Where will you get Innovative Ideas

As someone who has facilitated many, many strategic planning sessions, I am very familiar with the acronym SWOT.  Either loved or hated, SWOT has been an integral part of strategic planning sessions for over 50 years.  Originally developed at Stanford University, SWOT represents a 4 quadrant view representing:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

The purpose of SWOT is to understand the interplay of internal capabilities of an organization with the external activities or entities that might interact with it.  This grid is often displayed something like this:

A typical SWOT analysis begins with an examination of the strengths and weaknesses of the organization.  A good facilitator will make sure that this process is done with an eye towards accurately representing the capabilities of the organization (strengths) and where the organization is vulnerable (weaknesses). Many organizations, especially those that don’t use any outside facilitators to assist in the strategic planning process, often overstate the organizations strengths while understating their weaknesses. Organizations with sound senior management know that it is necessary for a true accounting of the organizations state of capability, without being brutal. Doing this as a complete self-assessment is often hard to pull off.

From an external view, opportunities represent some action or activity that represents new growth for the enterprise.  This could be a new product or service, expanding into a new market or anything that positively moves the organization forward.  Threats are actions or activities (or entities) that would negatively affect the organization.  This could be a new competitor, a rule or regulation that limits the enterprise or any action or activity that results in a negative outcome.  Again, it is critical to carefully brainstorm these to come up with a realistic list of opportunities and threats. There is no benefit to overstating or understating either opportunities or threats.

While many cannot appreciate the often tedious nature of SWOT, the end result, if performed properly, allows for the organization to use SWOT for strategic planning purposes.  By combining each of the 4 quadrants, the organization can determine a series of offensive or defensive actions or strategies and then prioritize those across all of the proposed potential objectives to create a target list for a specified period of time.  Here is how the 4 quadrants align:

Strengths + Opportunities = INVEST – When an organizations strengths align with an opportunity there is a clear path to invest in capitalizing on that opportunity.

 Strengths + Threats = DEFEND – If an organization has strengths in an area that represents a threat, then the organization is in a position to use its strength to ward off the threat.

 Weakness + Opportunities = DECIDE – If there is a clear opportunity, but the organization is weak in that area, then a decision has to be made. Does the weakness mean that the opportunity should be set aside?  Can the weakness be remediated, converted into a strength in order to properly address the opportunity?  Should the organization seek a collaboration with another entity that has strength in that area?

 Weakness + Threats = DAMAGE CONTROL – When a fundamental weakness aligns with a threat, then it may be that damage control is the best outcome.  What can the organization reasonably do that limits the downside of the threat?

From an innovation standpoint, any of these 4 alignments could be the target of a creative idea.  Certainly, no ideas of any kind, targeting any facet of the business should be overlooked.  But for those organizations looking to get innovative, I would recommend starting with the opportunities.  Assuming that you have a realistic list of real opportunities for the organization, align those with the strengths and weaknesses and brainstorm potential objectives that might result.  If you are a bank that has a strong commercial lending team and there is a new market nearby that is underserved with commercial lending, then expansion into that market is a clear opportunity to invest.  Similarly, if another institution decides to open a lending office in one of the geographic areas you serve, your strengths in commercial lending position you to proactively work against the threat of a new competitor.

I have recently been writing about the attack on OD fees. While the urgency of that issue has waned given that proposed rules restricting ODs has been tabled (for now …), the attack on ODs is a clear threat for any financial institution and needs to be included in a SWOT analysis.  Setting aside other potential threats, what opportunities do you have on your SWOT analysis that might represent the very action that should be the focus of creative ideation at your institution? Faster Payments is or should be on your opportunities list.  How about the option to change how service charges are calculated and assessed? Or perhaps the opportunity of encouraging local crowdfunding for new startups that do not qualify for traditional credit?

Trust me, there are lots of opportunities for financial institutions to consider. We simply have to have the will to openly and honestly assess what our strengths and weaknesses are and align those with a realistic view of opportunities and threats.  Securing against threats is important and should not be ignored but brainstorming opportunity is more fun, more exciting. And if you are not in the habit of getting innovative ideas out in the open across your enterprise, you would do well to focus on something like opportunities as a means to get the process working, then turn your attention systemically across all 4 quadrants of the SWOT analysis.  I value your feedback and stand ready to assist you in making innovation a reality at your organization. You can reach me at dpeterson@bankers-bank.com