How to Avoid the Really Big Mistakes
When DreamWorks creative superstars Steven Spielberg and David
Geffen announced they were not going to renew their contract with
parent company Viacom’s Paramount Studios, it made the news
everywhere here in Los Angeles. Viacom CEO Philippe Dauman told the
press the loss would be “completely immaterial” to his company.
Was this a bluff? Or did Dauman not research the potentially
catastrophic effects that losing this talent might have on his movie
empire? Consider the hits to come out of DreamWorks over the past
few years: Shrek, The Ring, Madagascar,
Saving Private Ryan … the list goes on. The message? Even
executives who run big businesses can make errors in judgment.
SWOT Analysis, a Proven Planning Tool:
a different scale, many owners of smaller companies commit the same
error every day—making decisions without doing adequate homework.
The best “homework” a small business owner can do is what’s called a
SWOT analysis. This is a proven strategic planning tool that gives
an organization critical visibility into its internal Strengths and
Weaknesses and its external Opportunities and Threats.
The bravado expressed by Viacom’s boss may be the leading indicator
of a bad decision that could ultimately impact the company’s bottom
line severely. Decisions by small company CEOs who don’t have the
benefit of a SWOT analysis can be even more costly. However, their
lack of financial depth may not allow as much room for errors in
judgments as a large corporation like Viacom has. What kinds of
unique insights might a SWOT analysis provide?
will force you to take a good hard look at your assets as a company,
the things you do better than anyone else, and the skills you and
your employees possess—skills that are more leading edge, brilliant
or simply more efficient than your competitors. These skills can be
leveraged into gains in the marketplace if employed properly.
your analysis, you’ll take an even harder look at your company’s
liabilities and the areas where you are vulnerable to challenges by
competitors. This could be weak customer service, products that
aren’t keeping up with changing demand, or a pricing structure that
doesn’t recognize where the market is going.
Your analysis may reveal openings in the marketplace where you can
take advantage of events and circumstances outside the company, such
as the weaknesses of key competitors or the sudden appearance of a
market need that you can address before your competitors recognize
could also give warning of the looming entry into your market of a
category-killing competitor, like a Wal-Mart offering generic
prescriptions for $4, an Amazon.com selling books online at
below-bookstore prices, or an internet telephone service taking a
big bite out of traditional phone company revenues.
Don’t Be Blindsided:
These are examples we read about in the newspapers, but every day
small business owners are blindsided by things just like this in
their own companies that they might have seen coming if they had
looked closely enough.
Performing a SWOT analysis is not difficult, although it does
require a certain objectivity about things we don’t always want to
hear. Perhaps Mr. Dauman should have taken a closer look—more films
were released this year by DreamWorks than Paramount. Interesting.
These days, all CEOs should take a very close look at the businesses
they run and ask themselves if they really understand their SWOTs,
and if they are confident that their strategic initiatives are
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