In his writings, the master tactician Sun Tzu wrote that aspiring generals should “Know the enemy and know yourself in a hundred battles” so that they “never be in peril.” This is essentially the goal of SCOT analytical practices. Companies must know their own capabilities and anticipate future possibilities if they want to claim victory and avoid defeat.

Overview: What is a SCOT analysis?

A SCOT, or SWOT, analysis provides a fundamental overview of a company’s strategic position by examining its current situation alongside outcomes in the immediate or distant future. SCOT stands for strengths, challenges, opportunities and threats. The SWOT acronym is identical except it substitutes the “C” for challenges with a “W” for weaknesses.

3 benefits of SCOT analysis

The main benefit of SCOT is its broad range and focus on the potential. It provides a big-picture outlook on key issues and helps leaders shift their view to truly align with the objectives that matter.

1. Get perspective

One of the biggest benefits of SCOT sessions is exposure to new ideas, commentary and perspectives. Talking with different people, whether they are industry experts, current employees or even clients, can provide new insight about your situation.

2. Establish strategic goals

This kind of analysis helps you develop strategic goals for the entire organization. You need a unified strategy for the entire company to properly integrate various departments and teams. It’s a vital step in lean management practices.

3. Prepare and prevent

Another big benefit of SCOT is the opportunity to articulate and consider the future. Talking about some risks and worst-case scenarios out loud helps people come to terms with existential threats instead of just ignoring them. It also helps you prepare through business risk management practices and establish meaningful prevention methods.

Why is SCOT analysis important to understand?

Analytical practices are important to understand so you don’t underuse or misuse them. It’s easy to turn these meetings into a fantastic waste of time if you aren’t prepared to capitalize on them.

1. Know thyself

Just as Sun Tzu wrote in the Art of War, you must know yourself if you want to maximize your victories and minimize your defeats. Identifying your strengths and weaknesses paves the way towards informed decision-making. It helps you anticipate the practices or innovations that might be particularly beneficial or detrimental before you embrace them.

2. Foundation for future strategy

Another reason it’s so important to understand SCOT is because it sets the foundation for all other business strategies. You aren’t going to seize an opportunity you don’t know about or prepare for a threat you don’t recognize. If you aren’t careful, your analytical sessions can limit your ability to adapt to the future rather than prepare you for change.

3. Ideas versus solutions

Don’t get carried away when doing top-level analysis. Leaders and organizers need to remember that it’s all about ideas at this stage, not solutions. Ideas are theories based on facts and data. Solutions are developed and implemented as a response to those ideas.

An industry example of SCOT analysis

A private pizza chain with a few restaurants in a mid-sized city is thinking about expanding into a much larger metropolitan urban area in the same state. They examine their strengths and weaknesses through focus groups of employees and customers. They ask questions that include menu item preference compared to competitors, how quickly they can respond to a sudden influx of orders and user experience with their website.

They also need to analyze external opportunities and threats in their target location. What kind of expectations might city dwellers have compared to residents of their relatively small town? They try to figure out what kind of competition to expect, what kind of regulations they may be subject to and if their prices are competitive or prohibitive.

4 best practices when thinking about SCOT analysis

Like any kind of analysis, SCOT isn’t perfect and it’s not conclusive. It’s just one of many strategic tools you should use as part of your overall plan.

1. Plan and prepare to brainstorm

Don’t just sit down at a table and start talking off the top of your head. Give all participants notice ahead of time, provide prompts for the discussion and plan the location or style of these discussions. Encourage them to come in with as many relevant ideas as possible, and provide plenty of time for each person to voice their thoughts.

2. Keep it real

Focus on realistic scenarios. This doesn’t mean you should ignore or squash creative ideas, but keep the conversation within the realm of reality. Ultimately, the purpose of the session is to provide a framework for real policies and actionable strategy.

3. Balance critical thinking with imagination

Don’t be afraid to think outside of the box or venture into uncharted waters. Sometimes the best opportunities are those that lay just over the horizon. You won’t have to go all that far out of your way to get there, but you’ll never see them if you don’t explore.

4. Verify findings with research

Brainstorming sessions can expose all kinds of interesting ideas and concepts, but you need to verify these with data before you act on them. For example, you should confirm the possibility of certain threats before investing heavily in preparing for them.

Frequently Asked Questions (FAQ) about SCOT analysis

1. How do you do a SCOT or (SWOT) analysis?

Basically you start by setting a goal. This method is typically used for getting a tactical overview of a business situation, but has other applications as well. Once you’ve confined the scope of the analysis, you need to gather information then review, compare and verify your findings.

2. How do you record a SCOT analysis?

Everyone involved in the analysis should take notes and develop detailed documents as they go to serve as reference material in the future. However, the sessions and findings themselves can be recorded on paper or through audio-visual technology depending on your preferences.

3. What is a personal SCOT analysis?

This process describes the application of SCOT analytical principles to yourself as an individual. Your research can include past experiences, work history and honest opinions from friends or colleagues.. You can then use this information to anticipate what opportunities you are suited to seize and what potential problems could be particularly difficult for you.

After the analysis

The analysis itself is only as useful as the actions you take in response to the findings. Gauging your strengths means nothing if you aren’t willing to use them. Knowing about opportunities has no value if you aren’t willing to go out and seize them. That’s why you need to keep moving after your analysis sessions by developing and implementing specific strategies at every level of your organization.

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