If you are a fan of Greek philosophy then you will have pondered over the teachings of Socrates. You may have taken the time to know thy self but are you taking the time to truly know thy business, asks Vikram Venkataraman, Director, Salvus Strategic Advisors.
Socrates was one of the greatest philosophers the world has ever seen. He was a pathological questioner of everything – life, the stars, morals, the status quo, his friends, and anything else that could possibly be questioned.
He was also one of the greatest teachers that mankind has had and followed a unique method of teaching – he questioned his students in a manner that would eventually reveal the truth to themselves. He never pontificated or made definitive statements of “truth”.
He made his students reconsider what they already knew, to consider issues from different angles and question their beliefs till truth presented itself. His tenet was, “Know Thyself”, to be wise and to live a better and more fulfilling life. He also believed that the unexamined life was not worth living. This, I confess, is a bit extreme.
He was also condemned and put to death for being a menace to society. But we don’t want to go down that road now!
Know thyself. What you are, your strengths and weaknesses, what you can do, and what or who might prevent you from fulfilling your dreams. In other words, do a modern day SWOT analysis. Know your strengths, weaknesses, opportunities and threats.
Millions of SMEs have found this an excellent, simple and effective tool in conducting a brutally honest self-analysis, to come up with action plans to move forward and to grow. Looking inwards and analysing the state of your firm will reveal your strengths and weaknesses.
Further brainstorming, discussion and consultation should give you the answers to handle these issues. Looking outwards, at opportunities and threats, will tell you how to defend yourself against market forces.
So, know thyself and what lies within. And know what lies without and what affects you. This is the essence of the SWOT analysis. It is a diagnostic tool which can help you ascertain what is wrong with your company and point towards solutions. It can also tell you about outside forces that present opportunities and threats to the firm.
It is also a flexible tool that can be applied to your business as a whole, to a particular division within the company, or a line of business. The SWOT basically can give you:
- A holistic diagnostic analysis of your firm, a particular problem, or, even an opportunity that you wish to deeply analyse;
- An opportunity to involve others in your company and solicit feedback from all levels;
- A great basis for bringing people together to “fight a common enemy”, especially if they have been part of the SWOT process.
Where to start?
Firstly, identify the issue(s) you would like to analyse (slow sales, poor productivity, customer complaints, or falling margins) and conduct a SWOT of the firm or department, keeping the issue in mind as the backdrop to the whole exercise. Basically, the perspective must one from the vantage point of the problem at hand.
Secondly, do your own SWOT analysis and ask select team members to do their own, individually.
Thirdly, aggregate all the ideas and create a master list.
Fourthly, gather everyone in a room for a brainstorming session on the master list and narrow it down to what really matters.
Lastly, decide a timetable to drill down into each of the problems (or opportunities) thrown up, to come up with an action plan and to sort it out.
A real life example
The SWOT is not some academic tool meant only for textbooks. We have, for example, used it very effectively to do a very quick analysis of the problems one of our clients was facing – tardy growth. This SME owner runs an extremely profitable company and felt that he had a hit a “growth ceiling”.
A very quick SWOT analysis revealed some very fundamental problems with the company. A few of the issues were:
- The owner had too many people reporting to him – 18 employees across all levels. This resulted with the owner involved in petty and administrative issues, leaving no time for serious business development.
- The sales team had no manager – all the salesmen reported directly to the owner who had no time to monitor and measure what they were doing.
- The company had three divisions but no financial information on any of them, i.e., they did not know what the contribution of each division was.
- The sales team spent 80% of their time on administrative issues, leaving little time for sales.
- Sales staff was inadequately trained, so they concentrated on selling the simpler, low margin products, resulting in low productivity.
This exercise took one hour of pointed questioning. When you start out, it will take you longer, but the key is asking a series of “whys” until you can ask no more.
The real keys for you SME owners are mind set and time. If you recognise there are fundamental issues with your business, you simply have to take the time to get to the bottom of them, and then the time to fix them.
In almost 100% of the clients we deal with, the owner knows there is a problem, but it stops there. Owners just do not get off the treadmill of running after that next sale, to step back, take a deep breath and to sit and think. To build a sound organisation, one needs to do a lot of thinking and analysis, to get to the root of problems, and then to fix them.
The SWOT is a tool that can help you get to the root. Know thyself, know thy company. Know thy strengths, weakness, opportunities and threats. And thou shalt have solved half thy problems.
Vikram Venkataraman is a career banker with 25 years of experience in banking in India and the Middle East with various banks. Some of the key senior positions he held are:
• Executive Director, Regional Head of Credit Structuring ABN AMRO Bank, Middle East and Africa.
• Founding Member of Management Team and Head of Corporate & Institutional Banking, Dubai Bank.
• Head of SME Business, Transaction Banking and Factoring, Mashreq Bank, Dubai.
• Various assignments in Corporate Banking in HSBC India.
His most recent experience in banking has been as the Head of the SME Business at Mashreq, which he left in 2010 to co-found an SME focussed investment banking firm – Salvus Strategic Advisors, JLT in Dubai and Salvus Capital Advisors Pvt. Ltd. in Mumbai. Salvus advises SMEs with the objective of helping them grow. Raising equity and debt capital is an integral part of Salvus’ activities.
Vikram has also been an entrepreneur in the wellness business, giving him a unique perspective of SME issues, both from a banking and entrepreneur’s points of view. He holds a BA from Loyola College, India and MA from Oxford University, UK. He has served as the Secretary of the Oxford University Economics Society.