This post is the first in a series of guides to help our readers better prepare for their EIC grant proposals. You can check this series of posts here or ask us for an evaluation here.
Many people do not know how to properly do a SWOT analysis. Unfortunately, that is why this relatively basic tool is often overlooked, even in the business world. There are even CEOs that thought badly of it, but came around and now swear by it after reevaluating and realizing they were using it wrong! In this post, we want to help you make the most out of this simple tool, so that your business may grow and succeed, as well as your proposal be successful, if you’re submitting one.
A SWOT analysis is one of the most well-known tools for business and strategic planning. It focuses on internal and external factors of a business, divided between positive and negative aspects. The positive aspects are deemed Strengths and Opportunities, while the negative aspects are Weaknesses and Threats. Strengths and Weakness are internal aspects, while Opportunities and Threats are external aspects, hence the SWOT acronym.
While it is one of the most prominent analysis types in business, there is still much confusion about it, especially regarding the Opportunities quadrant. Ordinarily, people assume Opportunities to mean possible projects, i.e., opportunities to do something, instead of present circumstances that can improve the company’s or the project’s situation.
Filling a SWOT matrix
While having only four quadrants, a SWOT analysis can be filled in different ways. The most usual way fills the quadrants in the order the acronym presents them: Strengths, Weaknesses, Opportunities and Threats. This order leads people to think of internal aspects of the project first. Filling the SWOT matrix in this way, however, has garnered growing criticism, mainly from specialists that defend that thinking of the internal aspects of the project first can lead to shortsightedness and an inability to see the bigger picture.
These critics defend that the matrix should be instead filled starting with aspects external to the project, mattering not if Opportunities or Threats are done first, to foster seeing the bigger picture and then focusing on the internal aspects. That way, the project is seen from the outside in, first looking at the environment it is situated in, so that the project’s particularities can then be observed. The way the SWOT matrix is filled out, however, is a matter of preference.
It is also important to try and be specific when filling out a SWOT matrix. Avoid one- or two-word descriptions, as they are too vague and not appropriate for a proper analysis. For instance, the word “price” could be put into every quadrant, each with a different meaning, but bringing no clarity to the analysis. “Price” as a Strength could be a low product sales price, as a Threat it could be competitors’ prices or their ability to leverage their prices to undercut your company and so on. Short, descriptive sentences presented as bullet points are key to a lean, but still effective SWOT analysis, that could later be expanded upon.
As already mentioned, Strengths are internal positives aspects of your project. Meaning they are your projects strong points, even if you don’t take the eco-system into consideration. They can be things like high-quality products, skilled staff, proprietary technologies, a strong brand, among others.
Strengths are things in your control that are either providing you with an advantage or make you stronger in some aspect. Some examples are “not only is our process the most economic so far, but our patents ensure the safety their use from competitors”, “our CEO is a known name in the tech industry, making end-users have confidence in our gadgets’ quality”, “our size and vertical integration make our production costs low, so we can provide the cheapest product and the best cost-benefit”.
Weaknesses are internal negative aspects, or areas within your business that need to be addressed, in which you are inferior to the competition or that could provide roadblocks in the future. Addressing Weaknesses can sometimes be mentally taxing, as they are issues theoretically within your control, leading to an idea of failure, however, all organizations have Weaknesses and, more importantly, addressing them will spur improvements.
Weaknesses can be things like high turnover rate, bad communication inside the company, resource limitations, weak points in products where the competition excels, etc. Notice how in both Strengths and Weaknesses, even if the competition can be mentioned, the Strength/Weakness is something in your control. Some examples are “our product is only sold in one retail chain, while most competitors sell in at least three”, “our video platform has no space for short-form content, which is a growing market segment”, “our low profit margin could jeopardize our ability to keep prices competitive”.
They are positive external factors to your project/company, that could allow it to grow, expand or otherwise make its position stronger. They are not possible projects, but instead are more like beneficial circumstances. For instance, if there is a new legislation requiring an environmental certification then, for example, an opportunity would be represented by having already that certification that would bring a first-mover advantage in that market segment.
Opportunities can be things like lack of competition in a market segment, a new emerging market, an untapped or under-serviced market segment, positive media coverage, etc. Some examples are “our pie tins have become popular as flying disks thrown in games”, “our partnership with local colleges provides us with highly qualified interns and professionals”, “the growing environmental concern improves our standing as electric car manufacturers”.
They are external factors that could negatively impact the project/company, things like regulatory changes, negative media coverage, supply chain disruptions, natural disasters and emerging competition. Some examples are “the production of EV batteries is hindered by the current availability of lithium”, “with the growing environmental concerns, our plastic products will have to be discontinued in time, especially straws, bags and bottles”, “due to our location in Japan, our nuclear power plant is highly vulnerable to earthquakes and tsunamis”, “the initial customer excitement about our virtual reality segment might cool down and as a consequence, our company’s stocks can lower in value”.
Cross-analyzing quadrant data
For a simple SWOT analysis, this is it. However, for a EIC proposal, you will need to do additional analyses by cross-analyzing different quadrants of the SWOT analysis on Phase 2. These analyses are presented as four questions, each relating an internal and an external aspect. Of course, it might not be feasible to relate all bullet points of a quadrant to all aspects of a different quadrant. In that case, they should be matched/related whenever possible.
The four questions that will guide the analyses are:
- To which extent your Strengths will enable you to seize these Opportunities?
- To which extent your Strengths will enable you to resist to these Threats?
- To which extent your Weaknesses will impede you to seize these Opportunities?
- To which extent your Weaknesses will exacerbate the consequences of these Threats?
Some possible answers to individual cases are:
- “Our award-winning marketing team (Strength) will enable us to quickly develop and release marketing campaigns on our app’s short video capabilities, reaching this market segment while it is still emerging (Opportunity) and taking full advantage of the low competition environment before other competitors can join the market.”
- “Our highly effective and patent-protected processes (Strength) will help us resist emerging competition in our market segment (Threat), as the processes they develop will not be effective without much previous R&D.”
- “Our high turnover rate (Weakness) could prevent us from being able to take advantage of the expected growth for our market segment (Opportunity), as a lot of man-hours will be spent with training and onboarding procedures instead of being used focusing on our main product.”
- “Our need for only highly qualified experts (Weakness) can create serious issues if compounded with both with the entrance of new, better funded competitors in the market and the risk of employee poaching (Threats), as the high training time required for each expert to be fully functional could be wasted if they are poached by competitors, compromising our ability to perform in the market.”
It is fundamental to note that a SWOT analysis’ quality will improve according to the intimacy of the one who performs it with the business/project. Ideally, a team of key staff should be employed to perform at least the brainstorming that precedes the SWOT analysis. It is a very versatile tool, that can be very useful if used right and lends itself to other variations, like analyzing Opportunities and Threats in relation to competitors Strengths and Weaknesses.
While knowing how to use it properly could be a challenge, we hope this guide can clarify its use for our readers. If you followed us this far, your SWOT analysis and follow-up questions for the EIC proposal should be ready to go, however if you want help with you EIC grant proposal, do an evaluation!