The SWOT analysis is one of the more useful of management tools when aggressively pursued. But too often it turns into an inauthentic exercise done merely for its own sake, completed by teams that go through the motions instead of taking its strategic implications seriously. We have all likely participated in dozens if not hundreds of SWOTs, some for our own departments and others in review of various enterprise-wide business functions and product lines, and we’ve seen a variety of approaches and attitudes over the years. Let’s break it down into some of the strengths, weaknesses, opportunities and threats of the SWOT exercise.
Strengths: The Strengths section tends to be a missed opportunity (pun intended), the one section with the blanks filled in just to get it over with, resulting in largely inactionable outputs. We tend to treat Strengths as something to merely duly record before moving on to more interesting business. Which is a shame, because often your Strengths, especially your differentiating strengths, are all you have going for you. If you are #6 in a market dominated by a “Big 3” (whatever that might be for your particular industry), you are going to be a “me-too also-ran” in the competitive areas outside your Strengths. Instead of initially chasing nebulous opportunities and patching up weaknesses, focus first on what it will take to truly capitalize on your strong points. Sometimes the best defense is a good offense.
Opportunities: This is the fun section, and rightly so. But before you pat yourself on the back for your team’s creativity and enthusiasm, take a quick read through one of my prior posts, “Conversational Analytics”, where I expound on the differences between possibilities and opportunities. I think you’ll find that your long list of Opportunities does not quite rise to that level, that you are still largely in the ‘possibility’ stage of the conversation. Opportunities are a subset of possibilities that have passed through a set of evaluation criteria such as feasibility and profitability. It is unlikely that in just 30-60 minutes of opportunity brainstorming you had the time to do a proper analysis and whittle the choices down to those that have earned the right to take action. While I doubt that SWPT will ever catch on, know that when you emerge from the conference room at the end of the session all you really have is a list of possibilities that still need a little more work before they become insightful, actionable Opportunities.
Weaknesses: It takes good management and facilitation skills to safely navigate the treacherous waters of the Weaknesses section – this one is a personality mine field. There is usually at least one somebody, if not several somebodies, present in the room who have accountability and responsibility for the items that come to be listed as Weaknesses. Because of this feature, this section tends to either be treated with kid gloves, granting too much deference to the players involved out of fear of hurting someone’s feelings, or it becomes an all-out blame-game. In the first case, the list of Weaknesses becomes a recap of projects that someone is already working on. Yes, we have a gap in our product functionality, but that is going to be addressed in our upcoming release next quarter. Yes, it is currently true that we don’t have adequate coverage in the mid-tier market, but Larry is already addressing that with his channel partner initiative (If Larry’s has no such initiative, then the item mysteriously never makes the list). The second case, the finger-pointing, is both even less effective and unfortunately more common than the first, and comes to look like a police line up of allegedly guilty suspects.
Threats: Threats are perhaps the biggest weakness of the SWOT (intended pun #2). Why? Because, like Strengths, and as opposed to Opportunities and Weaknesses, Threats are strategic in nature, and no one in the room feels empowered to tackle big gaps in strategy. The one area that should be taken most seriously is the area that generates the least actionable outcomes. The overused phrase, “rearranging the deck chairs on the Titanic” comes to mind when I think of how often strategic threats are identified and then immediately swept under the rug. While your business is facing an existential threat from an entirely new and out-of-this-world business model, or some upstart startup is eating your lunch with their breakthrough technology, the team instead goes merrily on its way addressing easier to deal with weaknesses and pursuing promising possibilities. The antidote to this syndrome is for senior management to up-front provide a channel to escalate these identified strategic threats. If the answer to that gap in your product line is an acquisition, there needs to be a ready channel towards which to steer that discussion. If a company is going to do nothing about a significant strategic threat, at least it should be a conscious decision by executive management, and not a shrug of the shoulders by an unempowered functional team that doesn’t think anybody is listening or cares.
The common thread that runs through each of these SWOT missteps is the lack of a strategic approach to the issues at hand. While everyone asserts to being a ‘strategic thinker’, this is the true test of that claim - whether or not your team succumbs to only taking a tactical approach to their SWOT analysis (‘low hanging fruit’ anyone?), or if they can spot the forest for the trees. The important versus the urgent. All of the clichés about the rapid pace of change in business didn’t arise by accident – things really are moving faster all the time, and you’ve got to keep pace. Threats that in the past might have taken a decade to ripen will now jump up and bite you during your next budget cycle. There is more downside to a lack of agility than just tactically missing out on the next big consumer fashion trend – nowadays, with a misdirected strategy, you can go completely out of business faster than ever before.
By Leo Sadovy, EPM Contributor, from: http://blogs.sas.com/content/valuealley/2013/10/29/swot/
Leo Sadovy handles marketing for Performance Management at SAS, which includes the areas of budgeting, planning and forecasting, activity-based management, strategy management, and workforce analytics, and advocates for SAS’ best-in-class analytics capability into the office of finance across all industry sectors. Before joining SAS, he spent seven years as Vice-President of Finance for Business Operations for a North American division of Fujitsu, managing a team focused on commercial operations, customer and alliance partnerships, strategic planning, process management, and continuous improvement. During his 13-year tenure at Fujitsu, Leo developed and implemented the ROI model and processes used in all internal investment decisions—and also held senior management positions in finance and marketing.Prior to Fujitsu, Sadovy was with Digital Equipment Corporation for eight years in sales and financial management. He started his management career in laser optics fabrication for Spectra-Physics and later moved into a finance position at the General Dynamics F-16 fighter plant in Fort Worth, Texas.He has an MBA in Finance and a Bachelor’s degree in Marketing. He and his wife Ellen live in North Carolina with their three college-age children, and among his unique life experiences he can count a run for U.S. Congress and two singing performances at Carnegie Hall.See Leo’s articles on EPM Channel here.