(Image credit: Doug Buckley of http://hyperactive.to)
SWOT (Strengths, Weaknesses, Opportunities, Threats) is a strategic planning tool, originally developed by Albert Humphrey of SRI in the 1960’s, to clarify an organization’s capabilities within a particular competitive environment. It’s not just a useful technique for business… I encourage many of my graduate students to use SWOT to better understand the context of their thesis problem or capstone project. SWOT is also a popular tool for quality professionals – the ASQ Service Quality Division maintains an introduction to SWOT on their web site.
However, it is REALLY EASY to do a BAD SWOT. If you try to use a bad SWOT to support your strategic decision making, it’s very likely that you’ll draw conclusions that are inconsistent (at best). The worst case scenario is that your SWOT can lead you to totally incorrect conclusions – and interventions or strategic decisions that damage your organization, rather than support and grow it. In a collaborative situation, it’s easy to deliver a BAD SWOT, especially when you genuinely wish to acknowledge all voices – and this wish is coupled with a tight schedule to deliver the SWOT.
How do you prepare a GOOD SWOT? Here are the four tests I ask my students to perform on each and every point within the SWOT analysis:
- Is the point supported by data or a reference in the literature? It’s easy to let anecdotes or personal opinions slip in to a SWOT. Requiring that all points are supported by data or research helps; personal opinions must be captured carefully (e.g. survey results over a representative sample of the population).
- Does the point address the issue at the right scale? If you are analyzing strategy for your organization as a whole, you don’t want your individual SWOT points to address the division, product-line, or product level – unless you can make a clear case for how your point impacts the scale of the whole analysis.
- Have you accounted for variation? Not everyone will agree with all points. One way around this is the poll the stakeholders within an organization (at the appropriate scale) to determine whether they strongly agree, agree, disagree, etc. with each point. Prioritize the items according to greatest agreement.
- Do you know why the point should be classified as a strength, weakness, opportunity, or threat? Sometimes a threat or a weakness is an opportunity, when considered in the context of the strengths; try to make connections between the four quadrants by considering these relationships.
And in addition, it’s important to do this final test at the end of the SWOT:
- Do any of the points directly conflict with one another? If so, REMOVE THEM.
Here are some real (modified) examples extracted from real SWOTs (to show you what I mean). Feel free to add your own guidelines to the Comments about what makes a GOOD SWOT.
Our headquarters is beautiful. This statement fails primarily on #3 and #4. Does everyone agree that the headquarters is beautiful? Probably not. But if they do, why should this be considered a strength? Do we have evidence that a beautiful headquarters contributes in any way to our organization’s ability to meet its strategic goals? A simple link should be made explaining why this is relevant as a strength.
The number of new customers is increasing. This statement is OK, but should be supported by data, a check to make sure that data is at the right scale, and an explanation of why this is a strength. “The number of new customers has been steadily increasing over the past 5 years, from 600 new customers in 2007 to over 8,000 new customers in 2012. Demand for our services across the organization is strong.”
Two thirds of our budget goes to supporting our consultants. So what? Why is this a strength? How do we compare to other organizations that also allocate budget to supporting consultants? Does this indicate that our funds are being prioritized properly? Maybe this in, in fact, a weakness – but we won’t know it until we compare ourselves to benchmarks.
We don’t acknowledge or discuss our weaknesses. This point is weak on all four criteria. If this is a true statement, what data do we have that supports it? Are such conversations lacking at the organizational level, the division level, or the team level (or all three)? Most significantly, which one of those levels is relevant to the SWOT at hand? Does everyone feel this way, or is there some variation in the sentiment? Furthermore, is this really a weakness? I’d say it is potentially more of an opportunity to stimulate wider discussion. Can we position this statement as an opportunity instead? I also find it funny that this is a weakness in a SWOT that is specifically designed to encourage acknowledging and discussing weaknesses. Hmm.
Our technology organization is decentralized. This point fails on all criteria except #2. How is the technology organization decentralized, and why is this a weakness? Comparison to benchmarks of organizations with centralized vs. decentralized technology is merited here. For some organizations, decentralization of technology services in fact makes it easier to achieve high levels of customer service.
Nationally, there is low or declining confidence among employees of their executive management teams, particularly in larger companies. OK, this one fails on all four criteria. First, where’s the data? Second, this is totally outside the scale of the organization, and I’m not sure what relevance it has to the organization completing the SWOT. Furthermore, there’s definitely an issue of variation here: what’s the variation in the opinions among employees here? And finally, why is this a weakness? It might actually be a threat.
Globalization provides opportunities for international experiences for our consultants. According to what data? And what opportunities are relevant to our people? Do all of our consultants need international experiences, or do we just want to make it possible for the ones who are interested to get such experience? Is this an opportunity across the organization, or maybe just for our consultants who we are assigning to projects for which international experience is appropriate?
We are competing with other organizations for top-quality entry level employees. How do we know that we’re competing? Are we defining this opportunity at the right scale – that is, are we competing across the organization, or maybe just for one or two key products or product lines? Furthermore, is this really an opportunity? Seems it might be more of a threat.
We should leverage our high demand. OK, fantastic… even more fantastic if you can reiterate the data that justifies that claim, and make sure that the data is on the appropriate scale. But why? Why should we invest the time or resources in leveraging this demand? Towards what goal are we reaching here? And do our defined strengths point to ways how we can accomplish this?
The human capital threat. Retirement of knowledgeable and qualified people are on the rise. Fails on all four criteria. How do we know retirements are on the rise? How do we know those retiring people are qualified (maybe it’s good that they’re leaving, and we have room for new blood and new ideas in our organization – meaning this would be an opportunity). Perhaps the real threat is that we’ll lose their institutional knowledge. And if so, is this across the board, or just in one division or product line?
Population growth of our consultant pool undermines the rigor with which they are solving problems. Senior consultants are spread too thin. This statement is a tricky one, because it’s assuming a cause and effect relationship: the pool of internal people is growing, so the mentors are stretched thin, and so the teams aren’t able to solve problems with such high levels of rigor. How do we know that this causal relationship exists? In addition, how do we know that it results in less rigorous solutions?
We may have utilized all available, qualified, local part-time staff in the community. Again, this is an example where the data is key, and it’s not provided. How many people do we have? How many people do we need? What are our projections, across the organization, for how many people we’ll need in the future? This may not be a problem or a threat at all, unless our plans for growth and the ability of the local community to support that growth are not aligned. More analysis is needed.
I recently saw the two statements below in a SWOT for a university, conducted at the university level. First, as a strength: “Our intercollegiate athletic programs add value.” Second, as a weakness: “The athletic funding model and return on investment are questioned.” In addition to being in direct conflict, there is no data provided, and there is no assertion of why this is a significant issue. I can guess, but I don’t want to. I want the data to guide me to my conclusions!