The Business Plan Canvas is one of many design and analysis models that help entrepreneurs identify the considerations and drivers that will be important to their new product or service.
Corey S. Halaychik, in Lessons in Library Leadership, 2016
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Simply stated, the SWOT analysis tool is designed to identify these factors in an effort to help with decision-making and planning. The analysis process is designed to allow an individual to clearly identify what internal (strengths) and external (opportunities) factors an organization has that can contribute to a favorable outcome and what internal (weaknesses) and external (threats) factors may prevent a favorable outcome. Identifying each group of factors allows an individual or organization to play to its strengths and, theoretically, avoid “no-win” situations by deciding courses of action that present the best match between strengths and opportunities.
SWOT is typically associated with organizational planning, especially at the strategic level, but can be used at all levels of an organization. It originated in the 1960s out of research at the Stanford Research Institute aimed at discovering an effective approach to planning. The simplicity of SWOT has contributed to its widespread use in both the private and public sectors. Furthermore, it can be used on a personal level to help individuals weigh decisions about their own careers. Its widespread application and simplicity have helped SWOT to become the default analysis tool when the operational environment needs to be evaluated. It is not, however, the only assessment tool available and may not be the best choice for every instance.
SWOT analysis is a decision matrix used by individuals or organizations to identify possible courses of action. The matrix clearly defines the factors that will impact any course of action, with each factor being categorized as a strength, weakness, opportunity, or threat. It can be used to both assist with planning and as a way to quickly paint a picture of the current operational environment. The former provides decision makers with a straightforward way to identify courses of action which leverage positive factors (strengths and opportunities) and avoid those which, based on negative factors (weaknesses and threats), offer less of a chance for success. This information is useful in selecting goals or objectives that support the best options and have the highest likelihood of success. The latter, provides a window into the operational environment of an organization or an individual’s unique circumstances, providing a finger on the pulse of the organization.
Conducting a SWOT analysis is a straightforward and simple process. The first step is to determine the purpose of conducting a SWOT analysis. Is it to discuss overall strategy? Identify opportunities for growth? To consider whether a project should be pursued?
Once you’ve determined the purpose of the SWOT, your efforts should shift to deciding who will be involved in the process. Although a SWOT analysis can be performed by one person, it is typically more beneficial to include others in the process, such as an entire department or a working group of key individuals from various units, as having multiple opinions allows for a clearer picture to develop. Regardless of the number of people involved in the analysis, it is important that they are knowledgeable enough to provide good, reliable, factual, and realistic information.
Once a team has been formed, the next step is to consider each section of SWOT. The group should engage in discussion with the purpose being to identify key points for each section. It is important not to overthink or overanalyze content. This should be a thoughtful but not overly complex exercise. It is recommended that the entire process be completed in two stages. First, record whatever anyone says without worrying about ranking importance. This should be completed for each section of the SWOT. The second stage involves revisiting the comments in each section and ranking them in order of importance or highest impact. Breaking it up into two stages allows for data to be captured quickly without getting bogged down in discussion which can cause some suggestions to be initially discounted or ignored.
When going through the actual process it is helpful to consider the following questions for each category:
Weaknesses
Opportunities
Threats
Once the SWOT analysis has been completed the information should be used to determine next steps. These steps will depend on why the SWOT analysis was performed but, generally speaking, it should be determined if there are any clear paths of direction to take, any barriers that are currently insurmountable, and any areas for growth that aren’t currently being pursued but should be.
As powerful and helpful a tool that SWOT analysis is, it still has some limitations that should be considered if an effective outcome is to be had. First, it should be recognized that the information included in a SWOT analysis lends itself to subjectivity. It is important to avoid opinions as much as possible and instead try to only list factual data. Most organizations have data available such as user surveys, door counts, reports, industry data, and so on. Second, lists can easily become overwhelmingly long. While it is helpful to list many factors, it is important to revisit the list to prioritize the list and cull unfounded opinions. Thirdly, information should be stated in simple terms. Verbose declarations aren’t very helpful and time should be taken to drill down until a factor can be simply stated. Lastly, SWOT is sometimes used on the backend to justify an existing course of action or to paint a rosier picture than what exists. In order to be useful, the SWOT analysis should be used to evaluate, not justify, courses of action or falsely improve the environment.
