Saturday, January 17, 2009


Strengths, Weaknesses, Opportunities and Threats Plus Scenarios

A SWOT analysis can be an efficient and effective way to quickly assess the strategic position of an organization or company. In order to be effective and actionable the SWOT analysis needs to be facilitated by an expert armed with a comprehensive perspective. The combination of expertise and perspective enables a SWOT analysis to appear effortless to the participants yet result in significant insights.

Understanding SWOT Analysis
A SWOT analysis is a way to utilize the existing knowledge of a team to produce a framework for the development of strategies. It is quick, low cost and can be effective if managed correctly. For small businesses or teams, repeated application of a SWOT analysis may be the only type of strategic analysis required. For larger companies, organizations or highly complex projects, a SWOT analysis is a good way to start a strategic analysis and strategy development project. It can identify the gaps and uncertainties in the existing knowledge base.

SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths/Weaknesses are internal. Opportunities/Threats are external:

* Strength: a resource or capacity of the organization, company or team that can be used effectively to achieve objectives now or in the future
* Weakness: a limitation, fault or defect of the organization, company or team that will hinder achievement of objectives now or in the future
* Opportunity: any favorable situation present now or in the future in the market
* Threat: any unfavorable situation in the market that is potentially damaging now or in the future
In general, an effective strategy is one that takes advantage of the opportunities, avoids the threats (or turns them into opportunities), builds on the strengths and minimizes the weaknesses (or takes action to eliminate them).
A potential strategy matrix for a simple SWOT analysis would be:

Benefits of a SWOT Analysis

One of the major benefits of a SWOT analysis is that it is scaleable. It can be a small as a couple of people talking about a situation to a multi-month project in a large multinational company. Dr. Ralph Wilson comments in Web Marketing Today, "Restaurants ought to make bigger napkins, since some of the most productive business ideas seem to come to mind over a meal. The SWOT analysis technique lends itself to napkin planning and snapshot insights." Don't stop there though. Use the team and an expert facilitator to get the most benefit from institutional knowledge.

Other benefits include:

* Simplicity: It's simple to the participants. They can grasp the concepts and process easily. And, they almost always enjoy the process. However, the apparent simplicity can belie the underlying complexity utilized by an expert facilitator. A good facilitator manages the complexity necessary for an effective SWOT analysis and makes it appear simple to the participants.
* Low cost: A SWOT analysis can be done internally, but usually internal facilitators lack the experience to manage the complexity and the SWOT analysis becomes simple with less insights as a result.
* Flexibility/ Customizable: The basic SWOT technique can be fashioned to meet individual needs.
* Collaborative: It allows the participation (and hence more likely buy in) of the team. In addition, since it utilizes the whole team, the results are more likely to more accurately represent the real environments.
* Quickness: It can be quick from the napkin example quoted above to a few days or weeks. However, it is also possible to use the framework over more extended periods of time if the situation warrants it.
* Integrateable: A SWOT analysis is easily integrated with other strategy and planning techniques. It is a great way to start an even more elaborate strategy and planning project.

Guidelines for an Effective SWOT Analysis
Some guidelines for an effective SWOT analysis:

* Be comprehensive: As this is either the only strategic analysis to be done or the start of a more elaborate strategic analysis, it is imperative that it be done on as broad a base as possible. Keep it broad and open. It can be narrowed later.
* Manage the group dynamics: You want to hear from everyone in an open, collaborative, and creative environment. Don't let group dynamics determine the outcome.
* Keep the thinking straight: The SWOT framework is specifically designed to organize thinking and expand the groups concepts of what's possible. Stay strictly within the framework. Don't muddy what belongs in what category, like calling skills of the engineers an opportunity rather than the strength it is.
* Fight for clarity: Work very hard in the facilitation process to make every statement as clear and unambiguous as possible. As Rashi Glazer, Center for Marketing and Technology, University of California at Berkeley states, " Clarity in strategy works. Fuzzy strategies fail."

SWOT Analysis Process
The process we use involves the following steps:

• Discover the driving forces for change: Collect the available knowledge within the company, organization or team before the facilitation on the social, political, economic, demographic and scientific driving forces for change affecting the strengths, weaknesses, opportunities and threats. If this knowledge doesn't exist, it would be better to preface the facilitation with a research project to determine these driving forces for change.
* Begin the facilitation with a presentation and discussion of the driving forces.
* Facilitate the group through the SWOT analysis in the following sequence:

1. Strengths
2. Weaknesses
3. Opportunities
4. Threats

This is usually also the order of difficulty for the group. Strengths are the easiest to think about and threats are the most difficult. We utilize the Innovate! framework for this facilitation.
* Facilitate the group through the development of the desired state they would like to achieve as a result of the implementation of the strategy.
* Work independently to develop four scenarios of potential futures based on the SWOT analysis.
* Present the scenarios to the group and facilitate them in the development of strategies.
* Identify next steps and document the entire process and results.

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