Have you seen Matrix, the movie? It can be entertaining, but it is not the reality. It's fiction. Just like many SWOT analysis.
The SWOT analysis is a business staple. As every modelling tool, it simplifies reality so we can see some important connections. It stands for Strengths, Weaknesses, Opportunities, and Threats, offering a seemingly straightforward way to assess your company's position. But here's the secret: a basic SWOT analysis can often be a trap!
The biggest pitfall lies in how people approach the analysis. We naturally tend to fill in the "S" and "W" sections based on our current internal state. "We have a strong brand!" or "Our marketing team is understaffed." These are valid points, but they miss the mark.
Here's the twist: Strengths and Weaknesses should be about your position relative to the market, not just your internal capabilities. Is your brand truly strong compared to competitors? Does your understaffed marketing team hinder your ability to capitalise on emerging trends? These are the questions that SWOT should answer.
The even bigger blind spot lies in Opportunities and Threats (the "OT" sections). These are supposed to be external factors – the economic climate, shifting customer needs, technological advancements. However, many people fall into the trap of listing internal actions they could take, like "launch a new product line" (opportunity) or "fail to meet production goals" (threat).
This internal focus renders the SWOT analysis useless. You have no control over external forces, so listing them as opportunities creates a false sense of agency. Similarly, internal weaknesses masquerading as threats don't illuminate true dangers.
Start with the external environment. Research market trends, analyse competitor strategies, and identify potential disruptions. These become your Opportunities and Threats.
Evaluate your Strengths and Weaknesses in light of the external landscape. Does your brand resonate with the new customer segment? Can your understaffed team leverage technology to stay competitive?
By focusing on external factors and their impact, you can transform the SWOT analysis into a powerful tool for strategic planning. It'll help you identify areas where your strengths can be leveraged and weaknesses addressed to capitalise on opportunities and mitigate threats.
Remember, a SWOT analysis is just the first step. The real value comes from using it to develop actionable strategies that propel your business forward.
So if you are about to manage reality, instead of chasing fictions, use the SWOT tool properly.
