You’ve completed your SWOT analysis and filled each quadrant with valuable insights about your company’s strengths, weaknesses, opportunities, and threats. But now what? How do you transform these lists into a strategic plan?
This is where the TOWS matrix comes in.
What is the TOWS Matrix?
The TOWS matrix is a strategic tool that helps you systematically link your internal strengths and weaknesses with external opportunities and threats. Developed by Heinz Weihrich in 1982, it’s often considered the ‘next step’ after a SWOT analysis.
While a SWOT analysis provides a snapshot of your current business position, the TOWS matrix takes it further by encouraging you to consider how to:
- Use Strengths to leverage Opportunities (SO)
- Use Strengths to counteract Threats (ST)
- Overcome Weaknesses by capitalizing on Opportunities (WO)
- Minimize Weaknesses to avoid Threats (WT)
In essence, the TOWS matrix is a matching tool that pairs internal factors (strengths and weaknesses) with external factors (opportunities and threats) to generate actionable strategies.
How to Create a TOWS Matrix
Building a TOWS matrix is straightforward and can provide significant strategic insights. Here’s a step-by-step guide:
Step 1: Complete Your SWOT Analysis
Before you begin, ensure your SWOT analysis is thorough, capturing all relevant strengths, weaknesses, opportunities, and threats.
Step 2: Set Up Your TOWS Matrix
Create a 2×2 grid with ‘Opportunities’ and ‘Threats’ as column headers and ‘Strengths’ and ‘Weaknesses’ as row headers. This will create four quadrants: SO, ST, WO, and WT.
Step 3: Match Strengths with Opportunities (SO)
In the SO quadrant, list strategies that utilize your strengths to take advantage of opportunities. For example, if your company has a strong brand reputation (strength) and there’s growing demand in a new market (opportunity), you could strategize to leverage your brand to enter that market.
Step 4: Match Strengths with Threats (ST)
In the ST quadrant, identify strategies that use your strengths to mitigate threats. For instance, if you have a loyal customer base (strength) and face increasing competition (threat), you might launch a customer loyalty program to retain customers.
Step 5: Match Weaknesses with Opportunities (WO)
In the WO quadrant, list strategies that leverage opportunities to address weaknesses. For example, if you have limited distribution channels (weakness) but a surge in online shopping presents an opportunity, you might invest in e-commerce.
Step 6: Match Weaknesses with Threats (WT)
In the WT quadrant, develop strategies to minimize weaknesses and avoid threats. For instance, if you face high production costs (weakness) and an industry price war (threat), implementing lean manufacturing processes could help.
Step 7: Evaluate and Prioritize Strategies
Once all quadrants are filled, evaluate each strategy for feasibility, potential impact, and alignment with your business objectives. Prioritize those with the highest potential for success.
Let’s illustrate the TOWS matrix with an example. Imagine you run a small video production company that specializes in creating content for SMEs. After conducting a SWOT analysis, you’ve identified the following key points:
Based on this SWOT analysis, your TOWS matrix could then look like this:
As you can see, the TOWS matrix takes the insights from your SWOT analysis and transforms them into concrete, actionable strategies.
By systematically matching your internal factors with external factors, you can generate a robust set of strategic options that leverage your strengths, overcome your weaknesses, seize opportunities, and mitigate threats.
At this point, you’re ready to think about what possible strategies you might go on to actually implement:
- Look for synergies: some strategies might seem to ‘go well together’ – for instance, one of your strengths might support several different options for pursuing opportunities and defeating threats. This might indicate that more investment in this area could act as a real force-multiplier.
- Watch out for clashes: conversely, some strategies might be mutually exclusive. Let’s say you go all-in on pursuing a consumer trend that would ultimately make your currently flawed processes redundant. In this scenario, you might not want to also pursue a threat-based strategy geared around massively improving that process.
- Avoid fixing too many weaknesses at once: although the TOWS matrix might reveal some urgent dangers in the ‘W/T’ box, strategies that are fundamentally based on ‘suddenly becoming much better at things you’re usually bad at’ are risky indeed. Although improvement is necessary, it’s also hard, so it’s a better strategic bet to only focus on addressing one or two weaknesses at at time. Play to your strengths when you can!
- Consider effort and impact: there are various ways to prioritise initiatives, but the impact vs. effort matrix is one of the simpler frameworks to adopt. (That’s right, another matrix!)
Of course, the TOWS matrix is not a silver bullet. It’s a tool, and like any tool, its effectiveness depends on the skill and judgment of the user. The strategies you generate are only as good as the SWOT analysis they’re based on, and not every strategy will be feasible or desirable for your specific context.
However, used properly, the TOWS matrix can be a powerful complement to your SWOT analysis. It can help you move from analysis to action, from understanding your business environment to shaping it. So the next time you complete a SWOT analysis, don’t stop there. Take the next step with a TOWS matrix and watch your strategies come to life.