Peter Crow
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Understand your business better: SWOT 2.0

18/4/2014

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Do you use the SWOT tool in your organisation as a precursor to the strategy development process? SWOT (Strengths, Weaknesses, Opportunities and Threats) is a useful tool, but it has fallen out of favour in recent years, as organisations have struggled to deal with the 'laundry lists' generated during SWOT sessions. Also, other tools have become popular. 

Many people have told me that SWOT is old (it is) and irrelevant (let's discuss this), and that newer tools do a better job. I agree, to a point. The trouble with most SWOT analyses is that they only go half-way. Identifying those internal and external things that are helpful or harmful to your organisation's success is useful if and only if something is done about them. The lists generated from SWOT sessions can be long, and complementary items often appear on each side of the ledger. Creating and resourcing effective action plans from such lists is simply too hard in most cases.

One modification that I have used for a couple of years now is to add a 'so what?' question to the analysis after the lists are assembled. For each strength, weakness, opportunity and threat, think about the impact or consequence of that item on the organisation—by asking 'So what?'. If the impact or consequence is high or significant, create an action to maximise (strength or opportunity) or minimise/mitigate (weakness or threat) it. If the impact or consequence is low or insignificant, simply put it to one side for now. This simple addition (let's call it SWOT 2.0) helps teams prioritise those things things that actually matter. It has transformed the usefulness of the tool (and the quality of the strategy) in every case that I am aware of.

One last word though: don't be lulled into thinking that SWOT, SWOT 2.0, PESTEL or any other tool is a panacea. They are just tools. They need to be used correctly, for the purpose for which they were designed. Often, it is wise to use a couple of tools, to ensure you get a well-rounded picture to base your strategy development work on. 

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