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Posts Tagged ‘strategic planning’

SWOT unleashed: how to master strategic excellence

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Image source: DAPA Images | Canva

In the world of strategic planning, the guiding light of SWOT analysis looms overhead, illuminating the path of organizations as they strive toward success. SWOT is an abbreviation of Strengths, Weaknesses, Opportunities, and Threats; it is an effective framework that empowers businesses to navigate the complexities of decision-making. It offers a structured lens through which organizations can examine their internal resilience, vulnerabilities, external openings, and looming challenges. This comprehensive analysis serves as the cornerstone for strategic planning, innovative thinking, resource allocation, and adaptive strategies. 

At its heart, SWOT analysis is a well-organized exploration of what an organization does well and where it could improve (those are the internal bits), as well as the changes and challenges it faces from the outside world (that’s the external stuff). Think of it as seeing the bigger picture of where an organization is right now and where it might be headed in the future. It is more than just a tool; it’s a trusty compass that helps steer the ship through the twists and turns of business strategy.

The key components of SWOT analysis

A SWOT analysis can be broken down into four key parts, each offering a unique perspective on the organization:

Strengths are the internal factors where the organization shines and stands out from its competitors. They could be things like having a strong brand, a loyal customer base, solid financials, cutting-edge technology, or highly skilled employees.

Weaknesses point to areas where the organization needs to improve to stay competitive. These might include having a weaker brand, high employee turnover, too much debt, inefficient processes, or outdated technology.

Opportunities are external factors that could give the organization an edge. These opportunities can arise from changes in market trends, shifts in demographics, evolving consumer preferences, or new regulations.

Threats are external factors that pose risks to the organization. These may include things like increased competition, rising material costs, economic downturns, shifts in consumer behaviour, or disruptions in the supply chain.

To present a SWOT analysis effectively, analysts often use a four-quadrant table, with each quadrant dedicated to one of the four components. Internal factors, strengths, and weaknesses are usually listed in the top row, while external factors, opportunities, and threats are placed in the bottom row. Strengths and opportunities, which are positive aspects, are positioned on the left side of the table, while weaknesses and threats, which are concerning elements, are placed on the right side.

How to conduct a SWOT analysis

A SWOT analysis is not merely an academic exercise—it’s a practical tool for strategic planning. Here’s a step-by-step guide to conducting a SWOT analysis effectively:

  1. Identify your purpose

It’s crucial to have a clear focus, whether it’s evaluating a new product rollout, assessing a division’s performance, or guiding overall business strategy. Your objective will serve as a guiding star throughout the process.

  1. Collect required resources

Identify the resources and data you’ll need to conduct a thorough analysis. This includes both internal data, such as financial reports and employee feedback, and external data, like market research and industry trends. 

  1. Compose insights

With your team in place, initiate a brainstorming session for each of the four SWOT components. Encourage participants to contribute ideas and insights, even if they seem unconventional. Internal factors should be explored for strengths and weaknesses, while external factors should be assessed for opportunities and threats.

  1. Filter outcomes

After the brainstorming session, you will likely have many ideas within each category. The next step is to filter and prioritize these findings. Engage in discussions and debates to determine the most critical strengths, weaknesses, opportunities, and threats facing the organization. 

  1. Develop the strategy

Armed with a prioritized list of SWOT elements, it’s time to convert the analysis into a strategic plan. Your analysis team will produce the findings and provide guidance on the original objective. For example, if the analysis was conducted to assess cybersecurity issues like outdated systems, the strategic plan may recommend investing in better tech and checking security regularly or partnering with cybersecurity experts for assistance.

Real-world SWOT analysis examples

To show how useful SWOT analysis is in real life, let’s look at two real-world examples:

Tesla, Inc. effectively employs SWOT analysis in navigating the electric vehicle (EV) sector. Their strengths encompass innovative technology, a robust brand, and global reach, and their challenges include production issues and elevated costs. They find opportunities in the promising EV market and expansion into the energy sector while facing threats from intense competition and evolving regulations. Tesla’s strategic approach, influenced by this analysis, emphasizes innovation, global expansion, diversification into energy solutions, managing competition, and compliance with regulations. 

Amazon, the global e-commerce giant, exemplifies how SWOT analysis shapes strategic choices. Its strengths encompass e-commerce dominance and a culture of innovation. Challenges include slim profit margins and counterfeit products. Opportunities are found in expanding markets and global reach, while threats come from intense competition and evolving regulations. Amazon’s strategy revolves around customer-centric innovation, diversification, global expansion, marketplace integrity, competition management, and regulatory compliance. This SWOT-influenced approach ensures that Amazon maintains its leadership, fosters innovation, and adapts to changing market dynamics by leveraging strengths, addressing weaknesses, seizing opportunities, and mitigating threats.

Just like how we use different tools for different tasks, the SWOT analysis isn’t our only option. It’s more like a trusty friend that works alongside other friends in your planning adventure. Through SWOT analysis, you can make smarter decisions, be more creative, and adapt to changes in the world—as you would with good friends by your side.

