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SWOT, PESTLE and Waterfall Analysis

The Management Pocketbooks Pocket Correspondence Course

Pocketblog has gone back to basics. This is part of an extended management course.


I used to be a director in a business where, like many businesses, once a year we would have a ‘strategy meeting’ to look at our strategy for the next year. How could we understand the market and what could we do to improve our competitive position. In the next blog, we will look at some of the more sophisticated strategy planning tools available to you. Here, I want to focus on three that have the overwhelming merit of simplicity.

Every year we would follow the same process… until, that is, until I got heartily sick of it and introduced another. But let’s start with the two tools that made up that much used process, before I offer you a powerful alternative that is guaranteed to give you insights into how your business can make more money.

SWOT Analysis

Perhaps the best known strategic analysis tool is SWOT Analysis – a structured review of your organisation’s Strengths, Weaknesses, Opportunities and Threats – often presented as a grid like this:

SWOT Analysis

The secret to making SWOT Analysis work is frankness and a determination to be really objective about how your organisation measures up to the market. Being good at something is not a competitive strength if your competitors are also good at it – or even better.

The hardest part is to understand what is coming over the horizon by way of threats and opportunities. Because it is when you pair up the top of the chart with the bottom that you start to see what strategic changes you need to make. So, how do you spot opportunities and threats?

PESTLE Analysis

Of all the tools for horizon scanning, PESTLE analysis is the simplest. We just take stock of all of the changes we can foresee under a range of headings:

 

PESTLE Analysis

Waterfall Analysis

When you get bored with these, focus on revenue. Waterfall Analysis splits your entire market into your market share and the market share you leak to your competitors. It further subdivides these to give five components and hence five parts to your strategy. It will not give you the answers, but it will focus your thinking. People who have used this for a first time often find it leads to revelatory ‘aha moments’; so why not give it a try?

Click on the figure to enlarge it

Waterfall Analysis

Further Reading

From the Management Pocketbooks series:

  1. The Strategy Pocketbook
  2. Business Planning Pocketbook

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Learning

The Management Pocketbooks Pocket Correspondence Course

Pocketblog has gone back to basics. This is part of an extended management course.


  • Why do you need to learn?
  • What do you need to learn?
  • How will you learn?
  • What will you do with the knowledge if you do learn?

These four excellent questions put us in mind of Bernice McCarthy’s 4MAT System for learning – a model that will help you answer the ‘How will you learn?’ question.  But let’s start at the beginning: Why?

The true answer to ‘why learn?’ will always be ‘because you can; because it is human nature to; and because learning is a joyous process.’  But I am guessing many readers will be more specifically career-focused.  You may be a new manager, perhaps hoping for a promotion, perhaps wanting a new role.

Exercise 1: Why Learn

Look at last week’s blog post, Career Development, and then ask yourself:  ‘What is my purpose in embarking on job-related learning?’  Write your answers in your notebook.

Exercise 2: What to Learn

To determine what you most need to learn, conduct a SWOT analysis.  Take a cold critical view of your personal strengths and weaknesses.  Then look at the opportunities ahead of you and the threats that may set you back.  Compare your strengths and weaknesses with the opportunities and threats and, from that, determine your learning priorities.

SWOT Analysis

Exercise 3: How to Learn

It seems likely that we all have our preferred learning styles: reading and analysis, experimentation and playing, reflecting on experiences.  Think about a time when you learned most easily and comfortably.  What were you doing then?  This is possibly a good starting point for designing a learning process that will work for you.

Further Reading

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Edward de Bono: Thinking

I have already declared my interest as a fan of Edward de Bono in the 2012 blog: The Fertile Mind of Edward de Bono, which I followed up with Six times Four: More de Bono. Now it is time for a slightly wider survey of the work of the man who introduced the term ‘lateral thinking’ and who has been trying to teach business people, governments, student and their teachers to think for nearly half a century.

