So you've conducted your SWOT analysis, filled out your four quadrants with insightful observations about your company's strengths, weaknesses, opportunities, and threats. Now what? How do you transform these static lists into a dynamic strategy?

Enter the TOWS matrix.

What is the TOWS Matrix?

The TOWS matrix is a tool that helps you think strategically by systematically matching the external opportunities and threats with your internal strengths and weaknesses. Developed by Heinz Weihrich in 1982, the TOWS matrix is often called the 'next step' after a SWOT analysis.

A TOWS matrix diagram for strategic analysis, showing SO, ST, WO and WT strategy quadrants. — Click the image to enlarge, then right-click to download. Just link to BiteSize Learning if you use it anywhere.

While a SWOT analysis helps you understand your business's current position, a TOWS matrix takes it a step further by prodding you to consider how you might…

Use your Strengths to take advantage of Opportunities (SO)
Use your Strengths to avoid Threats (ST)
Overcome Weaknesses by taking advantage of Opportunities (WO)
Minimize Weaknesses and avoid Threats (WT)

In essence, the TOWS matrix is a matching tool. It encourages you to pair internal factors (strengths and weaknesses) with external factors (opportunities and threats) to generate strategic options.

How to create a TOWS matrix

Creating a TOWS matrix is a straightforward process that can yield powerful insights. Here's how to do it:

Step 1: Complete Your SWOT analysis

Before you can create a TOWS matrix, you need to have a completed SWOT analysis. Ensure that you've thoroughly identified your company's strengths, weaknesses, opportunities, and threats. Here’s a reminder of the four quadrants:

What's in a SWOT analysis? This diagram shows strengths, weaknesses, opportunities and threats in a 2x2 matrix of factors.

Step 2: Create a TOWS matrix template

Draw a 2x2 grid, with 'Opportunities' and 'Threats' in the top row, and 'Strengths' and 'Weaknesses' in the left column. This creates four boxes: SO, ST, WO, and WT.

Step 3: Match Strengths with Opportunities (SO)

In the SO box, list strategies that use your strengths to take advantage of opportunities. For example, if you have a strong brand reputation (strength) and there's growing demand in a new market (opportunity), a potential SO strategy could be to leverage your brand to enter that new market.

Step 4: Match Strengths with Threats (ST)

In the ST box of the TOWS matrix, list strategies that use your strengths to avoid threats. For instance, if you have a loyal customer base (strength) and there's increasing competition (threat), an ST strategy could be to launch a customer loyalty program to retain customers in the face of competition.

Step 5: Match Weaknesses with Opportunities (WO)

In the WO box, list strategies that take advantage of opportunities to overcome weaknesses. For example, if you have limited distribution channels (weakness) but there's a surge in online shopping (opportunity), a WO strategy could be to invest in e-commerce capabilities.

Step 6: Match Weaknesses with Threats (WT)

In the WT box, list strategies that minimize weaknesses and avoid threats. For instance, if you have high production costs (weakness) and there's a threat of a price war in your industry, a WT strategy could be to implement lean manufacturing to reduce costs.

Step 7: Evaluate and Prioritize Strategies

Once you've filled out all four boxes, you'll have a comprehensive list of potential strategies. Evaluate each strategy based on its feasibility, potential impact, and alignment with your overall business objectives. Prioritize the strategies that offer the most promising outcomes.

Example TOWS Matrix

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:

Strengths	Weaknesses
Agile team that can quickly adapt to client needs Strong portfolio of work in the SME niche We're also getting very good at creating funny scripts and concepts (i.e: full creative not 'just production')	Limited budget for marketing and business development Heavily reliant on a small number of key clients We struggle to serve clients that want a lot of content over time (vs. big one-off shoots)
Opportunities	Threats
Growing demand for video content across industries - Reels and TikTok still growing fast Potential partnerships with marketing agencies Expansion into new geographic markets - developing freelance shooter network in N.Am, Aus/NZ	Increasing competition from freelancers and larger agencies Bigger clients are bringing video production in-house Smaller clients are more confident in self-shooting for social Non-zero chance that TikTok is banned outright

Based on this SWOT analysis, your TOWS matrix could then look like this:

	Opportunities Growing demand, agency partnerships, geographic expansion	Threats Increasing competition, clients insourcing, TikTok ban risk
Strengths Agile team, strong portfolio, creative script writing	Develop Reels and TikTok-specific packages to capitalize on growing demand Leverage strong SME portfolio to attract marketing agency partnerships Use agile team to serve new geographic markets via freelance network	Emphasize creative expertise to differentiate from competitors Nurture key client relationships to retain business amid competition Diversify platform expertise to mitigate risk of TikTok ban
Weaknesses Limited budget, reliance on key clients, scaling difficulty	Use marketing agency partnerships to offset limited marketing budget Offer ongoing content subscriptions to overcome struggle with long-term engagements Leverage growing demand to justify increased investment in business development	Offer in-house video training to clients to maintain relationships even as they insource Focus on SME niche to avoid direct competition with larger agencies Implement lean operations to survive potential price competition

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.