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This article is written by Chadia Abou Ghazale, a seasoned banking professional with 24 years of experience and who excels in budgeting, sales performance management, data analysis, and resource planning. Beyond banking, she is a dedicated reader of self-development topics and passionate networker. Chadia believes that life’s purpose is the pursuit of knowledge. Her extensive expertise and unwavering enthusiasm are a dynamic combination, driving success in her career and enriching her life’s adventurous journey.

Strategic planning in turbulent times: Is it still relevant?

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Image Source: RENE RAUSCHENBERGER | Pixabay

Over the past few years, companies faced volatile business environments all while keeping up with sustainability requirements, workforce and customer behavioral changes, and market trends. Because of the turbulence of the business environment, the role of strategic planning becomes even more essential to the survival and growth of any business.

As John Child defines it, business volatility is “the degree of change which characterizes environmental activities relevant to an organization’s operations.” According to the 2023 Global Trends Brief, these are some of the components that caused disruptions and unpredictability in the business environment: 

The traditional strategic planning process, according to Jean Dieudonne, strategic planning lead at ANZ, includes a three-to-five-year plan with actionable steps to achieve long-term goals. However, businesses must rethink this to adapt and deal with turbulent times.           

One of the leading providers of energy solutions worldwide, bp is currently investing in low-carbon solutions. The 2023 edition of the bp Energy Outlook, as outlined in this year’s annual report, has identified two turbulent factors: the Russia-Ukraine war and the US Inflation Reduction Act. Given the unpredictable nature and potential enduring impact of these events on the trajectory of the national and global energy systems, the organization’s strategic planning process becomes even more essential.      

Accordingly, bp proactively monitors the external environment and regularly updates its strategic plans in response to these external signals. They employ scenarios from the World Business Council for Sustainable Development’s “Climate Analysis Reference Approach for Companies in the Energy System” to assess and validate their strategy. This proactive approach enables them to seize opportunities and navigate challenges in turbulent times. The leadership team and board review the strategy, capital allocation, risks, and opportunities, making regular updates as needed. Also, to successfully go through the fast-changing business landscape, they monitor key indicators and metrics, including policy developments, renewables capacity, electric vehicle sales, and low carbon technology costs.

Another company that had to deal with turbulence in the business environment is Saudi Aramco Power Company, which has incorporated risk assessment into its strategic planning process. Projects go one by one through a structured decision process that includes rigorous risk assessments and value assurance evaluations, and each strategic scenario is stress-tested to ensure positive results in any business environment. 

Strategic planning will always stay relevant, and the selection process for strategists should be of critical importance. Also, choosing the right resources to strategize and execute plans with is like choosing friends to accompany one in a dynamic environment—an escape room, for instance. Choose those that can be effectively utilized or leveraged for a specific purpose.

The Importance of Data Gathering in Strategic Planning

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Some say when you fail to plan, then you plan to fail. This is the reason why you should establish a solid strategic planning process for your company. But strategic planning won’t succeed without the right data. Data gathering may sound simple, but you should not underestimate it. Why does it matter and how should you gather your company’s performance data?

Performance monitoring is a systematic process taken by the management in order to track the company’s performance and drive results and continuous growth. Performance monitoring could also send signals to top management which part of their business  operations are failing or working below expectancy. This process plays an important part in the strategic planning initiative.

In order to successfully monitor company performance, the management should be able to gather corporate performance data swimmingly. 

Data Gathering 

Data gathering in general should start with KPI activation. This KPI activation consists of four different steps: meeting with the data custodians, securing the activation budget, designing the data gathering template, and communicating the template to the data custodians. KPI activation is a step that allows management to develop infrastructure for capturing and managing data.

After KPI activation is done, the next step is the ongoing data gathering process. This is where the management or the performance management team sends the KPI data gathering notification to the KPI custodians and receives the data relevant to performance monitoring. For this step, it is imperative for the performance management team to gathers and centralize the relevant data before checking the data quality.

After sending the KPI data gathering notification, the management or the performance management team could also send the KPI custodians a reminder via email to make sure the data custodians prepare the data needed.

Once the relevant data is gathered, the performance team should check the quality of the data before calculating the KPI results and analyzing the data. The quality of the data should be checked based on multiple dimensions. The main dimensions are Accuracy, Completeness, Consistency, Conformity, Timeliness, and Uniqueness. In reality, the performance management team may find the relevant data does not meet those requirements/quality. When the data does not meet a certain quality, it is preferred for the top management or the performance management team to clarify the data to the data custodians. 

Data analysis is a set of processes of examining, transforming, and modeling data to generate relevant business insights that can be used in the decision-making process. In analyzing KPI results, the performance team should use analytics.

The final step of data gathering is to generate a performance report. In this phase, data custodians, the report generator, and the strategy performance team are collectively responsible for compiling all performance results, business insights, and analysis in a certain format for the decision-makers.

