Why your SWOT analysis is useless

Andrea Belk Olson

One of the traditional steps in developing a strategy begins with a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. 

The results are often unremarkable, highlighting the same things year after year, and failing to reveal any new, unique ways for the organization to compete. So, can a SWOT really form the foundation of an effective strategy?

The SWOT framework is credited to Albert Humphrey, who developed the approach at the Stanford Research Institute (SRI) back in the 1960s and early 1970s. It was intended to be used to gain situational awareness. You examine your external opportunities and threats. Then you identify your internal strengths and weaknesses. 

The results are often a long list of items, often without any hierarchy of importance or validation from external data. And this is the problem –- while some of the observations and opinions may be valid, the go-forward from a SWOT usually is driven by the strongest voice in the room.

Simply brainstorming items for your SWOT quadrants might get you some useful information, but if you want a SWOT to be effective, it needs to be in the context of a strategic framework. That should be based on two key factors – where you plan to compete and how you plan to differentiate. Those factors must be driven by your overarching definition of success – in essence, what winning looks like for your organization. Then you can determine your capabilities and weaknesses, and identify where you need to invest your time, effort and resources.

SWOT elements are highly contextual. Just because you have a strength, doesn’t mean it will help you compete more effectively, or achieve your winning aspiration. Alternatively, a weakness may only be a weakness in certain environments or for certain audiences. Some strengths can be weaknesses if they aren’t at a sufficient level to help you achieve your goals. 

The point is, you need to understand what you’re trying to achieve first before wasting time on a SWOT analysis, as you very well may identify a bunch of potential capabilities that are irrelevant to your strategy.

Think back to your last SWOT analysis. Did you have a clear plan for developing weaknesses into strengths with respect to your strategy? Or did you cherry-pick different elements, and pursue the ones which you thought were easiest to address? 

Not all SWOT elements are worth pursuing, and putting your efforts in the wrong places can result in attacking the wrong threats, pursuing irrelevant opportunities, ignoring critical weaknesses, and doubling down on unimpactful strengths.

(Andrea Belk Olson is a SCORE subject matter expert, CEO of Pragmadik, three-times published author and TEDx speaker. To contact a local SCORE mentor, visit www.score.org.)

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