SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. I particularly like the SWOT analysis because it’s easy to understand and very quickly gets a team involved in strategic thinking.
Notice that there’s a big difference between the first two and last two components. Strengths and weaknesses are internal. They are part of your company identity. You can change them over time, but not easily; you have to work on it. Opportunities and threats are external. They are out there in the market, happening, whether you like it or not. You can’t change them.
Especially when you’re growing an existing business, you want the planning process to pull your team together, to develop commitment and accountability. Managers have to believe in a plan to implement it. They also have to believe that results will be tracked and that managers will be held accountable for disappointing results and will be given credit for positive results. Healthy planning process depends on everybody believing that results will make a difference. As an owner or operator of an existing business, recognize this team factor as a vital part of your planning process. Work on bringing the team into the planning at several levels.
- At least once a year, go through a strategy review process that begins with a SWOT meeting and SWOT review. Get your key people together and develop bullet points. Keep notes. Keep the discussion open.
- Digest the results of the SWOT. Consider the responsibility you have as owner or manager of a business, which involves some delicate balancing. On one hand, your plan should include your managers by reflecting their input. On the other, real business strategy can’t be done by committee or by popular vote. Sometimes a leader has to make hard and even unpopular decisions. So you should digest those SWOT results in a way that combines ownership responsibility with participation and teamwork. Optimize the SWOT. Sometimes that means that as you summarize the points made, you allow your summary to reflect and direct the discussion towards the strategy that you want to develop. This can be a difficult paradox to manage.
- Share the digested, optimized SWOT with your team of key managers. Develop the strategy. Keep in mind that strategy is focus, and remember the principles of long-term consistency, displacement, and priorities.
- Give the team time to develop detailed strategy, tactics, and programs. You can use the strategy pyramid framework, for example, to develop tactics to implement each of your strategy priorities and programs to implement those tactics. Keep everybody involved focused on strategic objectives.
- Merge the team’s contributions into a plan. Remember again that strategy isn’t done by committee or popular vote. Somebody has to have the last word, and that somebody ought to be the owner of the business.
- Schedule regular implementation and plan review meetings — assign them dates and importance from the beginning — at the same time that you approve the plan. Make this schedule very specific, with real dates and times, so that every manager knows ahead of time; for example, meet on the third Thursday of every month. Review plan vs. actual results. Talk about why actual results are different from what was planned — and they always will be — and what should be done about it.
- Make sure that those review meetings happen. They have to be important. If you’re the owner, operator, or manager, make sure you attend and manage those meetings. If the review meetings fall apart, so will the plan.
During my 20+ years as a business plan consultant and 10+ more years running a company, I’ve seen many times how the SWOT is an icebreaker. It invites people to contribute. It gets people thinking strategically, talking, sharing, and it turns a group of people into a team.
The SWOT also offers a good forum for opening up discussion. I’ve seen a SWOT discussion bring up problems that needed upper-management attention but might otherwise have remained hidden. Middle managers don’t always like telling upper managers what’s wrong. Even in a healthy company culture, that can be awkward. SWOT makes that easier.
For example, I once saw a 30-year-old software development manager suggest during a SWOT meeting that one company weakness was that the 50-year-old president kept messing with the software code instead of leaving it to the full-time pros. I saw another SWOT meeting in which several managers said ownership was unwilling to hold managers accountable for underperforming.
It’s not magic. It’s just an easy-to-understand framework that invites anybody who cares about a business to contribute.
Of course you have to manage a SWOT meeting well. Like any other meeting subject, SWOT can degenerate into useless discussion. A SWOT meeting should focus on the SWOT agenda and avoid unrelated side discussions. It should invite contributions without reprisals for negative comments. It’s a variation on brainstorming, so contributions — as in suggested bullet points, suggested items on the list — are all positive as long as they are well intentioned.
If you accept all comments, good and bad, you also get the benefit of bringing people into the discussion. Implementation is much more likely when managers contribute to the plan. They understand the background and they feel like the plan reflects their input. So use the SWOT both ways — use it to catalyze team commitment and to develop strategy.
SWOT Analysis is adapted from Hurdle: the Book on Business Planning