The Dangers of SWOT
The Dangers of Traditional SWOT Analysis
It’s that time of year again. And, no, I’m not referring to Christmas shopping…
I’m talking about strategic planning.
This is the time of year to pause for a bit longer than usual and think and about what winning will look like next year. It’s when we peer into the future to determine where our organizations need to go and what we need to do to get there in the upcoming calendar year. It’s when we identify our top three to five strategic objectives, lay out the specific action steps needed to achieve them, and determine a realistic time frame for reaching our destinations.
For most companies, conducting a SWOT (strengths, weaknesses, opportunities & threats) analysis is an integral part of the strategic planning process. And it can be very helpful because an accurate identification of SWOTs plays an important role in determining subsequent steps in the planning process.
For those not familiar with SWOT, strengths are those areas where we excel that are not easily copied by others. Weaknesses are the risks or limitations that get in our way. Opportunities represent possibilities that we can capitalize on or leverage. And threats consist of things in the external environment that give us cause for concern. For example, what are our current competitors likely to do, and where might unexpected competitors come from?
When used properly, SWOT is a powerful planning tool. Unfortunately, many companies misuse it by getting stuck in old patterns of thinking about problems and threats rather then looking ahead to where the company needs to go and focusing on winning.
A primary goal of strategic planning is figuring out what you can do, not what you can’t. However, rather than looking for new and better ways to add value to their customers, many companies use the SWOT process to focus on blaming competitors, the economy, or other external factors for things they can’t control. As a result, they end up spinning their wheels rather than gaining any real traction to move the company toward its destination.
The key to using SWOT effectively is not just identifying your strengths, weaknesses, opportunities and threats. It’s asking the right questions and using the information that gets uncovered in an appropriate manner.
For example, when considering your organizational strengths, ask questions like:
- Where have we really been able to excel?
- Is there something we have that we don’t use/do enough?
- Is there something we can develop quickly that we can leverage?
- What do others consider our greatest strength?
When considering weaknesses:
- What has gotten in our way in the past?
- How do we get in our own way?
- What processes do we have for identifying weaknesses in the organization, and how well do these processes work?
- What processes do we have for addressing these deficiencies, and how well do these processes work?
When identifying possible opportunities:
- Is there a product, a customer relationship, or a market presence that we can better leverage?
- Is there something we would pursue if we had more resources (people, dollars, time, etc.)?
- What are our competitors most worried we will do? Should we?
- What signals are critical to assessing our relationships with our market and customers?
When considering threats:
- What are we most concerned about?
- Are their new or different competitors likely to emerge?
- Is there a potential supply problem?
- Do we have good relationships with employees, vendors and customers?
It also pays to analyze and review how you conduct the SWOT process itself. Not just after the fact, but as you’re engaged in the process. For example:
- What proportions of our organization’s resources go towards maintaining and enhancing the status quo?
- How much time do we spend leading and nurturing new directions?
- What new efforts have we started in the past year? What efforts have we stopped?
- Is our long-term thinking focused on the few critical things that matter? Are we vigilantly avoiding the many possible diversions?
Becoming a leader in today’s chaotic markets requires fast, flexible, and highly adaptable organizations. Ones that anticipate and plan for change rather than react to it after the fact.
A SWOT analysis can help you achieve this strategic agility, but only if you use the information to break away from old patterns of thinking and make strategic decisions based on where you’re going rather than where you’ve been.
Next year will get here before we know it. What are you waiting for?
image credit: robliano.com
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Holly is the CEO of THE HUMAN FACTOR, Inc. (www.TheHumanFactor.biz) and is a highly sought after and acclaimed speaker, business consultant, and author. Her unique approach to creating strategic agility, helping others go slow to go fast, will change your thinking.
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Great piece, Holly.
I too looked at this a while ago and defined the process into a different model (https://interacter.wordpress.com/2011/08/23/is-it-time-to-retire-the-swot/)
The problem I find with the SWOT is that it’s often a gateway to further thinking, but that threshold isn’t always crossed. I’ve seen people rely on it too heavily, which is a shame.
I very much like your further questioning on the model – really helpful!
Neil
thanks for your comments and the link Neil!
Thanks Holly, nice post with some excellent questions.
I agree that SWOT can be a helpful tool but one factor that it tends to bypass is culture, which in some markets is one of the biggest sources of competitive advantage.
When reviewing strategy, leaders need to honestly ask themselves to what extent the organizational culture is an enabler or blocker to the execution of strategy. Against each of the four SWOT categories, ask the question: what is it about our culture that contributes to our position here?
Culture (which is defined by what leaders truly value) can’t be changed overnight. With that in mind, a tough but useful question to ask can be:
“Are we willing to change our culture to fit our strategy, or are we prepared to change our strategy to fit our culture?”
Pass the Advil…..
Elvin Turner
Blog: http://www.elvinturner.wordpress.com
Twitter: elvinturner
ah yes, those darn people…we always include questions about how the culture or norms have impacted what got accomplished, what got in the way, what are you assuming will happen and what mindsets/beliefs must your organization have to make it so…these bring up culture in a very tangible way since it is so often discounted as that “soft, mushy stuff”. Appreciate your comments!
Holly…
Great comments! I would add a couple of other misuses of a SWOT analysis:
1. Too often, organizations spend the time doing a listing of strengths, weaknesses, opportunities and threats. They fail to realize that a SWOT Analysis intended to develop strategies, not just to do a series of lists! A SWOT analysis is supposed to force leaders to come up with creative answers to the questions: “How do we use our strengths to take advantage of opportunities and to ward off threats?” and “How do we overcome our weaknesses to take advantage of opportunities and ward off threats?” It’s the well-though-through and inventive strategies that develop to answer these questions that are the valuable outcome of the exercise.
2. In addition, I find that too often leaders fail to consider that opportunities and threats are those EXTERNAL forces that can impact the organization. Thus a good SWOT analysis involves a great deal of research into the current and the future set of EXTERNAL drivers — economic, demographic, financial, etc. — that could affect the organization’s future. It’s only with a rich array of such information that leaders can take full advantage of a SWOT analysis.
Thanks for the opportunity to voice my concerns about the use of SWOT analysis for strategic planning!
Cordially,
Lynne C. Levesque, Ed.D.
good points Lynne!
All great points & questions, Lisa.
I’d also add that without proper data to fuel the SWOT it can be an exercise in futility. Data, especially external data, often triggers real insight. When I led strategic planning for the Chicago YMCAs, it was often our community leader interviews & demographic data that were key to creating real insight & change.
Have you heard of the TOWS Matrix, developed by Heinz Weihrich? He created this model to address exactly the problems cited with the SWOT. It is an effective strategic brainstorming tool for all sectors and big or small businesses. One must start with a SWOT that is well structured and which clearly differentiates “facts” from true strengths demonstrating superiority or weaknesses which are inferior to competition.
had not heard of the TOWS matrix previously so will certainly look that up. Thanks for the info!
I agree strongly with Lynne. It’s the focus on EXTERNAL opportunities and threats and INTERNAL weaknesses and strengths that’s important. Without that focus you run the risk of identifying things you think you should do (ie, we should sell more of Product A) vs. what the market needs. It’s a subtle shift in wording– ie, Sell more of Product A vs. Customers are demanding more of our Product A. But it makes a difference. Secondly, I force clients to limit their answers to 3-4 per category– one may argue that it stifles creativey – but, I think the bigger challenge is prioritizing and resisting the temptation to list your “functional wish list”– the macro view forces this.