Monday, 26 October 2015

SWOT in focus

There are some highly-effective, simple, low tech, structured methodologies that are commonplace in intelligence and business analysis, such as SWOT, Cause-Effect diagrams (aka Fishbone diagrams), Mind Mapping and Concept Mapping.  However, sometimes these ‘analytical tools’ are wielded by users without giving much thought to exactly what kinds of problems they are designed to be used on. It can help analysts to think about these techniques in a more-fundamental way.  This helps them understand the possibilities and limitations of various common methods, and with sufficient command of these principles lets them customise and adapt them to be more appropriate for a particular question.

In a series of posts we're going to take a closer look at some commonly-used analytical tools. We don’t intend to provide a detailed description of how to use them as there are many excellent guides out there already. Instead, we'll de-construct them a little and consider why these techniques work, and what is going on when they are used. We'll suggest some ways they can be extended and adapted to suit particular analytical problems. We'll start with one of the most faithful tools in the toolbox of analysts from all sectors of business: the 'SWOT' (strengths, weaknesses, opportunities and threats) analysis.

What is SWOT?

SWOT is a simple but effective method of delineating and categorising the factors that will lead to the success or failure of an objective or set of objectives. We've found it particularly useful in the early stages of (for example) a technical delivery project but it can also be used when thinking about how third parties might behave. Although it's probably best done in a group (using ideas on Post-its around a whiteboard) it be just as effective done privately, or asynchronously and remotely via electronic means.

What’s going on in a SWOT?

SWOT analysis involves three types of judgement or input:
  • Specifying the actor and objective
  • Generating and capturing 'factors' influencing the actor's achievement of their objective
  • Sorting into one of the four areas on the SWOT 
Let’s look at these in turn.

1. Specifying the Actor and Objectives:  Failure to precisely define and agree on these will usually lead to woolly, unactionable output.  When we define the actor - the person or organisation whose strengths, weaknesses etc. we are interested in, who in most cases will be ourself - and objectives - the things that the actor is trying to achieve - we are choosing a scope for the question. It isn't possible to do a SWOT without having both an actor and an objective, since a feature of an actor or their environment can only be a strength, weakness etc. with reference to something they're trying to achieve.

Generally the narrower the scope of the actor or objectives the ‘easier’ the analysis will be (that is to say, it is easier to exhaust possibilities or at least the imagination of the participants), but there is limited scope sensitivity and usually a SWOT analysis will take about the same amount of time (30 minutes to an hour) regardless of how strategic or tactical its scale.  But the narrower the scope, the easier it will be to map the output to particular, actionable decisions or policies.  For example, in decreasing breadth, and increasing actionability:
  • Who: OurCompany Inc. Objective: Increase profits
  • Who: OurCompany Inc.'s sales division. Objective: increase sales to financial sector clients
  • Who: OurCompany Inc.'s 'BuyMeNow' sales team. Objective: increase sales of the 'BuyMeNow' product to financial sector clients by 20% in the next financial year.
As the scope narrows, the more relevant the outputs of the latter are going to be to the 'BuyMeNow' product developers and managers. By removing possible actions and factors from the possibility-space, narrowing the scope helps participants focus, and hence reduces cognitive burden. But it increases the risk of failure of imagination - of missing a potentially important factor that falls outside the SWOT's scope.

2. Generating and Capturing 'Factors': The most intensive component of a SWOT analysis is the generation of suggested 'factors' that actually or potentially help or hinder the actor's achievement of the identified objectives. Generating these factors in a group, and exposing them, has a number of benefits. First, there is the creation of a consensus and the identification of specific differences. Being explicit and open encourages focus on the relevance of particular factors with respect to the objective and, for example, challenges supposed 'strengths' that aren't clearly linked to any desirable outcomes.

Ideally, this element of the SWOT will yield lots of ideas pertinent to the problem, without introducing too much noise. It may also be the case that group workshops introduce a subconscious sense of competition that encourages people to generate more and more-creative ideas: this artificially-generated stress can be a powerful motivator. Finally, the simple act of recording ideas on paper (real or virtual) provides a useful audit trail for the subsequent work, and by doing it in a open group, accountability is shared.

3. Sorting ideas:  The SWOT process invites you to post a concept in one of four mutually exclusive areas. Categorisation is the placing of a concept within a framework of ‘higher’ concepts, which provide conceptually convenient groupings. Although in one sense categorical groupings are a gross simplification, they are also essential for understanding. The architecture of human cognition appears to involve the sorting of concepts into higher categories, and their division into lower ones, based on similar characteristics within each class.

Generating and sorting ideas is usually an iterative process, both cognitively and in collaboration with others. Ideas already on the board provide cognitive shortcuts by allowing comparison with other potential categorical siblings rather than on first principles: it is often easier to consider “does this idea I have feel more like the things in the S area that it does those things in the W area?” rather than to consider if the idea is a strength or a weakness in isolation.

