The SWOT tool is a simple template that guides you through a process of analysing an organisation and its strategy. It’s useful to help you step away from day-to-day operations and take a broader, more strategic view of how things are going.
Its name comes from the four elements of analysis: Strengths, Weaknesses, Opportunities and Threats. The first two are internal factors; the second two external.
In running the process the four elements are commonly laid out on a grid with four quadrants.
The idea is that by listing points under each of these categories you will be able to get a better understanding of the current situation faced by your organisation. This enables you to plan moves that take advantage of your organisation’s strengths and opportunities, and implement strategies to mitigate weaknesses and threats.
SWOT is often used during the strategic planning process, as a leadership team begins the process of looking at which areas the organisation should focus on over the coming period.
SWOT serves as a useful tool for establishing top-line areas for a potential business improvement strategy to focus on, and for sourcing ideas for new strategic initiatives.
However you can use it at any time, and you can also use it at different levels, for instance to assess an individual product or division, or even a key competitor.
The process can be run by a group of people within a workshop - face-to-face or virtual - or it can be followed by an individual team member who runs the analysis before presenting it back to the wider group.
In order to follow the acronym, SWOT is most used in the order below. However the quadrants can be focused on in any order - and, as we cover in Pitfalls to Avoid below, it may be often beneficial to mix up the order.
SWOT begins with the most satisfying element for most organisations: focusing on its Strengths. What does the organisation do particularly well? What are the unique factors that enable it to be successful? Where is it well-placed compared to its rivals?
Next, it’s time to get critical and honest about the organisation’s Weaknesses. Where does the organisation lack skills, resources or assets? Where does it come off worse than its competitors?
In thinking about what’s next for the organisation, what are its Opportunities? What conditions or situations exist that could enable the organisation to profit?
Looking outside the organisation we can assess relevant Threats. What, outside the organisation’s control, could prevent it from succeeding?
Let's imagine how a world-famous organisation - Apple - might look on a SWOT Analysis:
KEY POINT: SWOT is a simple top-line analysis tool. You may need to use additional tools to get the full strategic picture.
If you’re running a SWOT Analysis within a workshop, draw up the four quadrants on a flipchart or whiteboard.
You can then either invite participants to each begin populating the grid with sticky notes, or act as facilitator and write up notes on their behalf as they call them out.
It’s usually better to not be too picky about what goes on the board to start off with - for efficiency it can be quicker to allow everything to be posted verbatim, and then go through a process of refinement and validation afterwards.
You could invite participants to use the “Mirror Test” technique to help you think about your strengths: if your competitors could see inside your organisation, what would they feel threatened by? What would worry them? Likewise for your weaknesses - what would your competitors be glad to find out, that would give them confidence they were better placed than you?
Encourage participants to keep going even after they have posted several points each, make sure there is nothing they have missed or held back from mentioning.
Ensure that a friendly and collaborative environment is created so everyone feels confident in speaking up about any weaknesses they feel stand out.
The more complete and honest the appraisal, the more useful it will be.
When the board is populated, you can then run a process of refinement:
Consider looking at the quadrants in a different order - for example you might find that participants spend lots of time looking at strengths, and then lose energy as they begin to look at weaknesses. Another approach is to use the order TOWS, which reverses the process to focus on external factors first. Make sure you are spending equal effort and time on each segment.
Avoid restricting your analysis to senior management and directors only - this could limit your opportunity to gain a realistic overall picture. Invite a variety of people from all levels and departments of your organisation to participate and contribute.
The SWOT Analysis is only a surface-level analysis of your organisation, designed for use in the preliminary stages of decision-making. To gain a true picture of each area, and to inform thorough strategic decision making, it may be necessary to look much more closely at some of the individual elements identified in the exercise.
TOP TIP: You could use the results of other external analysis exercises such as PEST Analysis to help you with opportunities and threats.
You may find there are takeaways from the SWOT that require immediate action - for example taking steps to mitigate your organisation’s weaknesses in certain areas. Usually however the process is used to inform subsequent strategic planning activities.
When analysing and using the results, consider the following:
You could also extend the level of internal focus by using Core Competencies Analysis and add more external focus by using the PEST Analysis framework.
