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November 2007
TOOLS FOR THOUGHT
SWOT Analysis: Five Ways To Improvement
One of the most commonly used tools in all of strategy or
planning is the SWOT analysis. Standing for Strengths, Weaknesses,
Opportunities and Threats, it seems rare to review a product,
strategy, or corporate assessment today that doesn't include
a 2 x 2 grid with strengths and weaknesses on one axis and
opportunities and threats lined up on the other axis. The
strengths and weaknesses representing internal factors and
the opportunities and threats representing external factors.
The Competitive Intelligence Foundation's recent study, "State
of the Art," (Fehringer, Hohhof & Johnson, eds. at
www.scip.org/cifoundation)
reported that about 50% of the more than 500 respondents reported
using it very frequently, second only to a competitor analysis.
Originally all SWOTs were custom developed internally or externally
by consultants, but now commercially prepared ones can be
purchased from firms such as Datamonitor, PLC (www.datamonitor.com).
What's more, SWOT grids and PowerPoint slides seem to be
a match made in heaven, PowerPoint providing the sideways
8.5 by 11 inch piece of paper that neatly lays out the framework
and message of a SWOT. One would think that they were created
in the same workshop at about the same time. In fact, the
SWOT analysis pre-dates PowerPoint by about 20 years. PowerPoint
1.0 for the Mac was released in 1987 and it wasn't until 1990
that the Microsoft Windows version of Powerpoint first appeared.
SWOT scholars, on the other hand, trace the development of
this strategy tool back either to Kenneth R. Andrew's 1971
book, The Concept of Corporate Strategy, or to Albert Humphrey,
a researcher at the famed Stanford Research Institute (SRI)
in the 1960s who created an analytic process called SOFT,
which some think later became the SWOT analysis.
But has the SWOT analysis fallen on hard times? Ubiquitous,
yes, but do your executive teams use that 2 x 2 PowerPoint
slide, stress test the quadrants and reflect on the assumptions?
Most often not. SWOTs today are often cursory efforts, appearing
at the beginning of a PowerPoint deck, as a piece of landscape
art, or even relegated to the appendices.
The reason is that most SWOTs created today take several
shortcuts from the original implementation. They have been
divorced from the processes that gave them their appeal and
power. So how do you recapture the past glory of the SWOT
analysis?
Remember these critical variables:
1. Make some friends. SWOT development is an intramural
activity not a solo one. Engage co-workers and get the perspective
of departments upstream, downstream and across the river
from yours. Would your SWOT be more convincing if you included
issues and perspectives from key customers, partners and
suppliers?
2. The length of the SWOT lists. They shouldn't be more
than four to five items each. More than that indicates further
issue development is needed.
3. While SWOTs are designed to summarize large amounts
of information, accepted industry lingo and sanitized words
and phrases are often swept into the SWOT uncritically.
Limit these, they dilute your efforts.
4. Prioritize or weight the SWOT items. Rank order them.
Give users your perspective on where the real challenges
and opportunities lie.
5. Be able to verify data and conclusions. Footnote your
SWOT items with other internal or external studies and reports.
The good news is that SWOT analyses are a credible and immediately
recognized analytical tool, and a well-done SWOT analysis
still has the power to inform and persuade.
Like to receive more on this topic? Please contact Tom Davis
at tdavis@cygnusassociates.com
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