A Quick Look at Conducting a SWOT Analysis
The main point of conducting an annual strategic plan is to set priorities, focus energy and resources, and establish future goals for the company. However, a vital step in an effective strategic planning process is to first be open and honest about the realities impacting the business — both positive and negative.
This process, termed a SWOT analysis, requires teams to identify strengths, weaknesses, opportunities, and threats. The ideal outcome of a SWOT is accurate data that can create a solid action plan for addressing any weaknesses or threats, while harnessing the company’s greatest strengths and opportunities. Conducting a SWOT analysis can be a powerful exercise that forces you and your team to collectively think about your business in a new way. Consider this framework for getting started:
Prepare: Obtain as much internal and external data as possible to help achieve the most objective outcome. Use information that includes the company’s capabilities, resources, processes, business environment, industry performance, competition, and customer feedback. Create a list of questions, such as:
- What do we do well?
- What makes us unique?
- Where could we improve?
- What strengths could shore up weaknesses?
- What trends could harm the business?
- What is our competition doing?
- How can our company turn a strength into an opportunity?
- Are there opportunities that can offset threats?
Participate: To get the most complete, objective results, a SWOT analysis is best conducted by a cross-functional group of as many as 10-20 people with different perspectives and roles in your company. Ask the participants to prepare by getting a truly objective handle on industry trends, as well as the company’s relative standing versus ‘best-in-class’ in their areas of responsibility.
Brainstorm: Engage the group in brainstorming around the four SWOT categories, beginning with strengths to get everyone off to an enthusiastic start! Give participants a couple of minutes to write down as many company strengths as they can think of on sticky notes. While the group then moves to ‘weaknesses’ with the same approach, assign a helper to organize the individual strengths into categories by sticking them to the wall in affinity groupings (e.g., labeled as technical/product expertise, project management discipline, financial strength, loyal customers, etc.). Repeat this process for each of the four SWOT categories.
Document: At this point, you’ll likely have four lists with several items on each. It’s common to have a dozen items under each SWOT category or to have the same issue appear on more than one list. Based on the affinity clusters within each of the four categories, document a final version of your SWOT analysis. Use these lists as you make decisions that contribute to your business plan.
Prioritize: To prune the list down to a handful of the most important issues and opportunities, give every participant a fixed number of votes on what they view as most pressing. They should write their votes down so that they won’t be tempted to change them based on popular opinion. After all the votes have been recorded, you’ll begin to see what issues are a top priority to your team. This will typically be less than 10 and perhaps just five will dominate the voting. Group buy-in to the process is vital, but the CEO/Owner must also be satisfied that the final grouping captures the best thinking on key issues.
Address: Armed with these top SWOT issues, you’re now ready to address them as you develop your strategic plan. Look for synergies. Sometimes, particular issue combinations can be addressed by a single strategy. Challenge each functional area to consider ways to address areas of competitive weakness and to sharpen and protect areas of strength. These can be formulated as department or product-line objectives that support higher level or longer-term company strategic objectives.
Revisit: Review your SWOT analysis regularly, especially if your business is facing major market changes, increased competition, or unmet goals. See if the alignment of your strengths, weaknesses, opportunities, and threats has shifted and make the proper adjustments.