The Fallacy of the SWOT Analysis

For over 20 years I have advocated for the abolishment of several common practices in most organizations. One of these is the use of the typical SWOT Analysis (Strengths; Weaknesses; Opportunities; Threats) in strategic planning. I have recently had a couple of discussions with several people on this regard, and the following are some of the reasons that are guiding my position.

One of the most important reasons I take this position is the extensive research that led to the discovery and ongoing understanding of the Dynamics of High Performing Organizations, including the Seven Elements of High Performance™ and their underlying models. One of the things that the research says is “Focus on Strengths and Accentuate the Positive.” The research does not say “identify your strengths and weaknesses and accentuate the positive and negative options (opportunities and threats).”

Of course, I always get the challenge of “can you show that all of the exceptional organizations in the research did not do SWOT Analyses?” The answer to that is “no, I can’t.” In fact, the actions of doing or not doing a SWOT analysis simply never showed up as a factor for high performance.

But we did find other factors that did impact the effective crafting and execution of strategy, and doing a SWOT analysis will not support those things. While the best organizations might still engage in activities that don’t support effective execution of strategy, such as SWOT analysis and annual performance appraisals, their negative impacts seem to be nullified.

We also learned that the best organizations don’t just do things differently; they do different things. It is the different things that are based on the Seven Elements that not only make a difference in performance, but that they make most of the negative effects of many of the wasteful practices disappear.

But in the case of the SWOT Analysis, there is much more at play. Since most organizations are the “average, mediocre organization,” they are not strong in the Seven Elements. This means that the effects of using a SWOT analysis will be far more compromising for the average organization. The negative impact goes beyond simply being wasteful; it may cause the organization to define certain elements wrongly, make errors in judgements about those elements, and focus on the wrong things when taking action. This can be debilitating to the organization.

I have had people claim that there can’t be that much wrong with a SWOT Analysis, as it is simply helping to identify and define the “lay of the land;” the environment within which the organization will work. The problem with this identification and defining of “the land” is that it really does more than identify. By “defining” we are making judgements about the environmental factors based on some preconceived beliefs about those factors, as well as our beliefs about the organization and where it is going. Yet, most SWOT Analyses are conducted at the beginning of the strategic planning process, pretty much condemning the organization to a predetermined path based on the determination of the SWOT Analysis.

Let me give you an example using this “land” analogy and the analogy of golf that I used in a previous article on strategy. If the SWOT Analysis is simply a “map of the land” then as we look at the land and we see a creek, a pond, and some brush, we may quickly identify them as “threats” to us, and place them off limits. And the fact that we might not be good at the long game might push us to avoid those “threats” and do some things that overcome our weaknesses to stay away from those threats.

This might be well and good, but what if the intention is to go hunting on the land instead of play golf? In this case, the water and brush is where wildlife will hang out, and the brush will also provide concealment. But before we determined if we were going to play golf or hunt, we already made those suppositions based on our past behavior. We had already determined where the good and bad places to go were based on our thinking.

When moving from an average, mediocre organization to one that is exceptionally high performing, we have to give up our old way of thinking about things, and sometimes even our old way of doing things, and take off in a new direction. This requires some exploration and boldness when beginning the process of crafting the vision.

I have had more than one occasion where an organization has become involved in our Vision crafting retreat and ended up significantly changing their way of thinking and the focus of their organization precisely because we did not allow them to predefine the landscape before they decided where they were going. Once they figured out where they were going they simply focused on achieving those goals, not the extraneous variables that may not even impact their progress. Action plans are developed based on what must occur if they are going to be successful, and are also based on the strengths of the organization.

Here is an abbreviated overview of the approach:

