Most managers have experienced the SWOT analysis – strengths, weaknesses, opportunities and threats. The theory is if you understand these things about the corporation, then you can optimise the business to leverage the strengths, minimise the weaknesses, capitalise upon the opportunities and avoid the threats. Anyway, that’s the theory. In practice, two profound dangers occur in using the SWOT.

Firstly, many companies assume that a strength is an attribute that needs to be built upon. True on many occasions, but not a universal principle. IBM correctly believed in the days before the PC, that their core strength was its unsurpassed competence in main-frame computers. Their decision was to leverage that strength.

The problem occurred when the PC came to the market. The strength that IMB had and leveraged, was not the strength that they needed in the “new world”. Many organisations are lulled into a false sense of security by deluding themselves that what they regard as their strengths (and they often rely on their own opinion of themselves) will be the attributes that will see them through to the future of the company. Such assumptions often deaden the organisation to the realities and dynamics of their chosen market. Such delusions are deadly and have seen many corporations realise only too late the price of leveraging only existing strengths.

Therefore rather than asking “what are we good at”, the core question needs to be “what to we need to be good at to get the desired outcomes?”

Secondly, it is very rare (based on nearly 35 years of consulting experience) to see a company undertake a SWOT analysis at every level of the organisation and review that SWOT when basics within the organisation change. 

If a company chooses to embark on a web-based sales channel, for example, then its SWOT will have a certain construction. But if the organisation decides to embark on a manufacturing or retail strategy then that SWOT would (should) look quite different. A decision to leverage certain strengths might be a valid decision in a certain context but entirely inappropriate in another context. As an organisation lurches from business plan to business plan (sometime annually and sometime three-yearly), the SWOT undertaken in year one will, in all probability, be quite different in year “X”.

Inconveniently, most pressure to change occurs between planning sessions, not when an organisation chooses to develop its plan. It is a rare company indeed that constantly reviews its SWOT analysis and the impact at each level of the organisation – yet it is exactly that sort of review that is needed when the corporate focus and activities are significantly based on the outcomes of the SWOT analysis.