Sunday, June 10, 2012

Outward-Facing Introspection

Internal organizational analysis, such as the kind discussed in the HBR Spotlight "Capitalizing on Capabilities" is not always an introspective activity for a company, it's also a way to assess capabilities in order contrast and compare them to competitors, sometimes with the purpose of trying to adjust internal capabilities, so that if there are an asymmetric advantages in the market, on the part of the company, that will lead them to gain market share, the company will know of it and know how to exploit it. So, in a way, a company's introspection is never without perspective, the perspective of how well they would do in the market in comparison to their competitors.

To be able to assess against competitors as well as the market, there a need for keen insight into one's own company. There is a lot to know about one's own company that may actually be hard to know when looking from the inside of the company. So, the factors that ought to be considered when conducting internal analyses are not not limited to the company's capabilities and resources or what uniquenesses make the company most competitive, rather the external market's and competitors' factors are critical to having good measure of the company. An external perspective of a company's internal affairs is usually a complementing perspective when conducting internal organizational analysis.

The acronym SWOT, in many ways encapsulates the idea of a comprehensive approach to internal analysis in that it enables a company to understand that the particular Strengths, Weaknesses, Opportunities, and Threats (SWOT) amount to the factors that a company should consider as it develops a strategy that is adaptable to any company, while exposing to the officers of the company, the specificities and uniquenesses of the same company, or the lack thereof. So, if a company accepts to employ the methods required to employ SWOT Analysis, the next issue that could arise would be whether the company is utilizing accurate and complete data about its own company.

To be able to get to the correct information about one's own company, a significant amount of research and investment may be required. The amount of investment may also vary depending upon the status of the company. If the company happens to be a startup, then, some sorts of investment in market research of analogous companies may be desired, whereas if it were an already established company, the data and the correspondingly needed investment in the required resources will vary and depend on the already existing data. The essential point of SWOT is that from an internal company analysis perspective, strengths and weaknesses are factors that are inward looking but that are very much informed by opportunity and threats that could represent external opportunities. Companies would be do themselves a great deal to look out and look in during internal organizational analysis.

Question: Should Startups analyze the strategies of other comparable companies in developing their own strategies?

[1] Dave Ulrich & Norm Smallwood. Capitalizing on capabilities. Harvard Business Review (June, 2004.): 119-127.

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