Edward de Bono

Short Biography

Edward de Bono was born in Malta in 1933, the second of four sons of a doctor father and journalist mother, and was an exceptionally bright pupil at his Malta boarding school. He was three years younger than his class-mates when he got his degree in medicine from Malta University and went off to study psychology and physiology at Oxford University as a Rhodes Scholar, where he also earned a DPhil in medicine. This was followed by slew of further degrees and academic appointments, that leave him, technically, Dr Dr Dr Dr (Dr) de Bono. I may have mis-counted and I have bracketed his first qualification as a medical doctor, as that was not an academic doctorate. I think we can conclude that Edward de Bono is both intelligent and academically motivated.

In 1967, he published the first of his popular books on thinking, the now out of print The Use of Lateral Thinking. This book introduced the world to his idea of ‘lateral thinking’ – a term that de Bono coined. His books now number around 60, of which the current most popular are:

De Bono has also created online thinking skills programmes and the CoRT (Cognitive Research Trust) programme for teaching thinking to school-age children.

De Bono’s Contribution to Managers and Business Professionals

I think this is where de Bono has clearly been at his best and least controversial. Many of his techniques and training programmes have provided business people, public service managers and other professionals with practical and helpful tools to enhance their critical thinking and creative thinking skills. Like any creative powerhouse, de Bono has produced easily as many ideas that have not gained widespread use as he has lasting ideas. But we should judge him on the latter.

Lateral Thinking

This term is now so widely used that de Bono’s original meaning has been largely subsumed into the wider context of ‘creative thinking’. By ‘Lateral Thinking’, I believe de Bono originally meant perceiving the world in different ways, so that your thinking about a problem can pursue lateral branches, rather than following the main route that is obvious to it. It therefore means looking for new starting points for addressing a problem – an implicit assumption that existing patterns of thought rarely solve new problems effectively.

Provocation

A central theme of a lot of de Bono’s books on creative thinking is the idea that provocative assertions stimulate lateral jumps in our thinking. De Bono crystallised this idea in his (now out of print) book Po: Beyond Yes and No. By analysing the provocation (or ‘Po’), we can reach new and possibly fruitful insights.

PMI Analysis

Another key theme of de Bono’s work, including Po, is that the dichotomies of yes versus no, or right versus wrong, or good versus bad, lead us into linear thinking that is poor at identifying new ideas or thinking in a rich and subtle way. Arguably de Bono’s single most powerful tool is PMI analysis, which can get you over that problem.

It takes its inspiration from Kurt Lewin’s force field analysis approach (which, incidentally, leads directly to SWOT Analysis). But instead of looking at the driving and restraining forces, or the strengths and weakness alone, PMI analysis asks us to look at the Pluses, the Minuses and the things that are Interesting about a situation, option or challenge. This third dimension opens your mind to the subtleties and to new ideas.

Six Thinking Hats

We covered this idea more fully in an earlier blog, but the essence of the concept is simple: that there are different ways to think and that we will solve problems more effectively and make more robust decisions, when we apply multiple modes of thinking, rather than a single, favourite style. The six thinking hats represent six modes: analytical, risk-averse, constructive, imaginative, emotional, and procedural thinking (white, black, yellow, green, red and blue hats respectively).

Controversies

De Bono’s work is not without its critics – even his ‘mainstream’ contributions. Many cognitive scientists have critiqued the lack of evidence base for the efficacy of his methods and programmes – which matters deeply where the teaching of children is concerned, as for his CoRt programme. However, I am not qualified to assess these arguments. It does seem to me that there is a dichotomy here between the theoretical/academic assessment and the practical/utilitarian usage. His ideas as an addition to other training and teaching make a useful contribution to thinking skills for many people. There is plenty of testimony to support that assertion, even if the rigorous evidence base is lacking.

So, as with so much else in the world of management ideas, the proof is in the practical application: take de Bono’s ideas out for a test drive, and decide whether they are for you. If they help you: use them. If they do not: consign them to the bookshelf, and take them to the charity shop, next time you are passing. Maybe, if you donate one of de Bono’s books that I don’t own, I may well buy it!

 

 

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