The Role of S.W.O.T. Analysis


I will be honest. I am not a big fan of SWOT analysis. But who could blame me? My first introduction to the tool was at a partner retreat. The scene was set. There were two flip charts arranged in the middle of a 3 sided sofa arena. Our facilitator's penmanship was flawless. We broke for coffee and snacks after an hour and started back in again with renewed enthusiasm. But no one knew why we were doing this. It was like having all the building materials for a million dollar home delivered to the middle of a football field. No one knew what we were supposed to do with all of this intellectually inspiring, but contextually void material.

Since that time I have sat through many SWOT analysis sessions and I have led several. And sometimes I knew exactly what was going on, but other times I just felt like we were doing mental calisthenics. I have learned that many people know how to do SWOT analysis, but few know why they are doing it or what to do with the results.

**The role of SWOT is to help companies come up with strategies.** But unless the company knows what those strategies are supposed to achieve SWOT  simply serves to offer up a bunch of suggestions about things the company COULD do without saying anything about what the company SHOULD do. This can be the frustrating part for the bright minds in the room. During SWOT people are challenged to come up with their very best ideas, but no one knows how to filter and refine those ideas through the lens of a **strategic foundation.**

The strategic foundation is simply all of those things you address before you get to strategy. In order of importance they are:

  1. The values of the organization and its leadership
  2. The vision that leadership has for where the organization will end up.
  3. The point of differentiation that sets this company apart from others. Sometimes this is called mission, or it is closely correlated to mission.
  4. The mid range objectives (goals) the company is trying to get to on the way to attainment of the vision. These are usually 3, 4, or 5 year goals.

At this point SWOT gives the leadership team something to talk about. A careful, well facilitated discussion of strengths, weaknesses, opportunities and threats will inform the best way to go about achieving those mid range objectives. Many potential strategies will fall away because they are seen as inconsistent with the company's values or because they jeopardize the point of differentiation, or because they don't take the company in the direction of the vision. And a few will resonate so deeply with the strategic foundation that they become clear candidates for team's focus over the next year. 

That final selection of strategies is beyond the scope of this post. The point here is to give the SWOT tool some context so that when it is employed the output of the group is channeled into something useful instead of something intellectually stimulating but aimless and more than a little frustrating for the participants. If you do not have a strategic foundation that can be understood and explained by every member of the team you should spend time on that before you gather everyone for a day of SWOT analysis.