Key Points

• A SCOT analysis takes a close look at our organization’s current situation.
• Proper analysis will allow you to establish long-term goals.
• SCOT analysis also can act as a preventative measure for future threats to your organization.

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 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 into 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 It Matters

A company that isn’t taking stock of how it’s performing is doomed to failure. Taking the time to analyze where your company sits, and how it stands to perform in the future is shoring up your defenses. Further, it allows you to see where you’re succeeding and where you’re failing.

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 toward 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 vs. 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 strategies.

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.

Other Useful Tools and Concepts

Looking for other tools to gain some insight into your production? Understanding how warning limits work is a great way to keep an eye on your production. These limits aren’t just for manufacturing and can be applied to any industry.

Further, you might need to take stock in root cause and failure analysis. This analytical approach takes a closer look at the symptoms of an issue so you can get down to the cause of it.

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.