A SWOT analysis – Strengths, Weaknesses, Opportunities and Threats – is a critical element of a strategic plan, if done correctly. Far from being a “silly exercise” (and I’ll admit in the early days of my career I sometimes felt that it was…) the SWOT is an important input that leads to the development of strategies. It can be a determinant of whether or not you will be able to successfully achieve your goals and objectives. But, it has to be done correctly to deliver that value.

First, what is a SWOT? It’s a brainstorming exercise that explores four areas of impact on an organization: Strengths, Weaknesses, Opportunities and Threats. But, it’s not just an exercise in speculation and personal opinion–at least it shouldn’t be.

Done effectively, the SWOT should be based on real data and information, not guesswork, opinions or supposition. The more data you can bring to bear in your analysis the more likely your strategies will be built on solid ground.

For example, if a company “assumes” that its customers love its products and services, strategies will be far different than if research finds that there are particular elements of the product or service that customers are not happy with.

The SWOT process should be handled as a brainstorming exercise, with all inputs recorded. The elements of the SWOT are:

• Strengths–those things that are internal to your organization that you can leverage to your advantage
• Weaknesses–those things internal to your organization that hold you back, or could potentially hold you back, from meeting your goals/objectives
• Opportunities–external impacts on your organization; those things that you might be able to take advantage of to help you achieve your goals and objectives
• Threats–also external; those things that either currently exist, or might come to exist, that could hinder your ability to accomplish your plan

Generally, when I work with groups, I will go through the process of brainstorming each of these areas and then conduct some form of prioritization process (often a nominal ranking or voting process) to identify which items rise to the top in each of the categories.

The SWOT serves as an input for strategy creation. When creating strategies, you would consider how you might leverage your strengths and opportunities, and overcome your weaknesses and threats–those “hows” become your strategies. So, for instance, a strategy might look like:

“Leverage our long-standing history in the community and strong customer service ratings, to combat increasing competition in the market.”

When I work with groups, I often use a simple exercise to illustrate how strategies are derived from the SWOT. In this case, I use a fictional “pizza shop” and show their prioritized SWOT analysis–identifying the top items in each of the four areas. I then ask the group to come up with some strategies based on this SWOT and, thinking creatively about how they might leverage strengths and opportunities while overcoming weaknesses and threats.

I’ve actually heard a number of very creative ideas. For instance:

• “Build on the longevity and status of the pizza shop in the community to engage consumers and staff in the creation of a community garden to grow organic ingredients that the market demands.”
• “Turn the weakness of the outdated store and furnishings into a benefit by leveraging the long-term status of the pizza shop in the community and consumer fatigue with ‘big box’ brands to focus on nostalgia–use access to capital to make some improvements, but keep the feel of ‘the good old days’ in place.”
• “Address ease of entry for new competitors by strengthening community communication and leveraging both the loyalty of employees and community.”

That’s, generally, the way the process works and, when based on solid data and fueled by creativity and “out-of-the-box” thinking, the process can yield some very innovative ideas–sometimes, as demonstrated here, turning weaknesses and threats into opportunities.

Recommended Reading:

The Everything Guide to Customer Engagement