SWOT Analysis: Is Product Development an Art or a Science?
Why do so many companies fail? Some fail before they get big enough to achieve financial stability. Some fail while they are still small-cap companies. Sometimes even mid-cap companies go out of business? What do they (usually) have in common? Do they treat business as a science, or as an art. In fact, to be really successful you need to use both sides of your brain. This is why the number one predictor of the success of new business is their business plan and who they have as a business consultant. Even Benjamin Franklin and Thomas Edison had mentors and guides.
This is where you get to display the brilliance of your vision. Truly. Because if you don’t think it’s brilliant, no one else will either. The response you get from potential investors, partners, clients, customers and suppliers is all a direct reflection of how much you believe your technology will benefit the world. Think about any synthetic medicine. Someone in the past discovered a natural substance that had curative properties. Later, someone else figured out a way to synthesize and mass produce a medicine that had the same (or better) curative properties. How did that second person get the synthetic medicine to market? How did they get approval from multiple government agencies to sell the medicine? How did that second person convince a manufacturer to make the stuff? You already know this kind of thing doesn’t just happen. Somehow you to have to move from thinking about the product in science terms to thinking about it in market terms. That’s where your project background comes in, it’s the proper instrument for revealing why and how your idea is worthwhile.
A good project background is written in a style that is easily understood by people who have no background in your realm of science. You might logically think that you’d need to explain the what, why, when, where and who. That’s exactly what you’d do if this were a doctoral dissertation. Except that’s not what usually helps people to understand why they should invest in you or approve your product. Instead explain (briefly) the ‘why now?’, ‘why you?’ and ‘why this product?’ You’re already the smartest person in the room when it comes to your product, so make sure your project background is easily appreciated by people who are hearing from you for the first time. Your project background is the entry point for garnering interest from potential investors and partners. It has one job to do – it needs to entice potential investors and customers to learn more about what you are bringing to the world.
SWOT (Strengths, Weaknesses, Opportunities and Threats)
This is where so many businesses fail. Founders and Inventors are great at founding and inventing. When it comes to identifying and eliminating businesses challenges, as you grow, a whole different skill set must be applied. If you have the skill set, go for it! Make it happen. You shouldn’t have much trouble finding investors. But, if you don’t have the skill set, you can quickly kill your nascent enterprise by not doing a proper SWOT analysis.
What goes into a proper analysis? First, dive into the Strengths. Is your technology/product easy to copy? Does it solve a huge problem or is it for more of a niche market? What are you so good at that people recognize you as a top performer? What problem does your product solve? Where are the people (the market) who will throw money at you to solve their problem? How will you find those people? How will close deals with those people, thus producing revenues?
A Strength isn’t a strength if it is easy for someone else to claim that they offer the same thing. Examples of alleged strengths we’ve heard over the years are; “I outwork everyone else”, “My team are all geniuses in their fields”, “We are awesome”. Proper Strengths look something like this; “My product X solves problem Y for people who have need Z. I do this at price point W.”
A Weakness is something your competitors can smell, your potential investors can smell and regulatory bodies can smell. So don’t ignore the smell, own it. State all the Weaknesses as facts which are then directly correlated to your Opportunities. For our example we will take the fact of Debt. Unless you are extremely well-funded already, you probably have, or need to take on, debt in order to finance your company. Debt is a tool. You must show that you use Debt wisely.
Opportunity is where you talk about your target market. Where are they? Why do they need your product? What is unique about your offering? What will motivate your target market to come to you? How will they find you? Are you using a Sales team or a Closer? Those are two completely different ways of negotiating and securing contracts. Is your market located in one country or can your product go international? Your analysis should show an abundance of Opportunities will a special focus on the top two Opportunities.
Continuing with our example of Debt. In the Weaknesses section you say something like “Our current debt to sales ratio has no meaningful figure”. This means you don’t have any significant sales yet. Then you say “Our cash burn rate is X% with a reserve funding of $YYY,YYY. Therefore we can operate for another T months without having to receive any revenue”. The point is to show your staying power as an Opportunity for potential investors to jump in and infuse cash into your business.
Threats. Ah threats. Without them business would be incredibly boring. We’re not talking about mafia threats here. These kinds of Threats fall into the ‘What if?’ category. You’re already good at this or you wouldn’t have been able to create what you’ve created. The Threats section of your analysis is where you talk about potential disruptions to your business. For example, if you make everything in one facility what happens if your facility can’t produce? Or what happens if your giant competitor decides to steal your patented idea, and you have to sue them? Threats are best handled by showing how you have (brilliantly) positioned yourself to use your Strengths to negate the effects of the Threats, should any of the Threats occur.
That's the what. So what you say?! To minimize risk and maximize chances for success. Plain and simple. As you continue along your development path, try it out next time!
Looking for more resources on SWOT? Try these four resources: https://www.entrepreneur.com/article/293196
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