What are some of the most common business analysis techniques?
Business analysis is essentially the process of finding out what’s going on in a company – be it good or bad – and finding ways to improve.
Even small companies can benefit from some of the techniques, it is often assumed that it is just the corporates or the consultancies that need to analyze themselves. We would suggest that there is real value in taking a look at some of the thinking and making sure that we are not missing a trick or kidding ourselves that we don’t have any areas we can improve.
Sounds simple, but there are many different flavours of business analysis technique and it can be applied from top to bottom. One of the important things before starting is therefore to identify which suits you best and will work best in the situation required.
Top business analysis techniques
1 – SWOT Analysis (strategy definition)
SWOT analysis is a versatile business analysis technique and one that is favoured by many companies for enterprise level action. It’s a relatively simple approach and therefore one that can be rather high level but nonetheless flexibly applied lower down. The idea is to focus activity on where strengths and opportunities lie and avoid areas of weakness or threat. It can be seen as a quadrant with the aim to target activity in the quarter where strengths and opportunities sit. SWOT analysis is usually applied in defining organisational strategy. Ansoff’s matrix is another useful approach for strategy.
2 – PESTLE Analysis (external environment assessment)
This is used to determine the external environment in which an organisation operates. A variant is Porter’s Five Forces analysis. Both describe the situation in which the organisation exists rather than trying to define the organisation itself, but it can be very useful for guiding business and/or process improvement.
3 – MOST Analysis (internal capability)
A favourite for assessing internal capabilities, MOST analysis involves defining the four elements to ensure your activities are properly aligned to meet your business goals.
4 – SIPOC (process improvement)
This gets more into the nitty gritty of business processes. Forget supply chain – supplies and customers are merely the terms used for actors involved. For example, the IT department could be the supplier and the customer is your staff member. Suppliers and customers can be external or internal, inputs and outputs can be information, actions, raw materials, finished products and so on.
Based on Lean and Six Sigma principles, the idea is to break down individual processes into their component parts and see how they can be improved.
5 – 5 Whys (problem solving)
This is a simple interrogative technique used to quickly get to the bottom of a problem by exploring the cause and effect. The idea is simple – just keep asking questions until you find out why something – a particular function in the business, for example – is not performing, or is performing much better than others. It can be a useful method in order to avoid assumptions and work objectively to find how to do things better.
Whant us to write more simple overviews of business analysis techniques? Leave a comment below.
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