SWOT is NOT Strategy
It is absolutely crucial to get past the myths of strategy before any organization can get to what constitutes real strategy. As with most myths, they are grounded in history are easy to understand and have some face validity. Holding on to myths inhibits your ability to develop real strategy and more importantly will virtually prevent you from convincing your employees to take a more profound path.
SWOT Analysis as Strategy
SWOT (as applied to the business world) is generally viewed as a creation of the 1970s when business strategy was really business policy. When I took Business Policy (now called Strategy) in business school we read cases to “learn” what to do in business (some schools think this is all there is to Strategy even today). Once in business, we were expected to use corporate history or examples in the press as a foundation for what passed as strategy.
SWOT was an attempt to bring some structure to the topic and as a conceptual approach is still fairly robust. Unfortunately, many authors, academics and practitioners decided that SWOT was an ANALYSIS tool and a means for an organization to develop its strategy.
SWOT is NOT strategy and it is not an analysis tool.
Taking five minutes to do a SWOT exercise is a five minute waste of time at a company. More money has been wasted on SWOT than virtually any other aspect of thought in business. For those of you fortunate enough to not know as of yet, SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. Anyone can create a SWOT using their own biases and view of the world. In the end a SWOT is simply the opinion of the person or group filling it out. Companies over the years have dedicated untold dollars to meetings where groups throughout the organization craft the SWOT for their company, their division, their product, etc. Then (of course) you emphasize your Strengths, minimize your Weaknesses, look for Opportunities and prepare for Threats. It all sounds good. However, who decides which is what?
Just because someone believes X is strength does not make it so. SWOT is an inherently static look at the business based upon a gut opinion. Furthermore, everything that is strength is also a weakness. By the same token everything that is an opportunity is also potentially a threat.
Over the years I asked each of my then 8 year old sons to do a SWOT of his 3rd grade class. I taught him the technique in 3 minutes (anything that an 8 year old can learn effectively in 3 minutes should tell you everything you need to know about SWOT as an analysis tool).
I then asked his teacher and his principal (separately) to do one. Amazingly, they did not align. My sons thought recess and lunch were the strengths of 3rd grade. Each boy listed his teacher as a strength (albeit below the other two items), a weakness, an opportunity and a threat (at the top). I know it comes as a shock, but neither the teacher nor the principal listed recess or lunch as strengths.
There is a vast amount of material out in the internet world for you to learn about the drawbacks of SWOT as an analysis tool. This approach was abandoned by most serious strategy people more than 25 years ago and yet I see it every year as I work with companies. Its staying power is mostly attributable to its ease of understanding and the many, many non-strategy professors at universities who “teach” it as a technique.
Serious practitioners of SWOT craft elaborate charts that have a vast list of elements in each of the four boxes. More importantly, people preparing a SWOT tend to live in the past rather than the present or future because the approach does not provide for any dynamic view of the market.
Your view of the company will distort what you believe belongs in each category. However, as I pointed at the beginning of this, it is a fairly robust conceptual approach. If we look at each element, the fact is that we do want to know what would populate each of the four blocks.
Do we want to know the strengths of our company? Of course we do. There are very well-honed techniques available for getting at the true strengths (differentiators) of your company. Applying a process utilizing some version of resource-based analysis will allow you to get at REAL strengths.
Do we want to know the weaknesses of our company? Of course we do. These are the standard elements of the business that are being operated below the median expectations in the industry. It is crucial to identify these and put together an aggressive action plan to get them at or near median.
Do we want to know the Opportunities of our company? Of course we do. However, it is only an Opportunity if we have a competitive advantage that can be applied. There are a number of techniques for finding these opportunities.
Do we want to know the Threats to our company? Of course we do. However, threats affect most of the companies in our industry. Therefore, there are a number of approaches to discern what these might be and how an organization can navigate those ahead of its competitors.
What does this mean? It means that it is time to put SWOT to bed as a Strategy approach. It is time for every business person to learn how to really develop strategy and how it can be implemented.
