A comprehensive guide to building and using the TOWS matrix

A SWOT analysis (strengths, weaknesses, opportunities, and threats) is a simple way to assess a business’s market position and where it can improve its standing.

But a SWOT isn’t particularly thorough. Alternatives to a SWOT analysis, like a SOAR, NOISE, or gap analysis, could provide a more comprehensive understanding of your company’s current state.

Another excellent tool to pair with your SWOT is a TOWS matrix. Notably SWOT spelled backward, TOWS expands this concept to offer actionable insights for leveraging strengths and mitigating weaknesses.

What’s a TOWS matrix?

A TOWS matrix expands the SWOT analysis, identifying how each of SWOT’s elements interact by asking these four questions:

• How do strengths lead to opportunities?

• Do strengths inadvertently cause threats?

• What opportunities arise from weaknesses?

• Are weaknesses amplifying new threats?

Asking yourself these questions, you’ll fill out a three-by-three table to show interactions between internal factors (strengths and weaknesses) and external factors (opportunities and threats).

As you work with your team to fill in this matrix, you’ll use your SWOT analysis and draw connections between items to gain a more comprehensive understanding of your business, as well as what you can do to mitigate threats and leverage opportunities.

TOWS versus SWOT: What’s the difference?

While both SWOT and TOWS define strengths, weaknesses, opportunities, and threats, TOWS takes this further by illuminating relationships you might’ve missed, resulting in a more comprehensive list of opportunities and threats. But it also takes longer to conduct. You might prefer the standard SWOT analysis for more straightforward and time-sensitive situations.

Benefits of the TOWS matrix

Nothing beats a comprehensive understanding of your business — you’ll also enjoy the following benefits when conducting this analysis type:

• Strategic insights: This matrix provides a framework for strategic decision-making by linking internal strengths and weaknesses with external opportunities and threats. This breadth of knowledge can empower businesses to pivot in changing markets and develop product differentiation strategies.

• A more forward-thinking approach: Instead of simply stating your strengths, weaknesses, opportunities, and threats, this analysis asks you to consider how each element affects — or could, in theory, affect — others, helping you better understand what the company’s future looks like and how you can adjust this trajectory for the better.

• Informed decision-making: Analysts can use the TOWS matrix to create a strategic roadmap for the business, leveraging the data offered by their matrix to make better short and long-term business decisions showcased in this roadmap.

Limitations of the TOWS matrix

While the clearly defined structure of the TOWS matrix makes it easy to implement, it’s inherently limited by its boundaries, and understanding its imperfections illuminates the best use cases. Here are a few of this matrix type’s limitations:

• Complexity: Time and knowledge often dictate how much helpful information a TOWS matrix can provide. This might be particularly daunting for newer businesses or those without specialized analysis expertise.

• Subjectivity: The value of the TOWS matrix depends on high-quality input, meaning those working on the analysis need to have a deep understanding of the business to produce worthwhile and accurate results.

• Temporary relevance: Businesses and markets shift constantly, and stale data can lead to misguided strategies, so you must regularly update your matrix to keep it relevant.

• Oversimplification: Factors affecting a business can range far beyond the four included in the TOWS matrix, so relying on this technique may lead to overlooking other essential factors.

How to use a TOWS strategy matrix: 5 steps

Here’s a five-step guide to creating and filling out this matrix. Work with fellow leadership professionals to ensure your analysis covers all essential business elements and aligns with overall departmental needs. Once complete, share it broadly and outline an update and management schedule to keep it relevant.

1. Conduct a SWOT analysis

Start by identifying the company’s strengths, weaknesses, opportunities, and threats. Be thorough and realistic, as these points will impact the remainder of the process. Try to think outside the box and make a list that considers all aspects of the business, including industry-based, technological, and economic elements.

2. Build your matrix

Draw a three-by-three grid and label the SO, WO, ST, and WT quadrants. List each quadrant’s strengths, weaknesses, opportunities, and threats. When complete, the matrix consists of a comprehensive list of the elements in the SWOT analysis.

3. Analyze interactions

Look at the relationships between the internal analysis and external factors, thinking creatively and considering various perspectives to understand potential effects.

A great way to think creatively and comprehensively about how each element affects others is by creating flowcharts. Take a strength — say, “We have extensive investor funding.” — and make this the start of the chart. Then, ask yourself and your team what opportunities this presents. Branch off with each opportunity, asking again for each of these branches what opportunities they offer your team until you have a more thorough list. Conduct this process for weaknesses as well to gain a better understanding of potential threats.

4. Formulate strategies

For each interaction, create actionable strategies for capitalizing on opportunities and mitigating threats. If you notice your high investor contributions mean your team can scale faster, for instance, you’ll create a strategic roadmap that outlines how to achieve and handle this growth.

5. Implement and monitor

Execute the strategies and monitor their effectiveness, taking notes on the results and saving them for future use. Then, adjust and refine the matrix as more data arrives and results stream in.

TOWS matrix best practices

The TOWS matrix is simple to visualize but challenging to optimize. It works best when starting with a deep insight into the business and the surrounding market. Here are a few more best practices for using this tool effectively:

• Gather stakeholder insights: Using a TOWS matrix should be a collaborative process involving all relevant stakeholders, as their varied perspectives enrich the analysis.

• Update it regularly: Given the dynamic nature of business environments, teams must habituate updating the TOWS matrix regularly. This ensures that strategies remain relevant and practical.

• Stay objective: Ensure any personal biases don’t affect the analysis to gain a more neutral standpoint that provides well-rounded and accurate results.

• Be realistic: Keep a level head and maintain a clear view of the business’s market position, as overconfidence or pessimism can skew results.

The best tools for your team

When creating strategic roadmaps for embracing opportunities and mitigating threats, consider Strategic Roadmaps by Tempo. This tool offers flexible and easy-to-use roadmaps you can quickly adjust as your team executes business strategies. Then, use Timesheets by Tempo to track progress toward strategy goals and gain better metrics on TOWS data. Sign up today.