In conclusion, a solid data gathering enables decision-makers to set the right company’s objectives for the next period. A solid data-gathering process will help the performance management team provide the performance report required by the top management faster,  making the top management adjust the company’s strategy and objectives properly. If you want to learn more about how you could establish a solid data gathering process, sign up for The KPI Institute’s Certified KPI Professional and Practitioner course.

The impact of the pandemic on performance management practices

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Image Source: aleksandrdavydovphotos | Canva

The COVID-19 pandemic has left a strong mark in all aspects of our lives. It has impacted society – our habits, routines, and the way we interact. It has pressured the economy, its financial stability, and the way we do business.

Thus, what has changed in the way managers are doing performance management in these volatile times?  

1. The way we do strategic planning

Before the pandemic, risk management, scenario planning, and business continuity plans were specific to large corporations. Nowadays, even small organizations will have a plan B ready for different scenarios of the COVID-19 evolution. There are industries, like retail, where all planning revolves around foresting based on historical data. Nowadays, using data from the past to plan the future seems a futile attempt to regain the feeling of control.  

Moreover, most organizations, regardless of their industry, rely on annual if not 3 to 5 years planning. It is obvious that in the present circumstances and given the complexity of managing a business nowadays, these strategic planning practices seem useless. 

2. The importance given to performance measurement

More than ever before, real-time data is a vital management tool. Access to data is critical in managing a crisis. One of the positive side effects of the pandemic was the pressure to digitize operations that create opportunities for data collection and better measurement of operations.

3. The way employees can be evaluated

Remote work and hybrid systems (combining work from home with office time) are no novelty, but in the COVID-19 circumstances, they gained significant recognition and became the norm rather than the exception for many organizations.

Managers and team leaders can no longer directly observe employees. There is a series of soft competencies, like communication, collaboration, proactivity, and creativity that are very difficult to evaluate in an online working environment, and yet they are essential skills for many jobs.

What is the way forward?

1. A different way of planning

Risk management must be an inherent part of organizational strategy, regardless of the company size. You don’t need a risk management office to have a proactive management approach and handle risks well. Small organizations can use their performance scorecard and populate it with leading KPIs or Key Risk Indicators. 

For example, setting a red line level for # Days in accounts receivable can help you manage better cash flow, monitoring # Safety non-compliances can provide insights into the risk exposure to # Work accidents resulting in mortality. Identifying different scenarios in key areas of business and having contingency plans can give any organization a heads-up in case of a crisis.

Strategic planning must concentrate on shorter time horizons and reassess a series of factors that organizations may not have considered on a quarterly basis. 

Government interventions, international economic context, competitors’ reactions, customers’ preferences, customers buying power, suppliers’ situations, internal capabilities and optimization potential, and employees morale and productivity are factors that have changed post-pandemic and need to be investigated.  Moreover, agile strategic planning processes must be set in place to enable the organizations to react fast to changes.

2. Changes in the performance measurement framework

In the face of chaos, the most effective tool to put everyone on the same page is to use clear objectives, KPIs, and initiatives, even short-term ones. The challenge is to adapt the measuring and reporting of performance to respond to tight deadlines. Data must be available fast, preferably in real time.

Thus, identify five to 10 KPIs that are easy to use, concise (tackle the problem directly), and can be collected with high frequency (weekly, monthly). These will be the ones that help you navigate a crisis. Now is the time to replace complex measurements and reports with simple yet relevant tools.

In the medium term, most likely for many organizations, the entire strategy must be reconsidered and linked to relevant performance scorecards in which simple measurements can be combined with more complex KPIs to provide a holistic overview of performance.

3. Focus on building the right mindset for each job than defining the specific job outputs

Many organizations invest a significant amount of time in identifying the right KPIs and targets to capture as precisely as possible the employee’s performance or productivity. Moreover, the more complex the job is, the more difficult it is to capture all contributions in relevant KPIs. In a volatile business environment, such an approach makes targets and KPIs obsolete the moment they are communicated. 

The performance criteria used for employee evaluations should be flexible, easy to adapt and more focused on the extent to which the role is successfully achieved, as compared to looking at operational details. For example, it should be less important if the employee delivered one or three safety awareness sessions to factory workers if their awareness level is at the desired level. 

One methodology that can be used at the employee level is the Objectives and Key Results Framework. OKRs are set and reviewed quarterly, but they can be changed even more often if the result set is no longer of interest. They emphasize on the importance of personalizing the objectives and key results and making the employee accountable for setting and monitoring them. Not all key results have to be KPIs; some of them can be reflected by completing an initiative or other types of results.  

The end purpose of an OKRs system is not to compare employees or indicate what percentage of your staff are high performers. This methodology aims to facilitate communication, clarify expectations, align work activities to corporate strategy, and to provide a tool for managers and employees for discussing individual performance and improvement opportunities.

You can learn more about OKRs through The KPI Institute’s Certified OKR Professional Course.

Strategic planning in education: Webster University Case Study

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Webster

As one of the most culturally comprehensive and diverse universities in the world, Webster University has devised a Strategic Plan to fit its global perspective on academic excellence. The university’s newly formulated plan embraces the institution’s global vision on an international student experience that leads to successful professional formation.

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