I need to mention SWOT analysis, because although it’s a limited tool, people often take for granted that it will appear in a strategy process. I usually go along with that, not because I expect it to yield any great strategic insight, but because responses to SWOTs can expose how unreal or insulated many group’s thinking can be – the lesson can be salutary and immediately improves the quality of the subsequent discussion.

Auditionees in reality TV competitions such as X-Factor and American Idol are notorious for over-estimating their talent. They infer an absolute level of ability from their relative performance in a small pool. The ‘logic’ goes: “I’m the best singer at my school, and in my extended family, and in my own head I sound like Celine Dion, therefore I am a world class recording artist”.

At a UK division of a European manufacturing firm, I heard the MD claim that above and beyond their engineering excellence, what really set them apart was the quality of their service. This was accompanied by nods of self-satisfied agreement from his team, and the representative from the parent company. When you spoke to the customers however, they told you that the service department was arrogant, unresponsive and expected customers to fit in with their procedures and do so on the company’s timetable.

It’s perhaps tempting to scoff, but the thinking pattern behind it is very human and we are all susceptible (the world was nearly plunged into a nuclear war over the Bay of Pigs invasion of Cuba based on the same sort of self-sealing logic, and it would be hard to think of a higher-calibre leadership team than those advising Kennedy at the time – research on this historic incident is what lead to the coining of the phrase ‘groupthink’).

If you must use SWOT, it’s vital, I think, to remember that it is really about competing. In particular, a strength is not just “the thing we do best”, it’s “the thing that the client/customer thinks makes us better than anyone else”. Therefore a lot of the things typically listed as strengths are really only sources of pride within the group (which is fine, but may not make much difference to the customer).

Weaknesses are often best handled indirectly – rather than spending inordinate time addressing them for small incremental gains, it can be better to build on the strengths and opportunities that can propel you forward; weaknesses often then look after themselves. However, sometimes a weakness gives rise to a threat which must be handled or mitigated (by planning for preventative and contingent actions).

A for opportunities, watch out for those what are really just unexamined goals or wishes (“It would be good if we did X”).  Something really only deserves to be called an opportunity if there is a chance for a step-change improvement (e.g. if some new technology were dramatically to enhance document handling, saving huge amounts of time and money, or if you have identified an unmet need you can fulfil quite easily, but which competitors seem not to have noticed).

Threats: there is no end to the list of threats that most groups can come up with, and sometimes the true danger is spending all one’s time trying to handle them all. In that case the trick is to prioritise them so that the important ones are mitigated by planning preventative and contingent actions. But the real threats are likely to be things that are not on your radar, like small upstart companies with a radically new way to serve the customer.

Questions to consider:

  • Are you sure that your strengths genuinely stand out in the market, in the perception of your customers? What evidence leads you to that conclusion? (Be careful who gets your information).
  • What if you built on your true strengths rather than focusing on correcting weaknesses? How many of those weaknesses might then become irrelevant?
  • How many so-called opportunities are really just good ideas or examples of wishful thinking that don’t really line up with where you want to go?
  • As John le Carré put it: “A desk is a dangerous place from which to view the world.” Is your strategy-setting group getting into insular thinking patterns where it frets about the same old issues but where news of potential novel threats can never get in?

 

© 2012 Andrew Bass. All Rights Reserved.


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