As more ‘business-oriented’ curricula are pushed farther and farther down the educational ladder, it is not uncommon for grade schoolers to tackle a SWOT analysis as part of a new business start-up project. Should we be impressed or concerned? In my experience, grade schoolers probably have a better than even chance of matching the quality of most SWOT analyses I see in corporate business and marketing plans. So what’s the problem?
Key Problems with SWOT
The key problems I see most often include:
- Lack of recency and accuracy: The SWOT page of the plan is often a ‘cut and paste’ exercise with only minimal updates made from the previous year’s version. It is usually done once then left on the shelf, despite continuous changes in the external and internal environments.
- Lack of detail: Most SWOTs employ vague terminology like “weak/strong,” “high/low,” “premium/discount,” etc. which leaves the reader wondering what this means.
- Lack of comparability: Related to the detail issue is the absence of specific comparisons to key competitors which is unforgivable since SWOT can and should be a key part of the competitive analysis section of the plan.
- Lack of consistency: No two SWOTs from the same organization are often done consistently. ‘Strengths’ in one plan read the same as ‘Opportunities’ in another. ‘Weaknesses’ in one plan and ‘Threats’ in another might both focus on external issues, creating confusion in the mind of the reader.
Most importantly, however,
- The insights to be drawn from the SWOT – the ‘so what?’ conclusions – are completely missing or ignored in the rest of the plan.
How Did We Get Here?
We might be tempted to blame marketing for just being ‘bone lazy’ in a rush to get through the Situation Analysis section of the plan and get to the more interesting strategies and action plans. However, in my experience, a weak SWOT is often a sign of other issues, including:
- Critical information gaps: This can be due to a lack of resources, weak data sharing systems or even insufficient time spent with field selling and direct customer interactions.
- Management gaps: If senior management isn’t asking for higher-quality SWOTs, they are unlikely to appear.
- Training gaps: If consistency is an issue, it is probably because there is no common approach agreed across the organization.
A Different Approach: Strategic SWOT
Innovara® marketing programs include significant theory and application of competitive analysis tools. Innovara’s Strategic SWOT method and structure attempt to address the shortcomings of traditional SWOT Analysis by following these key 5 C’s principles:
SWOT is not a piece of paper in a plan but instead should be seen as a marketer’s worldview. Market forces are changing constantly and interacting with our business at multiple contact points. A SWOT Analysis should be viewed more like a Balance Sheet – a snapshot with specific forward-looking assumptions. It needs to be constantly updated, as conditions change.
Rather than vague descriptors like “weak/strong,” marketers need to be specific and quantify the description whenever possible. Where the data do not exist, this gap needs to be declared and included (perhaps) as a Key Issue and risk factor later in the plan to be mitigated.
If Brand X is our major competitor, then the SWOT should state this and make an explicit comparison.
SWOTs need to be done consistently. For example, Strengths and Weaknesses should apply to internal (to the organization) factors. Both product and company strengths and weakness should be considered, not just product. Opportunities and Threats should consider external factors with a forward-looking perspective.
Here’s where the ‘Strategic’ parts come in. If the SWOT portion of the exercise has been done correctly, we should still be asking – and the analysis should answer – ‘so what?’ How do we best proceed from here? We have identified four, basic strategic choices.
Four Strategic ‘Buckets’
If we envision our SWOT as a 3X3 matrix (see Figure 1 above), rather than the traditional 2X2, we can develop a more rigorous response to the ‘so what?’ question:
These are options where we apply a specific organizational strength to an identified, key external opportunity. An example might include leveraging a strong product portfolio or brand position with an external customer who values a category leader. These are the most valuable strategies and the likely sources of business growth.
The direct opposite of the ‘Champion’ situation is where an internal weakness is compounded by a significant, external threat. An example could be a smaller or less-resourced company facing an impending competitive launch with a superior, differentiating benefit. Here our options may be more defensive, including refocusing our efforts to defend our business with key customers most likely to be targeted by the competition or developing other service benefits or pursuing strategic alliances, while we develop a longer-term, product-based solution.
This is where an internal weakness is offset, to some extent by an external opportunity. An example could be an organization with a limited field force capability (relative to competitors) which then exploits online channels to reach customers directly.
Container Strategies – The scenario here is where we have key strengths like strong relationships with key opinion leaders but face an existential threat like a proposed regulatory change. A Container Strategy would be to leverage those relationships to delay or modify the proposed change.
Another important use of Strategic SWOT Analysis is to use it to anticipate competitive strategy. To do this, marketers put themselves in the shoes of their competitors, one company at a time. What would most likely be their Champion strategies? What would be their Challenger strategies? After doing such a competitive simulation, the marketer should revisit their own company’s Strategic SWOT to make sure it is still robust.
Strategic options arising from a Strategic SWOT Analysis would then be considered in the context of key issues, critical success factors and business goals, including funding. Those that ‘survive’ would typically form the basis of strategic imperatives and, eventually, supporting strategies and action plans. In other words, a Strategic SWOT Analysis, done properly, should have a profound effect on the entire marketing plan.
So yes, Virginia, you can believe in a SWOT Analysis but only if we agree that it needs to be elevated well beyond ‘grade school’ quality!
Gary Lyon is Principal Consultant at Portage Solutions and ‘graduate’ of the FMCG and consumer healthcare industries. Portage offers marketing-oriented strategy support as well as training and organization development programs through its affiliation with Innovara Inc. Innovara offers a full range of marketing assessment and training programs that build on many of the concepts described in this article. Programs typically run 2-5 days with customizable content and include Essentials of Product Management™, Marketing Plan in Action™, Advanced Strategic Marketing™, Building Brand Leaders™ and World Class Launch™.
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