Table of Contents
Introduction
If you’ve spent any time in a strategic planning exercise, you might hear SWOT thrown around like a verb, like a needed activity to tabulate, triangulate, or triage the challenges at hand. There is no doubt that SWOT Analysis is a robust framework. By collating the external to the internal, the known to the unknown, SWOT clarifies the organization’s mission and where it should focus its efforts.
But what if we’ve been doing it all wrong? What if the ease with which the term rolls off your tongue is the reason why it’s not as effective? What if a poor attempt at mass marketing has watered down the potency of the solution?
Michael D. Watkins makes precisely this case in The First 90 Days.
How SWOT became SWOT
Here’s how it happened.
SWOT (Strength, Weakness, Opportunity, Threat) came out from work done at the Stanford Research Institute in the 1960s. The core idea was to analyze internal capabilities (Strengths and Weaknesses) and external factors (Threats and Opportunities) to identify what to prioritize and what needed to get done. They named it SWOT.
My theory is that SWOT sounded like “SWAT,” which rolls off the tongue and is easy to remember and adopt. What ended up happening was the mnemonic implied a hierarchy.
It seemed that you first identified your strengths, then your weakness, figured out what opportunities there were out there for the taking, and what threats you needed to keep track of in your rearview mirror. In an example of checklist creation gone wrong, a hierarchy appeared where none should have existed.
Why is the Order Wrong
If you ignore the threats and start with your strengths, it’s easy to go into the circular logic of “we’re awesome because we’re awesome.” The problem with this sequence is it doesn’t take into account the operating environment. Watkins calls it “abstract, undirected navel-gazing.”
No decision is made in a vacuum, not in business, not in life. You have to anchor your thought process to the environment and make decisions based on the company’s external pressures.
Maybe it should be TOWS, not SWOT.
What should happen, Watkins says, is to start with anchoring the discussion to external threats and opportunities. Give them due thought and weight. And then, in that context, dispassionately assess the organization’s strengths and weaknesses.
Responding to regulatory oversight is a good example where SWOT, done the popular way, would result in a very flat-footed response.
Let’s take Facebook for example, and the looming (and seemingly inevitable) threat of regulation. SWOT, done the traditional way, would list as a strength the largest social media sharing and messaging platform and Facebook’s absolute control over what can or cannot happen on the platform.
However, if we started with the threat first, you have the biggest platform, and no other medium is even a close #2 becomes a glaring weakness. I won’t go more into the TOWS example, that would be a case study by itself, but the point is, once put in the context of a clear external threat, it can very well be that what you thought to be a strength is your weakness.
In the context of building an advertising business where advertisers would gladly outbid each other to get access to your users, being the biggest social media platform globally is an absolute strength. However, when put in the context of regulators trying to oversee personal connections and communications, the fact that your users and your customers have nowhere else to go is a glaring weakness.
Be the gladiator
So next time you find yourself in a SWOT analysis, ask for context. If none is provided, then ask them to reverse the order and attack it in pairs. Start with the external first (Threat and Opportunities) and then internal ( Weakness and Strength). These are expensive and intensive meetings that take a lot from the attendees. The meeting organizer may not appreciate you, but the other participants will thank you.
Finally
I love finding double-take-inducing revelations like these masquerading as little vignettes in books. Seemingly side discussions that could very well be their own HBR article if not their own chapter. Like the fact that the Two-pizza rule was not as successful at Amazon as the Internet would like you to believe. Maybe I’ll share that next.