SWOT is More Potent Than You Think...
Updated: Oct 9, 2018
Marisa Guerin, Ph.D. – October 4, 2018
...But most folks don't get it right, and so they fail to get the value it it supposed to provide. Let me explain.
For those who don’t use the concept: “SWOT” is the very common acronym for one step in the process of strategic planning; it involves identifying the organization’s Strengths, Weaknesses, Opportunities, and Threats. Because it is so very common, most people working on a strategic plan know that they should do this step. But I have found that most don’t know exactly why, and they consequently don’t do it correctly.
My purpose in writing this post is to sharpen your effectiveness in the hard work of strategic planning, assuming you are serious about needing a good plan to navigate future sustainable growth. Big corporations have plenty of experts for this – many nonprofits and religious groups don’t, and they rely on consultants/facilitators or Board members to help them. I have seen too many sincere efforts to do a SWOT that end up toothless, making no special contribution to a valid and defensible strategy for the future. That seems a shame to me. You can do this!
What’s the most common, not-quite-right practice? A large sheet of paper is divided into four quadrants, each labeled for one of the 4 elements of SWOT…and then the planning team or focus group or committee fills in each quadrant with a list of items as they perceive them. Then this assessment might find its way into the narrative of a plan, influencing its priorities.
Why is this not good enough? Because SWOT analysis is a competitive analysis tool – its true value is helping you to understand how the organization stands relative to the other options that potential users or clients have available to them, and in a specific context. Please note that even if your organization is unique in all the world, people always have an alternative use for their time, money, trust or attention -- THAT'S your competition.
If you don’t look out to your environment in a very practical way, the strategic plan will end up based on dreams and hopes, without some real source of traction. If any part of your motivation for strategic planning is to check for a sustainable path forward in a difficult environment, you really do need to do a good job with the SWOT analysis.
Of course, for some organizations the visioning driver is just as important. There is every reason to be sure that creativity, appreciative inquiry, and innovation are part of your process, and your plan may well be powered by true imaginative daring. Just don’t try to combine the dreaming step with SWOT, which is a reality-testing tool. A plan that addresses both vision and competitive analysis is a much stronger one.
To use SWOT for competitive analysis, you can start by filling in the two quadrants labeled Strengths and Weaknesses -- the organization’s own planners are well-positioned to identify these things. They are internal in nature, a reflection on what you know about how the organization works. (Do try to avoid partisan bias by getting various voices to contribute.)
However, you cannot complete the quadrants for Opportunities and Threats until you also know something about the Strengths and Weaknesses of the alternative providers that respond to the same need -- what businesses call “competitors”. Without that contextual understanding, your thoughts about Opportunities are no better than brainstorming. They aren’t analyzed or tested against likelihood of success. And you surely should not bank a strategic plan on dreams or ideas that turn out not to provide any distinctive advantage in your specific environment.
How could it be done better? If you have a handle on your own organization’s pluses and minuses, and if you know what the Strengths and Weaknesses might be for the competing options available to your consumers, then you can complete the other two quadrants. The Opportunities turn out to be aspects of the organization where you have a Strength and the competitors or alternatives have a
Weakness. The Threats are areas where competitors are strong and your organization is weaker, and therefore vulnerable. Remember, we’re only talking about elements that are relevant for your mission in your specific environment. You can see this approach illustrated in the accompanying chart at the top of this post.
For example, this means that if your organization and all the other organizations you compete with are pretty much equally vulnerable to an environment of shrinking government grant budgets, that is a shared Weakness that needs ongoing attention, but doesn’t necessarily represent a competitive Threat. On the other hand, if an alternative provider organization is exceptionally good at accessing grants in such an environment, that would represent an Opportunity for them and a Threat to you.
You can calibrate the degree of investment you may need to make in your capability by comparing it to what your competitors are able to do. If you can stay even with them, you may not have an Opportunity, but at least you have neutralized the Threat. Technology is similar – either everyone shares the same limitations, or someone has a breakout capability that gives them an Opportunity and represents Threat to others. An arms race results, with everyone needing to meet a new threshold level of capability just to stay in the game.
Your own Opportunity may involve people. If your school, clinic, or agency serves the same clientele as many others but you have a specialized staff expertise that no one else can provide at the same cost level, you have a strong competitive position, assuming that expertise is valued by those you intend to serve. For example, a business providing consulting and training resources for staffs of nonprofits might have a strong opportunity if it is the only one with a full complement of attorneys and administrative experts with deep experience. Compared with its peer group, the SWOT analysis might indicate that it has a strong position. But…
Here’s where it becomes important to think like a consumer when you identify “alternative providers”. Maybe the consumer isn’t just able to go to another business or agency – maybe the local consumers also have available to them an organization of pro-bono retired professionals that is good enough to supplant the paid services of the business you are trying to grow.
So pay attention. Just who are the “competitors” that you should analyze?
If you are a church group, the competitor is most likely not another religious group, but the “nones," folks who don’t affiliate with any religious group. Or the competition might be social media, accessed privately and from home. All the creative programs in the world won’t represent an opportunity unless they connect with a need that nothing else is satisfying as well. An attempt to really address the realistic situation pushes against easy assumptions or unquestioned traditions and forces deeper reflection.
In many arenas of today’s economy, the actual Threats are not coming from comparable peer organizations, but from disruptive new solutions to old problems. If you are doing a SWOT analysis for a potential new hotel or inn, for example, your competitive analysis has to go beyond other hotels – it will have to include an analysis of AirBnb and VRBO (Vacation Rental By Owner) and whatever other new platform has been invented by the time this post goes up.
Here’s my main message: SWOT is an oldie-but-goodie if you are going to use it as an occasion for rigorous thinking and probing investigation. On the other hand, if you spend time filling in the SWOT chart without studying your actual context and the alternatives available to your intended users or clients, it may end up only as an exercise of imagination, or a dry inventory of things already known or believed. Don’t stop there! Go outside, look around, do a reality check, and make your case – a clearly-argued SWOT analysis will lead you right to the priorities you need in your plan.
And if you have read this far and you haven’t got any reason to do a strategic plan, count your blessings – it’s hard work.