The SWOT analysis is a simple tool to identify and fix vulnerabilities in an organization.
When used properly, it provides insights about root causes that might be causing negative outcomes. However, the SWOT is often used as a once-and-done tool without additional analysis and follow-up.
Watch the video, or read more below.
Here are some ways to get the most out of your SWOT process.
How Do You Pronounce It?
SWOT is pronounced like “swat” (but it’s not something you brush away).
What Does It Stand For?
The word SWOT is an acronym; it stands for:
- Opportunities, and
How Do I Use It?
This is a wonderful strategic planning tool, probably the most well known (among the “boring” tools that strategic planners like myself enjoy using). The SWOT is basic and easy to use.
All you have to do is make a vertical line from top to bottom, and a horizontal line from left to right (or right to left). Label each box (see image below).
The Strengths and Weaknesses are internal problems you’re facing. Opportunities and Threats are external problems that originate from outside your company.
As a strategic risk consultant, I have developed several ways to identify unknowns. I consider it to be anything that is not uncertain.
Here is how I define Risk:
Risks are unknown factors that could result in a good or bad consequence; we just don’t know yet.
When evaluating goals and their associated risks, we’re looking at two factors:
- Quantitative: Precise, measurable numbers based on your financial data and data management tools.
- Qualitative: Emotional experiences, objective feedback both from customers and from staff (which is a little harder to measure).
In reviewing how your business is running right now, I recommend asking a variety of questions. This will help you dig into all aspects of your situation more deeply.
When thinking about the strengths, don’t limit it to just ways your company is doing well.
As a side note, I recommend selecting just a handful of strategic objectives (3 to 5), because otherwise it’s hard for you (or your staff) to remember. Having worked in organizations that had up to 10 strategic objectives, it was so confusing to remember them all. If someone had asked me “What are your company’s goals?” I would have answered, “Umm… I think there’s one about helping patients… or maybe making more money…”
Regardless of how many goals you select, the important thing is that they are clear and that you can easily monitor them.
Consider these questions about your company’s Strengths:
- Are you achieving your strategic objectives?
- What actions are generating the most profit?
- Which activities move you closer to reaching the strategic goals?
- Where are you generating the more profit?
- Which goals you are meeting or exceeding?
Quantitative strengths could include a high percentage of return customers.
Qualitative could be a high degree of customer satisfaction; they are happy with the service, thrilled with their experience, and getting a lot of value.
Weaknesses are things that aren’t going well in your company. Maybe you’re not achieving goals, experiencing lower revenue, high debt, or fewer customers.
Good questions to ask:
- What is causing your company to fail or under-perform?
- How are you not achieving your top 3-5 strategic objectives?
- Where are you overspending?
- Which activities are wasting your time and resources? (See waste, loss, fraud, and abuse)
- Where are you generating the lowest profit margins?
- How are you experiencing conflicts, problems, and difficulties?
A quantitative weakness could be high turnover of your staff.
A qualitative one is conflict and low morale.
External Factors include Opportunities and Threats. You can go much deeper in this assessment process by using the PESTEL tool, which helps you to analyze all Political, Economic, Social, Technological, Environmental and Legal factors.
Consider the possible ways you could be growing, improving, and benefiting your customers. Things that could help your company reach its goals; and perhaps areas your competitors are currently using.
Consider these questions to determine Opportunities:
- In what ways can things improve?
- Where are untapped niches in the marketplace?
- What unmet customer needs are competitors ignoring?
- Where could you generate more sales from current or potential customers?
- How can you grow your Processes, People, Profit, and Proficiency?
One great area to consider is making videos. Not everybody likes to do this, but it works. Here are some other ways to create content for your ideal customers to read, hear, and see:
- Write articles for trade journals or publications
- Share a weekly video or audio clip
- Get interviewed on a podcast (or start your own podcast)
- Send a press release of new services, products, or events
- Offer to speak at conferences
- Provide webinar training on topics of interest to your ideal customer
Now, I don’t believe that “more is better.” Simply gathering ideas and immediately moving ahead won’t necessarily be successful. You have to be able to analyze what you find in the entire SWOT analysis and then apply it to decision-making.
Quantitative Opportunities might be determining which services have the highest ROI (return on investment).
And qualitatively, you might review which services you really enjoy doing.
This area includes anything that could cause your business to fail: losing revenue, lower profit margins, fewer customers, buyer decisions, public relations disasters. Consider the PESTEL categories (Political, Economic, Social, Technological, Environmental and Legal).
Here are other ways to find out your Threats:
- Are there shifts in the market and industry changes?
- Where are you losing revenue?
- Do you expect overhead costs to increase?
- What are the sources of lost profit?
- Where are the potential threats to efficiency (Processes), customers & employees (People), finances (Profit), and/or development (Proficiency)?
I know several healthcare practice owners who don’t use e-mail or social media at all. They prefer in-person meetings, and they schedule visit exclusively with phone calls. While that’s an extreme example, there may be problems in your feedback loop or processes that might cause your company to fail.
A quantitative Threat would be a high debt load.
A qualitative example is feeling overwhelmed when you review your Accounts Payable each month.
Those are the basics of creating a SWOT Analysis.
To get the most out of this tool, consider using the next step, which I call a Super SWOT, combines each area in a matrix:
- Strengths with Opportunities
- Strengths with Threats
- Weaknesses with Opportunities, and
- Weaknesses with Threats.
An even more detailed step would be a Weighted SWOT, in which you rate each factor based on its Impact (degree of success or damage), and the Probability it will happen (very likely or unlikely).
When you combine a basic SWOT, Super SWOT, and Weighted SWOT with impact and probability, you’ll be able to make risk intelligent decisions: which changes to make first, and what can wait until later.
Have you ever used a SWOT analysis? Leave a comment or ask a question below.
Are you a business owner who feels frustrated about planning for the future? Schedule a free call so we can discuss ways you can regain control.
Grace LaConte is a Strategic Risk Expert who helps service business owners find and fix organizational vulnerabilities. Using her experience as a Risk Officer in the healthcare and technology fields, Grace shares a refreshingly honest approach to uncovering hidden risks and opportunities. Learn more at http://laconteconsulting.com, or connect with her on Twitter @lacontestrategy.