How to Evaluate Your Competitive Position
In discussing technology strategy with undergraduates, I emphasized the use of a strategic analysis tool that goes by the name of SWOT. SWOT stands for Strengths, Weaknesses, Opportunities, Threats.
SWOT is a good, basic tool. It gives us perspective of our specific company, product, or business plan as it may react to external emergent market forces.
The internal analysis methods focus on the strategic position of your product as you perceive it in the context of strengths and weaknesses.
Strengths refers to the nature of your project that will give it an advantage over others; weaknesses refers to the disadvantages your project has that makes it vulnerable.
SWOT can be used to evaluate the external forces that threaten to impact your position. The question is: how will changes in externalities create both opportunities that enhance your strengths/position, or, diminish your strengths/position.
(A quick note on externalities ... these are changes that happen outside of you and your firm's control. Things like changes to consumer opinion and preferences, changes in tax or foreign policy, shifts in technology, industry regulations, surprise news events. This is stuff that you can anticipate but not necessarily control.)
Opportunities reflects changes in market dynamics brought on by shifts in externalities; threats are conditions that could harm your position should the externalities come to pass.
It's a simple tool and it's been taught in business schools since the 1970's. It's not something you just conduct when putting together your business plan. It's something you constantly revisit for two facts will always hold constant:
Your product/service will change over time;
Externalities that shape the success of your product/service will change over time.
Change happens. And your technology strategy should adapt accordingly. In fact, we measure technology generations in about nine months; SWOT may be a tool you're using on a bi-annual or six-month basis to re-evaluate how changes influence your spending plan.
There's a good reason for this. Technology projects take a long time to implement. Over the implementation and adoption period, a SWOT analysis is a litmus test. A reality check. Is this still the right plan? Is it good to continue spending and strategic investment in this direction? Or is there a change - a shift - that's about to happen, that will influence adoption and use?
It's the middle of September 2014 and Apple just released the new iPhone6, capable of NFC (Near-Field Communication) and a new payment system called ApplePay. Over its introductory weekend, Apple has sold 10 million of their new phones - that's a record, even for Apple.
Now use the SWOT. If your in the middle of implementing a technology solution for your company like POS (Point of Sale) systems that rely/depend on magnetic swipes found on the back of credit cards, you're already at a technological pivot. An externality will now start shaping consumer behavior and preferences to start using NFC instead of magswipes for credit card transitions. It also stands to reason that Samsung and Google will ramp-up Droid solutions like Google Wallet to complete.
So, a couple of questions for you - the small business owner - at this critical time:
1. How rapidly do you expect your consumer's adoption rates of this technology? How does that present an opportunity or threat to your business?
2. How could the early internal adoption of NFC improve your product/service's competitive position? What are the risks/consequences to your business for later adoption?
3. What are the potential security consequences? How would your employees need to be trained?
4. How could the shift from magswipe to NFC influence your brand and delight everyone?
Thinking like this, applying SWOT when there's an obvious change in externalities, is a strategic application of technology spending. It allows you to think about, project, anticipate, and respond constructively rather than react. How could you apply SWOT today, tomorrow, next week, next month, next quarter?
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