While we briefly discussed the concept of SWOT in Chapter 2, VoC in the Product Development Process, it is important to note that this is one of the most fundamental building blocks in understanding your market and your position within that market. It provides a basic model that yields direction and serves as a basis for the organizations marketing plans.

The word SWOT derives from the initial letters of the words Strengths, Weaknesses, Opportunities, and Threats. Factors internal to the organization are considered either strengths or weaknesses. External factors are classified as either opportunities or threats. The SWOT analysis assesses the organizations strengths (what the organization can do), weaknesses (what an organization cannot do), opportunities (external influences which are favorable to an organization), and threats (external influences which are potentially unfavorable to an organization). The SWOT process should ideally be a multi-disciplined view of the organization and/or the product. To this end, if you are performing a SWOT for an organization, it is best to get all factions of the organization to share their view. If you are responsible for marketing, you may not have a good view into supply-chain issues or opportunities. Likewise, if you are doing a product SWOT, at a minimum you need to have input from sales, marketing, and engineering, but even here, you can see where something like supply-chain could have a large impact on a products' viability. Consider the first iPhone. While many would consider the iPhone a product breakthrough in both engineering and marketing, it was through the sourcing of Gorilla Glass that was one of the pillars of its success. Would it have been as successful if it had a plastic cover (as per the original design) or a glass that scratched easily? I seriously doubt it.

To briefly summarize, the main purpose of a SWOT is to determine which things will be or could be a benefit to the organization, and which things must be addressed or overcome to achieve the desired result. This is a key consideration as you prepare for your VoC. Not only will it give you a better understanding of your organizations internal capabilities and shortcomings as well as the outside opportunities and challenges, it will also give you a better foundation and insight to new product opportunities as they present themselves during your VoC.

When performing an organizational or a product SWOT, it is necessary to examine the things inside your organization that contribute to your position in the market, as well as those things external to your company or your control. The things of an internal origin are those contributing factors inside your organization you, or your organization, have a high amount of control over and you can take steps to modify or change (even if it is not immediate). Conversely, the contributing factors of an external origin your company may not have any or limited direct control over. The internal origin factors can best be thought as contributing to an organizations or a products Strengths and Weaknesses, while things of an external origin are often thought more as Opportunities and Threats, as they often become contributing factors to the company's future success or demise.

Figure 3.1 – SWOT analysis

Strengths of an organization are its internal capabilities and resources that it can put to bear to develop a competitive advantage over others in the marketplace. A well-developed list of strengths articulates the firm's advantages and what it does well. Examples of strengths include:

Weaknesses may be viewed as the absence of key strengths in an organization. A robust list of weaknesses will help an organization to understand what is done poorly and what can be improved. As an example, the following are examples of weaknesses:

Sometimes, an organization's weakness is the flip side of its strength. As an example, large multinational companies often have larger engineering and product development resources allowing them to allocate a lot of resources to a new development or product. While this is true, many times these same companies have difficulty in reacting quickly to changing market dynamics due to their sheer size and consensus required in creating a new product or offering.

Opportunities is an evaluation on those things that are outside the four walls of an organization that can yield new opportunities for profit and market expansion. Some examples include:

Some may not see an opportunity from market consolidation, but this may actually be one of the rare times when an industry follower has the chance to overtake the incumbent in a market without a large expenditure for a new product line or marketing program. How many times have we seen a large company acquire the assets of a successful market leader, only to have them change the offering or business model of the company that was acquired? In the last few years, we have seen companies like Honeywell acquiring the assets of safety technology companies like Sperion and RAE gas detection.

If I am a customer, in particular, a small customer of those companies, I may be asking if a company like Honeywell will service me the same way that the smaller company did, or is this an opportune time to leave? Or take the case of Google, who acquires companies at the rate of one per week since 2010. They have acquired such companies like Picassa (photo storage and sharing), Bump (contact management and sharing), and Feedburner (RSS syndication). After buying Bump in September, 2013, it was gone a scant six months later. It is also reported that Feedburner may be next to be jettisoned after the demise of Google Reader. Certainly, you could see if you had a competing technology or product to Bump or Feedburner, and given the market turmoil from these acquisitions, you may end up in a much more favorable spot largely through no action on your behalf.

Threats, as external factors can provide new opportunities for growth, they can also provide new threats to the profitability and ongoing vitality of the organization such as:

Often times, the drive to substitute products in driven by cost and availability. Consider how the effect of rising electric prices affects the adoption of gas in a neighborhood. The higher the prices rise, the more pronounced the migration to the new fuel. Many utilities even plan for this by creating power plants that can use multiple sources of fuel based on price and availability.

To illustrate how technology and consumer tastes can affect your market, consider if you were producing recorded music on cassette tapes. Unless you were savvy enough to see the future of CD's coming along and able to make that switch to this new medium, you were likely out of business. And even if you did make the switch to CD's, if you are not cloud based at this point with the ability to stream your music to your listeners, you probably have a very small market indeed.

As we look around, we can see how the threats and opportunities from yesterday are yielding the new reality of today. Consider banking (in-person tellers to ATM's), Computers (desktops to tablets to phablets), Computer storage medium (floppy disks to hard disks to USB to the Cloud), Researching (Libraries to Google), and a multitude of things all around us.

To better understand the market dynamics embodied in a SWOT, a matrix is often used to exemplify those variables and develop strategies to address them. You should fill out this matrix like the one presented documenting the internal variables, which are helpful and harmful (strengths and weaknesses), as well as the external variables which are helpful and harmful (opportunities and threats).

Figure 3.2: Completed SWOT Matrix with example data

As we discussed in Chapter 2, VoC in the Product Development Process, when performing a SWOT, it is far preferable to perform not only an internally focused SWOT, one which is done by the people in your organization based on their experiences and understanding of the market, but also a customer-focused SWOT (preferably with the assistance of your customers) that seeks to present your strengths and weaknesses from your customers perspective to ensure that the customers' voice is being presented in your analysis. As we know, a company or products strength is only a strength when it is useful in satisfying the needs of a willing customer.

Strategies should be developed to analyze an organization's weaknesses and how to turn them into strengths, and understand threats and how to turn them into opportunities. It is also a worthwhile exercise to review multiple dimensions together to develop an Organizations strategy such as:

You can modify your SWOT sheet to also both view the company or product SWOT and also develop key strategies to address each factor by developing and documenting your strategies in the outer boxes:

Figure 3.4: Completed SWOT Strategy Matrix

Some readers may also be familiar with the term PEST or PESTLE analysis that is also used by some organizations. PEST stands for Political, Economic, Social, and Technology. Expanding the analysis to PESTLE adds Legal and Environmental factors. I following briefly summarizes each, but most would consider this as a part of the opportunities and threats section of a SWOT analysis: