A SWOT analysis is a high-level strategic planning model that helps organizations identify where they’re doing well and where they can improve, both from an internal and external perspective. It is an acronym for “Strengths, Weaknesses, Opportunities, and Threats.”
You typically want to conduct a SWOT analysis at the beginning of your strategic planning process or during a strategy refresh. Your entire leadership team should be heavily involved, because they should have the ability to look across your organization and offer insight into your competitive environment and/or business landscape. When the leadership team offers appropriate recommendations regarding your strengths, weaknesses, opportunities, and threats, you will end up with a SWOT analysis that has the credibility to be used constructively in the strategic planning process.
To help you get started, we’ve created this SWOT analysis template. (The examples below are specific to a financial organization, but only for examples sake; the SWOT analysis exercise is applicable to all businesses!) You’ll notice we divided our hypothetical examples for strengths, weaknesses, opportunities, and threats based on the four Balanced Scorecard perspectives. You don’t have to use the Balanced Scorecard to be successful with your SWOT analysis, but this method does provide a strong framework for your discussion.
Start by asking the question, “What are we good at?” This is a broad question, but in the beginning stages of your discussion, you should accept all answers.
Next you should ask yourself, “What are we not good at?” or “Where do we have opportunities to improve?”
Following your discussion on threats, ask those in leadership to look toward the future and consider, “Where do we see big possibilities for our organization?”
After identifying opportunities, zero in on your biggest threats by asking, “What do we see on the horizon as being potentially harmful to our organization?”
As we mentioned in the introduction (and in our SWOT analysis example), your SWOT helps you identify strengths and weaknesses that are either helpful or harmful to your organization. As you can see from the SWOT matrix example above, strengths and weaknesses are internal to the organization, while opportunities and threats are of external origin. Strengths and opportunities are helpful to your organization’s strategy, and weaknesses and threats are harmful to your organization’s strategy.
Once you’ve completed the SWOT brainstorming process with your leadership, consolidate your results so you can see all the positive opportunities—and any negative trends—that could affect your strategy, and how you operate on the whole.
Before you can begin developing your strategy map, you need to be certain you fully understand strategy mapping. (Take a look at this strategy execution toolkit for more information.) If you have asked the 16 questions posed in the SWOT analysis example above (specific to each of the Balanced Scorecard perspectives), then it should be relatively straightforward to filter by each perspective and come up with key objectives for that area. For example, does it seem as though you urgently need to make strategic adjustments to one particular area of your strategy? Do you need to address a failing new product launch before addressing market expansion opportunities?
At this point, we recommend running a “brown paper exercise” with your SWOT analysis that involves everyone in your organization. Print your SWOT matrix in large size, and ask employees to add post-it notes in any or all of the four boxes of the SWOT matrix if they feel there is something the leadership team missed. (You can also ask employees to add their names next to their suggestions so leadership can follow up with them.) Not only is this exercise great for inter-office discussion, but it also gives leaders the chance to consider opinions from staff “in the field.”
Keep in mind that your SWOT analysis isn’t an end product—it’s the first step to helping you align your strategy around the areas you’ve identified as strengths, weaknesses, opportunities, and threats. Specifically, you’ll want to put some measures in place to track progress on correcting your weaknesses and seizing your opportunities.
Once you’re done, use your SWOT analysis as input for developing or further refining your strategic plan. Otherwise, this exercise could feel like a waste of time to your leadership. If you need some help with this process, download our free 41-page strategy execution toolkit. It provides you with the tools you need to write your purpose statement, build your change agenda, and create your strategy map. Download it today!
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Don’t waste time putting together your own strategic planning template. Adopt one of these and make it your own.