Few tools are more ubiquitous in management, marketing, and other key business functions than the SWOT analysis.
However, it is often conducted ineffectively, leading to less insightful results with no clear path to action. One issue is the traditional 2 x 2 grid layout, which often results in short and overly simplified descriptions of the factors being analyzed. SWOT analysis also lacks hierarchy, with all four quadrants emphasized equally, and often lacks a clear understanding of what constitutes an opportunity. Additionally, participants often list strengths without reference to the external market. For example, a client said one strength was “state-of-the-art technology.” When pressed, they admitted that competitors used the same technology, rendering that “strength” moot. For this reason, I rename the internal categories “Stronger” and “Weaker.”
To improve the SWOT analysis, I recommend turning the process “Inside|Out” by 1) first focusing on external factors, such as threats and opportunities, before exploring internal strengths and weaknesses, and 2) using a set of prompts instead of general brainstorming for determining opportunities and threats.
My recommended SWOT analysis process involves gathering an inventory of relevant environmental conditions, exploring internal strengths and weaknesses, and generating recommendations using a simple sentence that considers the relationship between external and internal factors. The aim is to identify a wide range of possible actionable outcomes that are more thoroughly developed and grounded in recommendations.
By using this approach, a set of clear-cut and supported recommendations can be generated. For example, given the current recession, the ability to maintain strong relationships throughout the distribution channel leads to a recommendation to offer discounts to channel partners to help them weather the storm.
SWOT analysis can be useful for insight or planning if used effectively. A more comprehensive and actionable analysis can be conducted by first changing the process and focusing on external factors.