  1. Identify the organization’s Vision; its enduring, long-term core of the Organization; those things that matter for the next 20 to 30 years, if not much, much longer:
    1. Identify the Purpose of the organization other than to make money.  This Purpose should be compelling to everyone, owners, managers, employees, and customers.
    2. Identify the Values that will be the boundaries of behavior in acting to accomplish the Purpose.
    3. Identify the REAL Goals™ (Relationships; Economics; Action-Ability; Longevity) that need to be achieved in order to accomplish the Purpose, within the boundaries of the Values.
  2. Ensure the Alignment of the Purpose, Values and Goals with each other, and begin their alignment with the other systems of the organization and the daily activities of employees.
  3. Identify one, two, but never more than three, Impact Goals™
    1. 6-months to 1-year goals that focus the efforts of everyone in the organization and that have a major impact on multiple REAL Goals™.  Achiving this goal should move the dials in a positive direction on the REAL Goals™.
    2. They provide a focused set of activities and results that allow everyone to be clear about what is important and what behaviors and activities that they need to be focused on daily in order to be successful.
    3. One or two goals are easily managed if attention and focus are applied.  There is a huge diminishing return when 3 or more are attempted at the same time.
    4. This allows for a shorter-term, intense focus, overcoming the distractions of the day-to-day work
      1. It also allows for overcoming the tendency of thinking we are conducting long-term planning (5-year plans) when they are actually shorter term plans.
      2. It keeps us from fooling ourselves that we are doing long-term planning, when in fact, we are not.
  4. Finalize a plan of Execution that will allow the Vision to be put into action and the Impact Goals™ to be acted upon.
    1. What are we going to achieve?
    2. What do we need to do to achieve it?
    3. What resources will be needed?
    4. What resources (strengths) do we already have?
    5. Are those resources (strengths) that we don’t have actually needed?  If so, then how are we going to obtain them?  (Hire them in?  Short-term contractors?  Training of staff? etc.).
    6. When we run into an obstacle, what are we going to do? (over, through, around, ignore?)

There are a couple of issues in this approach that are worth looking at in more detail. The first is that Impact Goals™ are few, span a large number of REAL Goals™, and are of short duration. Typical approaches using SWOT Analyses also tend to use short-term approaches when crafting 5-year strategic plans. The Analysis identifies the strengths, weaknesses, opportunities, and threats, those 5-year goals are set, and because they really aren’t that important, people continue to work in their daily jobs, dealing with the “urgent” things that happen daily, and not doing things that will impact those goals. A year later, the process starts all over again, with a new SWOT Analysis, new 5-year goals, with many of the old 5-year goals never being achieved and never being looked at again. If these 5-year goals did not matter after one year, then why would employees think them important when they were first crafted and made out to be 5-year goals?

But the Impact Goal™ gets rid of that baggage. It is an important goal to begin with, and has a sense of urgency to get it implemented, as everyone knows that it is short-term. Everyone in the organization is doing something to impact its achievement. And at the end of the timeframe, the organization can look at that goal, the organization’s progress in achieving it and its impact on the REAL Goals™, and determine if it needs to be renewed and recommitted to, or if it can be retired and a new Impact Goal™ can be identified.

Finally, in setting that plan for Execution, we did not need to deal with opportunities or threats and even weaknesses. We determine what we are trying to accomplish, what needs to happen (and what we need to stop doing in order for it to happen), what resources are needed, and how we are going to acquire them. Strengths are only considered as they are a resource. They are our natural talents, abilities, learned skills, information, and other resources that allow us to do some things better that others.

This approach is a positive, affirmative, intentional plan to accomplish what we have identified as important. It is a huge key in separating how the best organizations implement a Vision and get people connected, as opposed to simply going through the strategic process checklist and having very little of it matter. It is a different mindset; a completely different frame of mind. It focuses on what we can achieve and accomplish; not on those things we can’t do well and are trying to overcome. It unleashes powerful, positive energy that allows everyone to focus better and to accomplish more.

No, we are not being Pollyanna. Instead, we are choosing to focus on our goals and their results, dealing with obstacles as they arise, using our strengths and our resources to overcome them. We are not wasting our time, energy or resources on those things that might not materialize, and we are not bogging our thinking down with old, tired ways of managing our organization, because if we keep doing what we’ve always done, then we will keep getting what we have always gotten.

As we have shared before:

If you do what everyone else is doing, then you will get what everyone else is getting.

Most get Mediocrity, at best.

Most everyone else is still doing SWOT analyses.

If you truly want to get something different in your results; if you really do want to get your organization more focused, increase engagement, and increase performance; then you have to do different things. That means dropping the SWOT Analysis and begin your strategic planning process in a different, more productive way. It requires you to be open to new ideas and bold in your exploration of new ideas as you begin the crafting of your strategy. You will get far better results, and a plan that can energize and focus the work of those you lead.

Make a Great Day!