Innovation and creativity are considered by many strategists a key factor of business success and prosperity. However, only one from six ideas achieve the goal and return profit to the organization. How to determine the potential success in innovative ideas? Many tools and methods are used to evaluate ideas such as pass-fail evaluation, evaluation matrix and SWOT analysis.
While these tools are initially used to evaluate organizational strategy and business opportunities, it can be used to evaluate innovation and creativity inside organizations to explore winning ideas. One of the clear and direct tools to evaluate different success factors of innovative ideas is a SWOT Analysis.
Download a free SWOT template at the end of the article.
SWOT Analysis Definition
A SWOT analysis is one of the methods that is used to evaluate strength (S), weakness (W), opportunities (O) and threats (T) involved in innovative ideas and strategies. It can be applied to products, services and strategies. Those four factors evaluate both internal and external factors related to a specific project, service or strategy.
The internal analysis includes both strength and weakness factors, while the external analysis includes opportunities and threats factors. Classifying the related factors of product success under the SWOT umbrella helps stockholders to identify the strong and weak points and subsequently helps to determine the right decision to turn a specific idea into a new product development (NPD) stage.
Companies do not necessarily have to have all the factors met on the same level in order to identify the opportunity. However, strategies can focus on two factors rather than the four factors. For example, the company may find a profitable opportunity in a specific project and decide to overcome the weakness to take the project to the production level.
The organization can form the strategy based on the different factors as following:
- Strength-Opportunity (S-O) – strategies target the opportunities that fit well with the innovative product strength.
- Weakness-Opportunities (W-O) – strategies targets overcoming the weakness to build opportunities for the new product or service.
- Strength-Threats (S-T) – strategies aim to identify the methods to use the product’s strengths to reduce the threats and market risk.
- Weakness-Threads (W-T) – strategies which builds a plan that prevent the product’s weakness from being influenced by external threats.
Using the SWOT Analysis tool
The SWOT analysis tool can be used on two different approaches. The first approach is an icebreaker tool used during strategic planning meetings. The second approach is as a tool for building strategy or exploring innovation.
The SWOT analysis depends on asking questions and finding answers related to each factor; strengths, weakness, opportunity and threats.
- What are the advantages of the new product or service?
- What are the product advantages over similar competitors in market?
- What strength points do people see in the product or service?
- What are the product’s unique selling factors?
- What weakness could be improved in the design?
- What issues should be avoided?
- What are the factors that reduce your sales?
- Does the production process have limited resources?
- What are the opportunities for the new product?
- What are the trends to take advantage of?
- How can we turn strengths into opportunities?
- Are there any changes in the market or government which can lead to opportunities?
- Who are the existing or potential competitors?
- What are the factors that can put business into risk?
- What issues can threaten the product on the market?
- Will there be any shifts in consumer behavior, government or market that can affect the product success?
SWOT Analysis Example
As mentioned earlier the SWOT analysis is initially used to evaluate and build organizational structure. But it can be applied in evaluating the success of new innovative products. In order to understand how to use the SWOT analysis tool, below is an example that shows the SWOT analysis for a new product development.
A company is specialized in designing mobile applications and would like to evaluate the idea of creating a new mobile application called Y App. The application is designed to create a social network for over-weight people to help them to succeed in their diet and build a challenging environment between them to help achieve their goals.
In order to evaluate the project idea, the company used a SWOT analysis template as in the following. You can download the SWOT Analysis template at the end of this article:
- Knowledge and experience: Our team has the skills and experience to build a professional application at responsible cost and high quality.
- Creativity and innovation: We have a talented design team that can create an eye-catching user interface (UI)
- Reputation: Along with our experience in the market, we have built a good reputation in the mobile app development business
- Experience: although we have experience with the mobile app business, we did not build a similar project before
- Brand: The new application needs to compete with powerful brands in the same niche of the market
- Budget: Since this is a new application, the budget allocations are very limited
- The project idea is unique and innovative which can lead the market
- There is an increasing number of people who seek this type of application
- The government is encouraging people to do more activities, which can be an opportunity to increase sales
- Many competitors are presenting their application at a very low price due to their long standing in the market
- Many people think that all diet mobile application are the same, which may be challenge the application to stand out in the crowd of competition
Based on the above SWOT analysis, the team has a clearer observation of the strengths, weakness, opportunities and threats that can face the new product development (NPD). The company may try to overcome the weakness and threats in order to turn the project into a successful product.
SWOT Analysis template
Companies usually depend on a SWOT Analysis template. It is a simple one page worksheet that organize meeting thoughts based on the strengths, weaknesses, opportunities and threats.
You can click on the link below to download our SWOT Analysis template and use it in your personal and professional experience.
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A SWOT Analysis is one of the successful methods to help companies understand the strengths, weakness, opportunities and threats that face organizations. However, we can use the same tool to drive innovation and creativity inside companies and projects. The SWOT analysis can help identify successful innovation opportunities and how to turn ideas into a successful product or service.