After nearly nine months of dealing with the COVID-19 pandemic, I've yet to find a leader who hasn't felt their world get rocked. Some leaders I've talked to have found themselves unable to conduct business the way they always had (i.e., face-to-face). For others, products and services they've always provided suddenly increased in popularity, and the demand quickly became challenging to meet. Some leaders faced difficulty getting the supplies they needed to deliver their final product because their suppliers faced issues such as reduced workforce and international shipping restrictions. Lastly, some leaders have dealt with employees and families exhibiting symptoms of COVID and the quarantine guidelines and procedures that go along with that. Although each situation was different in some regard, there is a common theme. Shutting the doors and waiting out the storm until things become normal again just wasn’t a viable option, and finding ways to operate under these less than ideal conditions was necessary for survival.
There’s no doubt that figuring out ways to successfully operate while under the grip of this novel virus has been a very unique, unplanned, and stressful ordeal, but it's one that leaders have to face head-on and get through. Exceptional leaders, the leaders we all strive to be, won’t get sucked in by the chaos and allow themselves to become drained. Instead, they'll use their energy to move the company and its employees forward to either maintain or create a competitive advantage they’ve yet to have. These leaders will embrace these uncertain times and step back to analyze the external environment around them with hopes of identifying future opportunities that may not have been available until this point. On the flip side, they will scan for potential threats, in order to guide their companies well.
5 types of Analysis
SWOT Analysis
Those of you familiar with SWOT analysis know that the threats and opportunities I speak of make up the “O” and the “T” in SWOT. For those of you who aren’t as familiar with SWOT, the other two letters, the “S” and “W,” stand for strengths and weaknesses analyzed internally within the organization. Although internal analysis is essential for all businesses, times like a pandemic require a significant amount of focus to be placed externally, and there are many ways that leaders can scan the external environment for these opportunities and threats. I'll take you through several of these analyses in hopes that you may consider conducting at least one of them to set you and your companies up for greater success as we navigate through COVID and beyond.
STEEP Analysis
The first approach is through a STEEP Analysis. This analysis looks at sociocultural, technological, economic, environmental, and political factors that may pose threats and offer opportunities at some future point in time. Leaders simply need to research by reading trade journals, following the news, engaging with experts in other fields as well as their own, searching the web, and ask themselves how these future trends they’ve discovered could change their current clients' or customers' behaviors. It’s also extremely beneficial to consider how the trend might alter prospective clients' and customers' behaviors. There might be an opportunity to appeal to prospects the company hasn't been able to up until this point.
Now suppose I was considering some technological factors that could affect the financial planning firm where I work. I'd look at the new technology trends in our industry and think about how implementing those trends might impact our current client base. I’d contemplate whether the new technology would be well received and considered a value added to our service. I’d also consider if the technology upgrade would entice new clients to join our firm and if it justified the price tag on the upgrade. Although I could go on and use several other factors we could explore as an example, I highlight technology because we actually had to look hard at it during the onset of COVID. The use of technology became a top priority and a challenge for the firm as face-to-face contact, our preferred way of meeting clients, suddenly posed a threat to the age bracket most of our clients fall within.
Porter’s Five Forces
Another way to identify potential threats looming on the horizon is by exploring Porter’s Five Forces. This analysis forces leaders to determine whether the threat of the following: potential new market entry, suppliers, buyers/customers, existing rivals, and substitution fall within a low, medium, or high range. Like the other analyses covered, understanding the Five Forces and applying it to a firm can help leaders adjust their overall business strategy to remain competitive and profitable. Using my firm again as an example, we’d use this tool to consider whether COVID suddenly made it easier or harder for new financial planning firms or advisors to enter the industry. We’d determine if our clients could easily switch to another firm or advisor, and we’d explore to see if our rivals or competition were doing anything differently to give them a competitive advantage over us. We’d also need to find out whether substitutes for our services existed that clients may turn to instead of our firm. Once these five forces have been evaluated and assigned a level of threat, focusing on our current strategy and determining the changes necessary to lower the threat levels could be more easily accomplished.
Competitive Analysis
Another way for leaders to identify opportunities and threats is to do a competitive analysis of their major competitors. This analysis is completed by researching the products and services the competition offers, their prices or fees, their reputation, unique features, ongoing support, marketing and advertising, location, financial data, and market share. Once all or most of this information is compiled, a side-by-side analysis can be completed in order to identify areas for potential opportunities and threats. To do this analysis for my firm, we’d look at the fees advisors in the Rochester area are charging their clients for the services they provide. We'd look at what they are doing to market their firms, and see if there is something unique that the competition is offering that gives them the upper hand. Some of this information might seem difficult to uncover; however, it might be easier than one would think with the internet, company websites, and a little creativity during the investigation.
Stakeholder Map
Lastly, a Stakeholder Map, or also referred to as a Stakeholder Matrix, is another tool that can be utilized. This tool is used to analyze the firm's stakeholders, who are individuals, or groups, interested in an organization's decisions and activities, to determine their level of cooperation and potential to threaten based on the firm’s current or proposed business strategy. This map is broken into four quadrants titled non-supportive (low cooperation, high threat), marginal (low cooperation, low threat), supportive (high cooperation, low threat), and mixed blessing (high cooperation, high threat). The stakeholders to focus attention to would be the non-supportive because they have the greatest probability of losing interest in working with or supporting your organization. Every time a new strategy is proposed, this exercise should be completed to get an idea of how stakeholders may react to the change.
I realize I’ve shared a lot of information and tools, and as leaders, we have a lot on our plates to deal with right now. However, COVID-19 has changed the world we once knew, and the "normal" we once experienced is probably something of the past. We all must seriously take the time to explore the new environment outside of our organizations. There may be something looming that has never been considered a threat and could potentially hurt our businesses and competitive advantages, or opportunities could surface that could project our companies well into the future above the competition. In either case, finding the time now to research and run these analyses will aid in a more successful strategy to lead you into the future, past the COVID pandemic.
Additionally, once COVID is over (hopefully sooner than later), I'd encourage you to make sure these analyses are done regularly. Time is always moving, things are still progressing, and people are ever-changing. To remain competitive, you must continuously scan the horizon for threats and opportunities. As long as time is ticking, they will always exist.
Refrences
Michael Porter. “The Five Competitive Forces that Shape Strategy.” Harvard Business Review Reprint # R0801E. Boston: Harvard Business School Publishing, January 1, 2008
Michael Porter. “What is Strategy?” Harvard Business Review Reprint # R96608. Boston: Harvard Business School Publishing, October 31, 1996.
Pankaj Ghemawat and Gary P. Pisano. “Sustaining Superior Performance: Commitments and Capabilities.” Harvard Business School Publishing Case # 9-798-008. Boston: Harvard Business School Publishing, July 31, 1997
Pankaj Ghemawat and Jan Rivkin. “Creating Competitive Advantage.” Harvard Business School Publishing Case # 9-798-062. Boston: Harvard Business School Publishing, Revised February 25, 2006.
Wheelen, Thomas L., J. David Hunger, Alan N. Hoffman, and Charles E. Bamford (2018), Strategic Management and Business Policy: Globalization, Innovation, and Sustainability (15th edition). Pearson. ISBN-13: 978-9-13-452205-0
