TOWS matrix: turn your SWOT into strategic options you can choose between

Exactly one option: that is where a lot of strategy work ends, and usually it is the one the owner or the board had in mind from the start. It is the most expensive shortcut in strategy, because without alternatives there is nothing to compare and no plan B. The TOWS matrix exists to prevent it. Where the confrontation matrix scores how internal and external factors meet, the TOWS matrix turns those same combinations into types of strategy.

This step sits between the SWOT analysis and confrontation matrix and the moment of choice. Its result is a short list of options that really differ. The example continues with Norvane Building Services, the fictitious building services firm whose matrix pointed to retrofit work and showed a shortage of technicians as the main blocker.

A good choice starts with real alternatives

An option is not a single measure such as "hire two people" or "launch a website". It is a coherent route: which customers you serve, how you win them, what it takes and what you stop doing. Two options are real alternatives when choosing one means you cannot fully do the other. If you could do both without trade-offs, they are parts of the same route.

The four types of strategy in Weihrich's TOWS matrix

Heinz Weihrich introduced the TOWS matrix in Long Range Planning (1982). It pairs each internal quadrant with each external one, which gives four types of strategy.

Fictitious Firmfocus example.

Every company would like to be in the SO corner, but few strategies live there alone. A sound strategy usually combines one SO route with one or two WO or ST measures that make it possible. For Norvane, the retrofit route (SO) only works if the technician gap (WO) is closed.

Look beyond the matrix

The TOWS matrix combines factors you already know, so it rarely produces a truly new idea. Widen the search with four lines of questions. A.G. Lafley and Roger Martin, in Playing to Win (2013), put the first two at the heart of strategy.

Two options belong on every list. Carrying on as now is the baseline against which you judge the others, and it is not risk-free. Stopping, selling or winding down is the second; even if you reject it, the comparison shows what the business is worth to you.

Questions that produce new options

• The newcomer: what would a well-funded entrant do in our market tomorrow?
• The disappearance: what would we do if our largest client or product disappeared?
• The halving: what would we keep if we had half the people or half the budget?
• The customer without us: how would our customers solve their problem if we did not exist?
• The other industry: how does a completely different industry solve the same kind of problem?

At Norvane the halving question was the most useful. Asked what they would keep with half the technicians, the team answered without hesitation: the maintenance contracts and the retrofit work. Nobody chose new-build.

From idea to worked-out option

Describe every option in the same structure, so they can be compared in step 5. This is Norvane's option B.

Fictitious Firmfocus example. The investment stays within the €400,000 limit set in step 1.

Write the key assumptions down separately. They are what you will test first in execution, and they tell you when to revisit the choice. Some can be tested before step 5, cheaply and quickly. Norvane's key accounts manager asked two landlords whether they would discuss a framework agreement for a retrofit programme, and both agreed to a meeting within a month. That is not a contract, but it moved the first assumption from hope to a reasonable expectation. For each assumption, ask what the cheapest way is to find out whether it holds.

How many strategic options are enough?

Three to five options that really differ, including carrying on as now. Fewer and there is no real choice; more and the evaluation becomes superficial. Richard Rumelt warns that a long list of things to do is not a strategy: choosing all options at once is a way of avoiding the choice. Norvane went into step 5 with four options:

• A, continue as now: keep the current mix and wait for new-build to recover.
• B, retrofit and maintenance specialist: the route described above.
• C, energy services: load management and batteries behind the meter for commercial clients, with an electrical partner.
• D, join a national group: sell a majority stake to one of the groups buying up regional installers.

Check mission and vision again

The mission and vision drafted in step 1 may need sharpening now that the options are clear. Jim Collins and Jerry Porras argue that core purpose and core values should stay fixed while strategies and practices change. If an option clashes with your values, that is a reason to drop the option, not the values. More in mission, vision and values.

Small business or larger organisation

Pitfalls in generating options

• One option only: there is nothing to choose and no plan B.
• Forgetting the baseline and the exit: without them you cannot see what the new route adds.
• Options that are measures: "a new website" is a step within a route, not a route.
• Choosing everything: spreading money and people across all options at once.
• Hidden assumptions: if they are not written down, nobody can test them later.

Three to five worked-out options are enough to move on. Step 5, evaluate, choose and implement, compares them on the criteria you agreed at the start. The whole route is in the strategy process in five steps, with further reading under Strategy.