Regain Your Focus with SWOT Analysis

I was meeting this week with the CEO of a venture capital-backed company, and he was looking for some advice. I had invested in his first company that he sold to Johnson & Johnson. I had introduced him to his current company. I knew him, the company, and most of the people involved. Shortly after our discussion began, I stopped him dead in his tracks:

“Youre spending 90 percent of your time, energy and resources trying to fix problems, and only 10 percent on building your business. Does that seem right to you?”

I want to pose that query to each of you CIOs.

What Keeps CIOs Up at Night?

Looking over recent articles on CIO.com, it seems to me that the pendulum has really swung in an unhealthy direction for IT professionals, in general, and CIOs, in particular. The primary pressures you are facing and being forced to deal with have very little to do with building the economic value of your company. Some of you aspire to be CEO some day, but increasingly your job is more akin to that of a janitors clean it up, put things in their place, fix or replace things that are broken.

Some areas that are giving you headaches:

Sarbanes-Oxley (Sox) compliance Any impact it has on your bottom line is negative as far as I can tell. In fact, as noted in several articles in recent issues of this publication, the process of compliance often unearths areas lacking proper control, which then need to be fixed in order for you to comply, further draining time, money and energy.

Business Process Outsourcing Figure out how to get others to do what you and your team used to do and do it more cheaply, without any loss of quality or security. That sounds like fun!

Security Now, I know that security is important, but need it be such a dominant preoccupation within the CIO community? With the exception of a few of you, do you really need to be as secure as the CIA? Have you ever experienced a catastrophic breach? Do you have people and systems that will catch breaches and stop them before they become catastrophic? Do you really think that your competitors have IT SWAT teams who are out there trying to compromise your system to get access to critical competitive information? Is a social misfit geek going to transfer millions of your dollars to an untraceable bank account in the Cayman Islands? Is a drug cartel laundering money through your company?

(Oh, by the way, Im from the school that says that anything man can build, man can penetrate. If someone has the sophistication to mount a credible attack, youre probably toast.)

Are you building real value in the business? There doesnt appear to be much, on the surface. Perhaps youre contributing to avoiding some adverse outcome, but how do you measure those results? Why will your peers respect you? Why will your boss give you an “Attaboy”?

Strategic Planning 101: SWOT Analysis

Theres not a whole lot being taught in business school that was taught when I was a student (perhaps with the exception of accounting debits, credits, balance sheets have to balance). Even strategic thinking and competitive analysis has advanced by leaps and bounds. Michael Porter of the Harvard Business School has created an industry around his take on Competitive Strategy.

Still, good old SWOT analysis is an exception. My students today still draw the same two-by-two table, label each of the four cells, and cram as much stuff as they can into each to impress me.

SWOT analysis takes a look at Strengths, Weaknesses, Opportunities and Threats. As part of your companys strategic planning process, someone probably does this, or its equivalent. I believe that SWOT analysis can be empowering when applied in two ways.

First, apply it to the IT function.

Strengths: What things do you do very well that are important to your business? What would be the impact if you applied those strengths to tangential and complementary activities? Would it enable worry-free BPO (I know there is no such thing, but go with me on this)? Can you compress your supply chain? Can you optimize inventories in such a way as to significantly reduce them while at the same time improving customer service (www.smartops.com)? Can you master the use of Web services so that its adoption goes smoothly without any business disruption?

Weaknesses: How important are they once youve identified them? How can you strengthen those areas? How can you isolate their impact so that while they exist, they do little or no harm? What might happen if you ignore them? Might it be your cost structure, or the time to develop and deploy IT solutions?

Opportunities: Where are the low hanging fruit? Where might a modest improvement make a significant impact? What arent your competitors doing that you can for competitive advantage? What do your customers want that will improve their experiences with you? Can you exceed their expectations? Can you architect your infrastructure so that it can easily (thats a relative term) respond to strategic initiative being initiated by the business units?

Threats: What are the threats? What might their impacts be? Can they be avoided? At what cost? What if you ignore them? Can you achieve competitive advantage by preemptively addressing them?

Consider it in the context of the business SWOT analysis.

Once youve been through the initial SWOT analysis, work with the business unit managers to evaluate their SWOT analysis. Identify areas where you can help. Identify areas that you need to address to enable certain actions. Establish yourself as a key member of the strategic management of your company.

What Are Your Priorities?

It is human nature to be preoccupied with fixing problems. They are right there. They appear to require urgent response. But,

“When youre up to your [butt] in alligators, its hard to remember that youre there to drain the swamp.”

In his column “Bold is Beautiful,” (2/1/05), Gary Beach, publisher of CIO magazine, exhorted you to be bold. He cited an MIT study that only 13 percent of IT budgets were being deployed in efforts that had strategic value. Like Gary, I think thats out of whack.

Are you addressing things that are important, or things that are urgent [with credit to Stephen Covey for making this distinction clear to me]? If you take the time to do even a cursory SWOT analysis, you will have perspective to prioritize your efforts.

Frank Demmler is Associate Teaching Professor of Entrepreneurship at the Donald H. Jones Center for Entrepreneurship at the Tepper School of Business at Carnegie Mellon University. Previously he was president & CEO of the Future Fund, general partner of the Pittsburgh Seed Fund, co-founder & investment advisor to the Western Pennsylvania Adventure Capital Fund, as well as vice president, venture development, for The Enterprise Corporation of Pittsburgh.