So I was working with a new client recently who had been struggling and I asked them if they had ever done a SWOT analysis for the business.
After the funny look, they admitted that they did not know what it was.
I immediately blurted out without thinking about it, "that should be your next step."
If you have ever spent any time in a corporate work environment, you have probably heard of a SWOT analysis. In a nutshell, a SWOT Analysis is a framework for taking a long, hard look at your business or project.
A SWOT analysis is often used as part of an ongoing strategic planning effort or at the beginning of a project. The framework provides valuable insights that assist with decision-making because it enables organizations to uncover opportunities for success that were previously unknown and highlight potential threats so that they can be addressed as part of the overall plan.
Elements of a SWOT Analysis
SWOT is an acronym for the following 4 elements:
- Strengths – What a company does well.
- Weaknesses – Areas where the company needs to improve.
- Opportunities – External factors that could lead to success.
- Threats – External factors that could jeopardize success.
Performing a SWOT Analysis
A SWOT usually begins with ownership laying out the overall vision and objectives for the business or project. Once you have this, you will want to gather a team of people together to work on a SWOT analysis. You don’t need an all-day retreat to get it done, though. One or two hours should be more than plenty.
Make sure all stakeholders and/or a representative from each group are present. You’ll find that having different perspectives from each of the groups will give your analysis a better chance of success.
There is no right or wrong way to conduct the SWOT meeting. It is generally done by asking a series of questions for each category and brainstorming to come up with the best responses to those questions.
How to use Your SWOT Analysis
Once you have conducted the analysis, start by looking at your strengths and determine how you can use those strengths to take advantage of your opportunities. Then, look at how your strengths can address the threats that are in the market.
Use this analysis to produce a list of actions that you can take. With your action list in hand, look at your company calendar and start placing goals (or milestones) on it. Determine what do you want to accomplish in each calendar quarter (or month) moving forward.
Why is this so valuable?
The SWOT analysis and the resulting action list helps to provide a clear vision and strategy for your business or project. Decision-makers will have better insights into the business or project and should be in a better position to determine if an initiative, project, or product is worth pursuing and what is needed to make it successful.
And not only that, the process wasn’t completed by management and simply handed down. It involved all stakeholders so that everyone could have a say in the direction of the organization. This provides additional clarity and support for the mission at all levels of the organization.
Other things to consider.
If a SWOT analysis is deficient in one or more areas, the results may be skewed and offer an incomplete perspective for decision making. To prevent this from happening, take extra care to consider the questions that are asked while conducting the analysis and make sure that each area is thoroughly examined in terms of the overall business or project objectives.
Another problem with the SWOT analysis is that it only captures factors at a particular point in time and doesn't allow for how those factors could change over time. As a result, the insights from SWOT have a limited shelf life and need to be updated. When used for strategic planning or at the beginning of long projects, a SWOT should be reviewed regularly.