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The SWOT Analysis is for the InexperiencedPosted by Tresha Moreland in Competitive, Planning | 1 comment

Jan 20, 2012

The SWOT analysis is for the inexperienced is what a MBA professor exclaimed in a business strategy

course I took a couple years ago. I, along with my fellow

students, was astonished to hear that statement. I mean, really. We all thought the SWOT analysis was a

golden tool to help build strategy. We tried to convince the professor to change his mind on the SWOT

tool. But the professor held firm on his statement.

A SWOT analysis is a common strategic planning tool that identifies an organizations strengths,

weaknesses, opportunities and threats. Ultimately the goal of this tool is to help identify internal and

external factors that might impede or support key objectives.

At the start of every year, planning for the near term and future, is usually top of mind for the C-Suite,

HR executives, leadership, and board members. Planning sessions are no doubt on many upcoming

meeting agendas. More often than not, the SWOT analysis will show up as one of the agenda items.

It turns out the professor I spoke about earlier made some valid points. Dont get me wrong. This is not

about dismissing the SWOT analysis. But instead this is about expanding our thinking as opposed to just

sticking to a common think box of what is most popular. There is various strategy planning methods.

When it comes to objectives such as obtaining a competitive advantage, the right strategy and effective

execution is a key to success. So it stands to reason that we must be able to utilize strategy planningmethods up front that are most effective.

Here is a high level overview of three strategy-planning methods:

The SWOT Analysis The SWOT analysis as stated above is a tool that emphasizes the consideration of

an organizations strength, weaknesses, opportunities and threats. The SWOT analysis is applied in non-

profit and for-profit settings. It is utilized for organization-wide or individual based analysis. Marketing

discipline may also use this tool to assess competitors.

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The advantage of the SWOT (or WOTS up in some circles): One of the greatest advantages of SWOT

analysis is that it helps to summarize and clarify whatever opportunities and issues are facing a business

or project (Uhl). It is a tool that provides a simple structure to identifying areas that can impede or

propel objectives.

A disadvantage is that the tool is considered too simplistic in nature and doesnt account for

complexities such as to what degree the strengths and weaknesses exist. More research is required to

learn to what level are issues and opportunities. An organization, department or individual may be weak

in something, but it may not be to the degree that it would undermine objectives. So putting resources

on something identified, could be a waste and better served on other key strategies.

Scenario Planning Scenario planning is a discipline for rediscovering the original entrepreneurial

power of creative foresight in contexts of accelerated change, greater complexity, and genuine

uncertainty (Wack.) Scenario Planning is a strategic planning method that sets a flexible path for long

term planning. This process seeks to answer the question, What if? From that point, decision makers

can consider developing strategies to address each possible scenario. Scenario Thinking, introduced by

Shell Group Planning in the 1970s, has evolved as a powerful methodology to enable groups to

structurally anticipate change and incorporate external uncertainty into the internal decision making

process.

The advantage of scenario planning is that it can be a powerful tool in deciding course of action

especially in times of uncertainty. This tool will help give some insight in when to advance and when to

retreat in a strategy plan given a particular scenario.

Disadvantages to this method are time spent and ambiguity. Just imagine how many possible scenarios

your organization faces today that could possibly impact objectives. Now sit down and talk about them.

Okay now decide which scenario is imminent and which will likely occur 5-10 years from now. How doyou know? This exercise will most likely going to take more than just a simple 1 hour meeting and

certain the need to validate before investing in decisions made.

Distinctive Competencies Distinctive Competencies, also known as core competence analysis,

identifies what it is your organization does better than anyone else. An assessment of the internal and

external environment helps to determine strengths. Once a strength is identified that will meet market

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needs and delivers a competitive advantage that becomes an organizations core competency. What

gets real interesting about this strategy is determining future core competence.

Helping organizations identify strategies around building new or strengthening existing resources and

capabilities is a definite advantage to this method. Ultimately this method could propel an

organizations ability to compete in a global and local marketplace.

However the downside is if key decision makers do not understand what consumers value. There is the

risk of over differentiation and charging a higher price than what consumers are willing to acknowledge

with their wallets.

Of course several there are other strategy methods such as issues and value based assessments,

and Porters Five Forces. Ultimately each strategy planning method holds value. But which one to use

depends on the organizations objectives, planning history, culture, and environment. In some cases a

hybrid approach to planning where one size dont not fit all may be the best planning method.

What are your experiences with strategic planning? Which method do you use or have found most

helpful?