In the end, you will have packaged up ideas in exclusive buckets which provide additional meaning to the ideas.  For example, there is an obvious implication that you should use strengths and exploit opportunities, while reducing the effects of our weaknesses and mitigating  threats.  So by simply classifying ideas, you have already decided the fate of them within a wider framework of action. If the SWOT analysis is about a third party, then you will have an idea of the kinds of things that party is likely to pursue, assuming they are broadly rationally self-interested.

Playing with the SWOT Analysis

Clearly, personal preference and problem-specifics will partly determine the best way to conduct a SWOT, but it can be easier to separate the generation and sorting of factors (steps 2 and 3) from one another. Switching between generating an idea and then immediately judging it and assigning it to a box involves transitioning between two different cognitive styles can be tiring, and may take longer. It's sometimes easier either to take each quadrant in turn, and use it to further narrow the scope of thinking, or to generate ideas until they ‘dry up’ and judge each in turn.

It's not necessarily worth investing too much energy in thinking about whether a factor should be in one quadrant or another. If in doubt ‘split’ the idea into more narrowly specified sub-ideas and then they will be easier to categorise. Nevertheless, categorisation can be harder than it feels like it should be, and so it sometimes helps to exploit the 2x2 nature of the grid by thinking not about which quadrant a factor belongs in, but where on each axis it should be placed.

If instead of strengths, weaknesses, opportunities and threats being primary categories, the axes are considered to represent first scales of control from ‘in your control’ (strengths and weaknesses) to ‘outside your control’ (opportunities and threats) and from ‘good’ (i.e. they do or would tend to help achieve your objectives) and ‘bad’ (they tend to work against them) then a new type of diagram can be generated.  This represents a more generic 2x2 matrix.
Instead of 'inside / outside control', 'actual / potential' or 'present / future' work well to help distinguish opportunities and threats from strengths and weaknesses. Another added advantage is that these axes can be considered continuous scales rather than discrete categories.  This invites an optional bolt-on judgement where individual ideas can be compared to see how relatively strong they are on each axis (e.g. is X being more helpful than Y) and their position on the scale adjusted appropriately.  This can, if used carefully, begin to indicate which ideas are the priority.

Through this substitution of the categories for continuous axes we can see that the SWOT may be considered a highly specific instance of a much (infinitely?) broader family of analytical tools: the 2x2 (matrix).  Very briefly, you could judge ideas on any set of axes which are conceptually orthogonal - whether these provide enlightenment is a up to the analyst. For example, here is a manifestation of the Dunning-Kruger effect for stakeholder analysis and communication strategies, based on the two axes 'understands' and 'thinks they understand'.
2x2 matrices are helpful in general because they force us to consider combinations of features that are sometimes overlooked (e.g. 'knowing' but 'unaware') and they encourage us to decompose high-level concepts into their lower-level determinants (e.g. 'strength' being a combination of 'in our control' and 'helpful to an objective').

Turning it into Action

The point of a SWOT analysis is not, of course, just situational awareness. Its primary function is to inform our action planning. If the analysis has been done properly, then action planning should flow very naturally from the output. One way explicitly to transition from a SWOT to a set of actions is to vote on the top (say) three factors in each quadrant, and then identify a specific action to take with each one: either to exploit (strengths and opportunities) or mitigate (weaknesses and threats).

Finally, if a SWOT is from the perspective of a third party, and particularly if their objectives are inimical to ours (e.g. if they are an enemy group or rival firm), we can plan our own actions using a trick called the 'Jolly Inversion', which broadly observes that their strengths are likely to map to our threats, their weaknesses to our opportunities, their opportunities to our weaknesses, and their threats to our strengths.


A SWOT analysis is a straightforward but powerful precursor to action planning, if done with a modicum of care and precision. It's part of a wider family of analytical methods that help minimise the cognitive load associated with generating and classifying ideas into higher-level families that invite similar responses. It forms a useful bridge between your objective and the actions that can help achieve it, and provides an audit trail for future reference.

1 comment:

Unknown said...

Interesting description, but I think that specifying actor and objective is not sufficient to get truly useful results out of the SWOT. A third part that maximises the power of this tool is have a "comparator". In a toy company supply chain management division (actor), if we look at staff training cost-efficiency improvement (objective), then it is not especially useful to discuss strengths or weaknesses without adding the "compared to what/whom" element. Without the comparator, lots of SWOT analyses lose focus as they don't generate actionable points. The same toy company supply chain management department might accurately claim, for example, that a culture of only sending short and direct emails are a strength as regards their goal, but without any standard to hold this factor to, it is impossible to know whether the claimed brevity and accuracy is superior or inferior to any other department in the company or other similar companies' supply chain departments. And without this, the factor becomes frivolous and directionless.

The same actor and objective require a new SWOT for each comparator to truly draw out useful insights that can shape more effective and efficient problem identification, solution generation and solution implementation.