What's the difference between SWOT and TOWS?
Most recently I've been trying to generate a Competitive Intelligence dashboard. In it, we want to provide dynamically and manually updated info on the competitive intelligence services of the team. As such, the controversial SWOT analysis was brought up as an option. Some people mentioned a TOWS analysis, and the battle of acronyms started. I then set myself to analyze: are these really useful and what's the difference?
SWOT analysis
A SWOT analysis is one of the most well known and overused tools to profile a competitor, industry, or even product. It is used to identify key internal and external factors seen as important to achieve an objective (i.e. compete).
I believe one of the reasons of its overuse is its simplicity and minimal need for background information. You have to list in a 2x2 matrix, the internal positive and negative factors (Strengths and Weaknesses) on the first row; and the external positive and negative factors (Opportunities and Threats) on the second row.
The biggest challenge of a SWOT analysis is that it is a snapshot in time of the situation. This means it is not good for helping answer the important question of “what should we do?”. It is definitely useless to help find the competitor's next moves, blindspots, or early warning.
TOWS strategic analysis
A better approach is the TOWS analysis variation. At first, it might seem that it is as simple as reversing the order of positive and negative columns of the 2x2 matrix of a SWOT. However, it is a bit more than just that.
The rational of a TOWS analysis is to help you get a better understanding of the strategic choices available and what options could you pursue. You can lay out what options do you have, to maximize strengths to capitalize opportunities, while minimizing weaknesses to avoid threats.
You can lay out a TOWS analysis in a 3x3 Matrix, swap the columns of Opportunities and Threats from the SWOT analysis, and list SWOT items in the row and columns “title” section.
Then start asking yourself four things. First, how can I make the most of my strengths?. Second, how can I circumvent my weaknesses?. Third, what do I need to do to capitalize opportunities?. Finally, is there a way to manage my threats? Then lay out the respective strategies that use and minimize strengths and weaknesses, respectively, and how they map to maximizing and minimizing the opportunities and threats.
The goal of swapping the columns, is because you end up with a quadrant system where you want to push yourself to the top right (the SO quadrant, that defines which strategies to use your strengths or capitalize in opportunities) and shy away from the lower left corner (the WT quadrant, that defines which strategies should minimize the weaknesses to avoid external threats). The four quadrants are:
- Strengths and Opportunities (SO) – How can you use your internal strengths to take advantage of the external opportunities? These are attacking or proactive strategies.
- Strengths and Threats (ST) – How can you take advantage of your internal strengths to avoid real and potential external threats?
- Weaknesses and Opportunities (WO) – How can you use your external opportunities to overcome the internal weaknesses you are experiencing?
- Weaknesses and Threats (WT) – How can you minimize your internal weaknesses and avoid the external threats? These are defensive strategies.
As you can see, a TOWS analysis takes the SWOT a bit further, and gets you thinking on how should you form your strategy. However, it still is frozen in time and does not quantitatively give you indicators of blindspots and early warning. It is however a better starting point.
Happy (competitive) selling!