The answer to the question: “What is SWOT analysis?” is as much to do with clearing away wrong ideas as it is in simply providing a definition.
What are some of the misunderstandings of the SWOT method? Here are a few situations I believe that muddy understanding of SWOT analysis.
Some people equate SWOT analysis with strategic planning. It seems amazing, but some people when asked for about the strategic plan for their organization simply produce a list of strengths weaknesses, opportunities and threats, or SWOTs.
Of course, the SWOT analysis is about organizational Strengths, Weaknesses, Opportunities, and Threats.
In carrying out corporate strategic planning, finding the SWOTs is a key step in finding the big strategic issues, which the strategic plan must address.
Before the SWOT analysis, comes the objective setting and gap analysis. The planning team set targets for desired future performance. They also make forecasts of performance resulting from current strategies. Comparing these two provides a picture of the gap to new strategies need to fill.
The gap analysis gives you the overall size of the strategic task over time.
Then the SWOT analysis unearths the big factors you need to address in shaping strategies of the right form to close the gap.
SWOT analysis helps you to hunt down the elephant sized issues facing your organization: issues you must address in the strategic plan.
SWOT analysis is not strategic planning; it is just one stage of strategic planning.
I do not wish to rule ou the idea of using SWOT analysis in other contexts. It can be used in project management and other situations where clarifying issues is important. See here for an overview.
SWOT Analysis is a vital part of the strategic planning process. What is SWOT Analysis? It is a way of hunting strategic issues! So the conduct of the SWOT analysis must relate to this purpose.
In trying to determine which factors to include in SWOT analysis, it is crucial to push past conventional and simplistic assessments. Look for evidence, and challenge organizational myths.
For example, many organizations when starting a SWOT put as one of their strengths ‘our employees’. Some go on about ‘…our staff are our greatest asset…’.
Look for evidence!
In what way are they strong? How does this influence organizational performance. Do not accept general labels like ‘skilled’. At what are they skilled? Is this is above the norm for other enterprises in your industry? How does the skill lead to the higher than average performance?
Do not claim as a strength engineering excellence, unless you can find evidence of staff, systems, and standards that lead to recruitment of well-qualified and capable engineers and programs of development and testing for quality in engineering work.
The simple four-cell table of the SWOT analysis can give a false sense of the simplicity analysis. I am not against simple approaches in strategic planning. Trying to help people to use simple approaches to strategic planning is one of my key motivations for building this website! However, too often SWOT becomes simplistic.
By simple I mean something that is straightforward, and uncomplicated. It does not necessarily imply something that is easy.
The approach to strategic planning emphasized at Simply Strategic Planning is straightforward. However, it is difficult at times. The difficulty is not in the process, but in the nature and consequences of the issues addressed. The decisions are often difficulty to take. The process may be simple in unearthing strategic issues. This does not automatically give managers the courage to address them, or even the honesty to face them when discovered.
In contrast, simplistic approaches emphasize easiness over straightforwardness. Simplistic approaches to SWOT analysis, or strategic planning, oversimplify. They fail to face the complexities of the real life situation of the organization.
Slogans, or fashionable strategic ideas, are poor substitutes for a full facing of the facts of the organization’s unique situation.
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