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Summary

I Threats fall into two categories, those that can be avoided and
I those that cannot be circumvented by any action taken in
I advance. Ask enough questions to ensure that everyone is clear
I about the difference and that today’s actions and tomorrow’s
I contingency plans are robust.

COST analysis

The above is a COST Analysis. It performs all of the capabilities of a SWOT
Analysis with the additional advantage that it is designed to be action oriented
and therefore integrated from the start into an effective planning process. It
also avoids the emotional problems that research has shown are frequently
associated with the better known, but less useful SWOT Analysis. Just in case
you revere the sequence of the four letters S-W-O-T you may be interested to
know that the concept first saw the light of day at the Stanford Research
Institute as SOFT Analysis (Strengths, Opportunities, Failures, Threats). The
change to SWOT was for commercial, rather than practical or conceptual
reasons and was not made by the inventors of the concept.

The reader will be fully familiar with SWOT Analysis, but on an analogy with
the writer of concert programme notes who has to assume that someone is
listening to Beehoven’s Fifth for the first time let me explain what goes wrong.
The first activity is to establish STRENGTHS. This means that most planners try
to identify this most important factor before they are “warmed-up’ mentally.
As a result they miss a number of strengths that the business has and which,
with a little thought could have been exploited to deliver superior service and
win business. A weak list of strengths makes it easy to dwell on inessentials
when considering WEAKNESSES. As a result the planners identify a wide range
of confidence sapping weaknesses. If, on the planner’s paper at least, the
organization has a limited number of strengths and a considerable catalogue
of weaknesses, OPPORTUNITIES appear to be few and hardly worth bothering
with. Finally an organization that has been defined as strong only in terms of
weaknesses is perceived to be subjected to many and varied THREATS. In short
the emotional effects of conducting the SWOT Analysis can be to drain rather
than to build enthusiasm and motivation. At best the work that has been put
into the development of the lists of Strengths, Weaknesses, Opportunities and
Threats is ignored during the rest of the planning development and where
work is done and then set aside the whole process is devalued.

10 Key management questions