SWOT analysis is about as ubiquitous in business as empty coffee pots in break rooms. The method was introduced in the 1960’s by Ken Andrews or Albert Humphrey (It’s origin is unclear. That’s right, we’ve got a business strategy whodunit on our hands) and has since become a mainstay.
SWOT stands for strengths, weaknesses, opportunities, and threats, and it is a flexible form of evaluation. It’s been used for everything from assessing the suitability of Greece as a market for truffles to the viability for a major city to host a mega-sports event, like the Olympics.
Of course, you’re probably more likely to run into it when evaluating a new project or appraising the health of your business.
SWOT is a strategic tool used during a planning process. Whether you’re doing market research, considering a product update, or thinking about rebranding your company, it can be useful in determining what are the best next steps for you and your organization.
It’s important to remember that this is a tool to aid in the decision-making process. It won’t tell you definitively what you should do, nor should you use it as some almighty mechanism for guiding your business. However, in the right context, it can be incredibly useful.
How to do a SWOT analysis
First thing you’ve got to do is understand: why you are undertaking a SWOT analysis? Are you just performing a general evaluation of your business? Are you considering adding a new product feature? In order for your analysis to be effective, you need to have a clear goal.
Otherwise, you risk going off track and leaving the session more confused than when you entered.
Assuming you have your goals for the session in order, the next step is to create a SWOT matrix. This is a tool to keep you organized and make sure you don’t forget anything when you leave the session.
Image from University of Missouri Library
Here’s what a SWOT matrix looks like. Use it to compartmentalize your strengths, weaknesses, opportunities, and threats. There are plenty of different versions of SWOT matrices out there, and yours doesn’t need to look exactly like this, it’s most important that you have a method for tracking these different categories. As different people in your organization lend their thoughts on these different areas note them on the matrix. This will help you obtain a holistic view of whatever it is you’re analyzing.
When it’s time to actually host the SWOT analysis, you’re going to need a facilitator. This person is responsible for guiding the conversation, making sure everybody has their voice heard, and the group stays on track.
You’ll also need a note taker to record people’s thoughts and ideas.
The last thing you do before beginning is figure out your structure for the meeting. The will depend on how much time you have and how big your group is. If you have a huge group and are short on time, it might be useful to break into small groups and have those small groups create their own SWOT matrices. You’ll need to know how much time you can spend on each quadrant of the matrix so that you cover everything before the meeting ends.
The first part of the matrix you’ll be visiting the Strengths section. For the purposes of this example, we’ll assume you are performing this SWOT analysis as an overall evaluation for your business.
There’s no one method for gathering comments from those within your organization, but I tend to think it’s a good idea to ask everybody to come to the meeting with thoughts and ideas already in mind.
Ask your team to brainstorm before the session begins, so they can come in with well thought out ideas. Some people have trouble contributing during these type of sessions when not given time ahead to think about it.
One of the important things to consider when deciding on your strengths is to look withinthe context of your industry. Everything is relative and if you don’t do something better than the vast majority of your competitors, it’s not wise to include in this section.
What you should hope to get out of the strengths section is an understanding of things you can leverage and build on.
Weaknesses are pretty straightforward. This is more or less the opposite of your strengths section. However, you should hope to identify things within your organization that can impede progress and growth.
It can be quite difficult to improve on weaknesses when you don’t have them down on paper. When your organization agrees on what its weaknesses are, you can form a plan of attack on how to improve said weaknesses.
It’s important to be realistic when evaluating your weaknesses. It can be uncomfortable, and you want to avoid any antagonistic conversation, but it’s critical you get down the things that are truly weaknesses within your organization.
With strengths and weaknesses, you should be generally looking internally. ‘What are we good at?’ ‘Where can we improve?’ When you consider your opportunities and threats, you should begin to think of external factors.
Opportunities only exist in context. Your opportunities will depend on things like the industry you’re in, what your competitors are doing and other such things.
Make sure to remember that the opportunities you come up with should still fall into the context of your goal for the session. So, if you’re doing a general evaluation of your company, the opportunities can be quite bold. However, if you’re adding a new feature to you product, an excess HR budget and an over saturation of HR-related job applicants doesn’t really fit, despite it being a potential opportunity in a broader context.
Threats can be closely related to your organization’s weaknesses, as your weaknesses have the potential to magnify risks.
Like opportunities, threats are mostly related to external factors and can range from competitors to social factors to nearly anything else.
It’s crucial for an organization to keep an eye on it’s threats as recognizing and neutralizing them can be the difference between succeeding and failing as a business.
Once you’ve collected all of your strengths, weaknesses, opportunities, and threats, take time to think about how they fit together. Which strengths and opportunities are aligned. Capitalizing on those might make for easy wins.
Conversely, where are your weaknesses aligned with threats? If you identify any, it might be worth raising a red flag and closely monitoring that situation.
Once you’ve taken the time to evaluate everything on your matrix, you can formulate a plan and start making business decisions that will impact the future.
Is a SWOT analysis right for my organization
The short answer to this question is likely yes. It’s always good to be introspective and really inspect where your organization is succeeding and where it’s falling short.
Having said that, it could be an issue if you use this as your only form of evaluation and decision guiding. Let’s quickly go over some cons to the SWOT analysis method to clarify why it’s imperfect.
One major drawback to SWOT analysis is its static nature. Market conditions change faster today than they ever have in the past—and what was an opportunity last week might be a threat next week. By the time you’re ready to implement your findings from your SWOT analysis, they may already be outdated.
The other concern with using the SWOT analysis is the lack of actionable information drawn from it. It’s great to understand your organizations weaknesses, but SWOT does nothing for telling you what to do about them. One thing you want to avoid is doing a SWOT analysis at the beginning of the year and reflecting on it at the end of the year and the only question you have about it is “what came of that?”
These are both certainly drawbacks, but they’re not reasons to throw out SWOT analysis altogether. They’re simply things to be aware of when you conduct your own. Come in with proper expectations, and you’re likely to find the experience helpful.