Written by
Chuen Seet
When it comes to conducting a company analysis, business leaders and strategy consultants have a variety of methodologies to choose from. Today, we’ll be comparing the pros and cons of two common analysis models – SWOT analysis and capability-based planning – and creating a company analysis example for each.
SWOT analysis is an extremely popular method of conducting company analysis that’s been around since the 1960s. A SWOT analysis categorizes various broad facets of a business into four categories – Strengths, Weaknesses, Opportunities, and Threats – arranged in the quadrants of a 2x2 matrix.
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When it comes to company analysis, SWOT has several advantages: it’s relatively quick and easy to conduct, it’s easy to understand, and it encourages objective analysis. A completed SWOT analysis makes a great one-sheeter – and it makes a good first step towards initiating the strategic planning process.
However, in terms of company analysis, SWOT also has some serious limitations as well. As you can see from the SWOT analysis example in the next section, a SWOT analysis only provides a broad, superficial, static view of a business.
A SWOT analysis describes what conditions a business faces, but it doesn’t explore why the business ended up in that state or how the business can improve to achieve its strategic vision.
Below is a SWOT analysis example for a furniture retail chain that we used in this step-by-step walk through of the strategic planning process. While this style of company analysis is useful, you can see from this example that SWOT doesn’t provide any level of prioritization or define any actionable steps:
Capability-based planning, also known as capability modelling, on the other hand, is a much more modern approach to company analysis and business planning.
Developed in the 1990s, capability-based planning was originally designed to address post-Cold War military security needs. As you might imagine from its origins, capability-based planning is rigorous, thorough, and forward-looking.
Although not nearly as common in the business world as SWOT analysis, capability-based planning has been adopted by more forward-thinking businesses, particularly for developing systems and IT-related strategies.
A capability-based company analysis looks at a business through a strategic framework. It compares a business’s future state to its goal state – and then examines what people, processes, and physical objects the business will need to leverage, enhance, and develop to realize that future state.
Capability-based planning has numerous advantages over SWOT. Capability-based planning creates a holistic view of an organization, focuses directly on what a business needs to do to execute its strategy, ensures that nothing is missing, provides prioritization, and aligns all departments. Basically, after using capability-based planning, the business has more than a company analysis – it also has an actionable path forward in the form of a strategic roadmap.
Does capability-based planning have any disadvantages? In the past, capability-based planning was time-consuming and a nightmare to organize. However, with modern business planning software like Jibility, business leaders and consultants have an easy-to-use, streamlined platform for conducting a company analysis with capability-based planning.
Below is a company analysis for the same exact furniture retail chain using capability-based planning:
But while that may look extremely complicated, this is just the back-end view of all the components and considerations that went into this analysis – showing the hidden links between their strategic objectives and the specific actions a business must take to improve its capabilities to achieve those objectives.
When it comes to presenting the finished result, the company analysis looks more like the example below – an actionable, easily-shared strategic roadmap that maps the company’s future:
Jibility is a free tool that enables you to efficiently apply capability-based planning techniques to analyze your business and develop a strategy roadmap that bridges the gap between strategy and implementation.
Jibility provides step-by-step guidance, pre-built content libraries, a drag-and-drop cost-benefit calculator, and other features to make sure your strategic analysis and planning is complete, thorough, organized, and easily shared – without the massive time costs!
Capability-based planning can rewire a traditional approach to project planning. This is how the two approaches can work together.
Business capability mapping helps you to identify what needs to change. There are two key frameworks for deriving your business capabilities.
