One of the most known strategic tools is the SWOT analysis. SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. The purpose of the SWOT is to draw a future landscape in order to identify where to re-allocate your resources in order for them to serve you best. To be able to do good forecasting is a great strategic advantage since you will be able to address issues before they emerge.   

But even if the SWOT is great in many ways it also has some faults one must be aware of.

1. In my experience almost no one know that there is a second part on the SWOT that needs to be done to make the exercise useful and even if that part is done properly it seems to be immensely hard to transport that knowledge to the organisation. The SWOT is one of the most used strategic models but it is also heavely abused.

2. The SWOT greatest weakness it also shares with all other scenario models. When modelling you make assumptions about the future. Those assumptions are based on accumulated experiences. If tomorrow will be more or less like yesterday those assumptions will be correct. But if that is true, you are in no need of re-allocating resources for future positioning. What scenario models don’t do is highlighting the unknown unknowns. It does not identify possibilities for disruption and it does not protect against black swans. The common mistake, acting as if it did makes scenario modelling potentially more harmful than useful since you are made believe that you are protected against asymmetric risk while you instead are more exposed. Pursuing a strategy against asymmetric risk strategies from the obrydd playbook serves you better.

3. The SWOTs indata are often based on perceived strengths, weaknesses, opportunity and threats and are therefore also subject to bias distortions. I know that you think that this is not affecting you. But thinking so is a bias distortion too. If you chose to use any scenario tools or methods of modelling first go to great length to secure that the indata are substantial and real before basing any decisions on them.

How to make a SWOT-analysis.

(S)threngths and (W)eaknesses are internal. (O)pportunities and (T)hreats are external. My experience is that this abstract terminology is the first thing that makes the SWOT fail. If the language used isn’t intuitive the participants in the exercise will not understand what they are doing. What has worked for me is in order to ease the cognitive load to instead talk in terms of good and bad things. And things you can do something about and things that you can not do something about.

The SWOT is typically drawn in a four field matrix, one field for each term. Except for overview there is no real underlying function of doing this. If other ways of representation suits you better. Use them.

One also need to understand that a SWOT-analysis not is a exact representation of a future everything. There are variants of the SWOT that uses ways and means of weighting and prioritising its content agains each other by using number systems. I would argue that this strengthens the illusion of the SWOT being exact and should therefore be avoided. Furthermore on the same topic. Keep things simple. Have absolutely no more than five bullets in each field. Remember, this is not precise and it is not a map of everything.

SWOT analysis are said to be especially useful when deciding on the temper of the strategy. Should it be aggressive, defensive or mixed. Key word here is maybe a bit surprising “deciding”. All scenario tools are mostly a tool of agreeing on the order of things. This the SWOT does excellent.

The last part of the SWOT-analysis is often missed. Once the respectively strengths, weaknesses, opportunities and threats are identified you need to know what to do with this information. This is done by combining identified bullets with each other. Strength 1 + opportunity 1, strength 2 + opportunity 1 etc. When doing this it is especially important to not use abstract lingo. Think of it as a to-do list that anyone should undertand and be able to act on. In terms of good and bad things and things you can do something about and things that you can not this second part becomes much easier. In grouped combinations answer the following questions;

1. With my strengths, how do I exploit the opportunities?
2. What opportunities must I refrain from because of my weaknesses?
3. With my strengths, how do I mitigate or eliminate the threats?
4. What threats must I avoid because of my weaknesses?

Now, If your list is dominated by 1 and 3s you should use a offensive strategy, is it dominated by 2 and 4s you should be defensive. Is it a mix of 1,2,3 and 4s a mixed strategy is advised.

Governance is the art of planning and predicting. Strategy is the trade that enables that. But keep in mind that all strategies are imposed. It is an exercise in centralised power, used to overcome the natural workings of things. This coordination is unnatural in the sense that it would not occur without the hand of strategy. If you are even the slightest unsure about how the future landscape will look like you will be better off putting you in a different mode of thinking and use a strategy that does not rely on planning and predicting.