This article is an extension to our "In a Nutshell" series. To read our original overview of SWOT analysis click here.
In its basic form, SWOT analysis is simple and easy to perform, applies to a wide range of strategic decision-making activities, can be used by anyone at any level in any industry, does not cost anything, and no special training is needed (i.e. it is not necessary to read a specific book, acquire prerequisite knowledge or hire an external consultant).
Other types of strategic planning activities can be extremely detailed and require a significant amount of time, planning and research. SWOT keeps thing simple by generally reducing answers to a single page. Placing constraints on thinking can be very useful as it forces the decision makers to define and categorise their answers with greater precision than might otherwise be achieved with a more open-ended model.
SWOT is probably best suited as a preliminary or initial activity in the early stages of the strategic planning process used to brainstorm ideas and get the ball rolling, which can be further complemented with other models later on in the process, rather than as an exclusive model for strategic planning. With that said, since SWOT is not a copyright-protected model, this allows people the freedom to experiment with the structure and adapt the process to suit their particular situation and organisational needs.
Ultimately, SWOT encapsulates four of the core components that are important to consider in a strategic decision. Failure to look at any one of the four components could be seen as a significant oversight. The process, when performed at its best, will help decision makers identify “blind spots”, capitalise on strengths, minimise weaknesses, address threats, and most importantly, generate strategies that tackle the organisation’s biggest concerns.
SWOT analysis has a number of criticisms. The flipside of its 1-page, four-box simplicity means that people often have a tendency to reduce ideas to short bullets only a few words long. This abbreviated structure may cause decision makers to “chunk” ideas at a higher level than is desirable. For example, “globalisation” may be listed as an opportunity but this really says nothing about how this development is a meaningful opportunity that can be translated into a practical strategic action. In fact, probably the most significant criticism of SWOT is that people often report difficulties translating information into meaningful outcomes. This is to say, SWOT identifies broad issues without generating specific solutions.
Another closely linked problem of the SWOT structure is what to do with ideas that may fit into multiple boxes. For example, Southwest Airlines does not provide meals on flights. This is can be seen as a strength because it allows the airline to reduce costs and is thus a major competitive advantage, but it could also potentially be seen as a weakness because it impacts the customer experience. Just because something can be defined as a weakness does not mean it should be.
Information can easily end up being placed in the wrong category because it superficially appears to be correct based on how people understand the definitions of “strength”, “weakness”, “opportunity” and “threat”. The dynamic interrelationship between all four points of view can be squashed by the SWOT structure, which, in the attempt to simplify ideas, may lead to misdiagnosis of the organisation’s situation and facilitate, rather than reduce, to tendency to make poor strategic decisions.
In addition to these problems, critics also point out that people frequently don’t prioritise issues within each of the four boxes. People have a tendency to treat the exercise as a “box-filling” activity in an attempt to generate as many bullets as possible in each of the four quadrants and don’t go any further to identify which issues are of greatest strategic importance. Problems with SWOT’s inherent simplicity and failure to support prioritisation will be further compounded when there are only a small number of decision makers in the room who don’t represent all the important viewpoints.
A set of final criticisms relating to SWOT involves timing. First, market conditions can change quickly, causing information built into the SWOT analysis to become dated quickly. It is not clear how often (or under what conditions) a SWOT analysis should be revisited. Secondly, information built into the SWOT analysis is usually based on present or past assumptions; however, this may not adequately account for forecasted reports about the market during the time period when strategies are implemented or what competitors might be during this time period or even how competitors’ behaviour might change in response to a particular strategic decision.
These sorts of issues may have been mitigated if an “operating manual” or fuller context had originally been developed around how to run a SWOT planning session. There is ongoing debate about whether the criticisms of SWOT are valid problems inherent in the structure of the model or problems related to how the structure is used in practice (i.e. criticisms of the tool vs. criticisms of the tradesman). Its openness to interpretation, anecdotal evidence of misuse and structural simplicity have lead some critics to conclude that the model should be replaced altogether rather than simply revised or improved.