From the Ask Tom mailbag –
You appear somewhat down on SWOT analysis as a planning tool?
It’s not the analysis part, it’s the opinion part. Most SWOT exercises are not analysis, but rather opinions, not tested by reality. Chuck Bamford, in his book Strategy Mindset tells the story. He was able to teach his eight year old son the SWOT methodology and asked him to conduct an “analysis” of his third grade class in school. Shockingly, his son declared the strengths of recess and lunch.
In our companies, we make million dollar bets on strategy. That strategy has to have some relationship to reality and requires a much harder examination than casual opinion.
“Of course, we are doing strategic planning this year,” Allison smiled. “Each year, we go off-site, the central exercise is our SWOT analysis.”
“But, you said you were disappointed over the past few years with your planning efforts?” I asked.
Allison nodded her head. “You are right. Sometimes it seems our planning is a rote exercise to build some SWOT lists and call it a day. The effectiveness of the exercise, though completed and compiled in our single page business plan, isn’t very helpful when the firefighting of the day kicks in. Sure, we pull the plan out every quarter and walk through its initiatives, but at the end of the year, we are still firefighting in spite of the plan’s guidance. Becoming the premier provider of goods and services to our targets markets seems like more bluster than planning. I mean, we wanted increases in revenue, gross and net profit, but it appears to be more intention that a methodology.”
“But, SWOT is a tried and true exercise,” I observed. “Why do you describe it as lackluster?”
Allison was quiet. “SWOT is supposed to be an analysis. Seems like more of a list than analysis. We are comfortable making the list, not so much on the analysis. And what we are really comfortable with, is the firefighting of the day.”