.
A suggested process of reviewing and fine tuning your strategy is laid out on the worksheet you should have downloaded by now begins with development of a practice profile. As you go through this process, you will draw from all the research and notes you have made during the sessions where we talked about the Rainmaker Simplified Strategy Matrix and learned how to construct your Rainmaker Business Model.
In the TOWS matrix, when you complete Step 1, development of your practice profile uses information you have gathered for your Simplified Strategy selection, and design of your Business Model.
Steps 2 and 3, on the other hand, require you to think about your present and future situations in respect to the competition you face, as you see them in your external environment, especially as how they affect your target market.
Step 4, the audit of your strengths and weaknesses, requires you to focus on the resources you identified while developing your Business Model.
Steps 5 and 6 are the activities necessary to refine the strategy and business model you have designed and selected, and help you refine the tactics and the specific actions you will take in order to achieve your strategic objectives.
And, since you are doing this all alone, in a fishbowl, you need to go over this planning again and again to develop alternative services and products, or as they say in the real world, contingency plans must be prepared (Yep, that’s Step 7).You need to go over this planning again and again to develop alternative services and products Click To Tweet
So, get out your TOWS matrix worksheet, and study it. Don’t mess with it yet, we’ve got a lot of stuff to cover, beginning with an understanding of the External Environment.
In the TOWS matrix, the analysis starts with how the external environment looks from the point of view of your Strategy and Business Model. Specifically, the listing of external threats (T) may be of immediate importance to you as some of these threats (such as the lack of available funds or staff) may seriously threaten the operation of your practice.A listing of external threats (T) may be of immediate importance to you Click To Tweet
In the next few sessions, I’ll show you how to identify and evaluate these threats. Once you have been through those sessions, you should be able to list them in box ‘T’ of the TOWS matrix. Same thing with opportunities, which you should show in box ‘O’.
Your internal environment is assessed for its strengths (S) and weaknesses (W) based on the work you did in developing your Business Model.
Once you complete the TOWS Matrix, you will have identified four conceptually distinct alternative methods of implementing your strategy.
Do keep in mind, as I keep reminding you, these choices of tactical implementation may overlap or operate in parallel. But for the purpose of understanding, I’m showing you four distinct sets of variables.
First, take a look at the lower right cell of the matrix, the WT Cell, marked as mini-mini (for the need to minimize your weaknesses and the external threats). In general, the aim of WT tactics are to minimize both your internal weaknesses and the competitive or external threats.A practice faced with external threats that align with their internal weaknesses is in a precarious position. Click To Tweet
In fact, you may have to fight for your survival or even close down. But there are, of course, other choices.
For example, you could revisit your target market and strategy selection, or modify your business model, with the intent of either overcoming the weaknesses you have identified, or wworking to diminish the effects of external threats. Whatever tactics you select, the WT position is one that you should try to avoid.
WO tactics, the mini—maxi cell, attempt to minimize internal weaknesses and maximize opportunities in the market.
You could identify opportunities in the market, but have internal weaknesses which prevent you from taking advantage of the opportunity.
For example, a practitioner with a great demand for Cost Segregation Studies may lack contacts with engineering firms who have the expertise required for producing these studies.
One possible strategy would be to acquire this capability through an alliance with and engineering firm having competency in the Cost Segregation field. An alternative tactic would be to hire and train an engineer with the required technical capabilities.
You also have the choice of doing nothing, thus leaving this opportunity to competitors.
ST tactics attempt to maximize the strengths of the practice while minimizing competitive threats in the environment. This, however, does not mean that you need to waster your resources meeting competition head-on. Further refinement of the Business Model and narrowing of the target may identify holes in the competitive threat that allow you to capitalize on your resources and build some significant barriers to competition.
The SO position where you can maximize both, strengths and opportunities is an enviable position, and where you want to be.
It is extremely difficult for your prospects to evaluate the quality of the intangible services of an accounting or consulting firm.
Consequently, prospects seek out the services of firms with established reputations. This is why you must position your firm in a way that prospects recognize as providing the best, or preferably, the only solution to their need
Your TOWS matrix will give you the tools to tie everything together. Let’s get started. I’ll see you in the next session where I give you a better understanding of the 80-20 rule and how it affects your marketing, or doesn’t.
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