Replacing the “SWOT” with The Landscape

Frameworkologists have plied the “SWOT Analysis” since the 1960s. It sounds useful in theory, but in practice I find it doesn’t uncover many insights or lead naturally to great strategies.

The strategic insights a SWOT are supposed to generate are indeed important:

• Strategy must leverage strengths to maximize chance of success, to match the special capabilities of the organization, to and succeed in a manner others can’t copy.
• The organization must be capable of implementing the strategy despite weaknesses; the strategy must include a plan for avoiding or eliminating them.
• The strategy must exploit growth opportunities afforded by the market.
• The strategy must “face the hard facts” of existential threats to the company, with a plan to neutralize or avoid the most likely, most impactful threats.

In practice, however, I find the SWOT exercise devolves into trite bullet points that aren’t conducive to generating the insights that result in a great strategy.

I’m not the only one who feels that way:

When I give a strategy talk, I often ask the audience: Who here has performed … a SWOT analysis? Virtually all members of every audience put up their hands because SWOT is such a prominent tool. …

I then ask: Who can tell me a blinding insight that came out of any such SWOT analysis? I am still waiting for my first hand on that second question. Not one single audience member has raised his or her hand to tell me of a decisive insight from a SWOT analysis.

That is pretty damning given the millions of person-hours per year that are spent on performing and reviewing SWOTs.
—Roger L Martin

Why SWOT fails us

By detailing the problems, we’ll create a sort of “checklist” that an alternative framework must adhere to, to avoid these problems.

Facts whose location in the 2x2 depends on the strategy (that hasn’t been created yet)

Consider this common scenario: “Our software does only a few simple things, but does them well. As a result, customers need almost no tech support.”

Could be a “strength,” if the target market has basic needs and doesn’t want to call tech support. Could be a “weakness,” if the best strategy is to tackle an Enterprise segment with complex requirements and the desire for a Named Account Manager. Could fuel an “opportunity” to win a niche of customers trying to cut costs during a recession, or if customers have no alternatives that are “easy to use” or “don’t need support services.” Could be a “threat” if a large incumbent competitor releases a free “lite” version containing even more features than you have. Without context, it’s a fact that defies judgement.

One concept falling into multiple, sometimes contradictory categories

Our product is great for small businesses (strength) / Our product isn’t good for Enterprise (weakness) / We could build something for Enterprise (opportunity) / Our competitor might build something for Enterprise (threat).

We have 100,000 customers (strength) / It’s hard to make changes when you have to retrain 100,000 customers (weakness).

We have a great support team (strength) / Our product requires too much human support (weakness).

People are moving away from X and towards Y (threat if you build X, opportunity if you build Y).

“Strengths” that are neither special nor insightful

We love our customers (and what, your competitors hate their customers?). Our customers love us (you mean the ones who haven’t already left?). We work hard because we care more than those lazy people at big companies (have you met a VP from Amazon?). We have a great culture (according to those who choose to stay here). We hire the best people (out of the 0.001% of potential global candidates that we even had a resume for).

This is largely feel-good stuff that most of your competitors would also claim. They don’t pass the Opposite Test. Even if true, these aren’t insights into how to carve out a niche you can uniquely win, or a long-term advantage, or a flywheel of self-reinforcing advantage, or which customer persona you should target, or what sort of product you should build.

“Weaknesses” that are just normal operational challenges

“We’re only a year old, so no one knows our brand.” “Now that we’ve reached scale, it’s hard to release new features quickly.” “We work on too many things simultaneously.” “We don’t have enough engineers / designers / product / marketers.” “Competitors A, B, C, … have features X, Y, Z, … that we don’t have.”

Sure, you and everyone else; you should work on some of that. But none of these observations explain how best to position in the market, or which fewer projects will be the best way to win, i.e. a strategy.

“Opportunities” that are merely trends or tautologies

eCommerce is growing fast, so it’s an opportunity. AI is the future. Data is valuable. Having a lot of data is an opportunity to gain insights.

An opportunity… to do what exactly? Compete from a standing-start against well-funded companies with years of experience? Trends are only opportunities if you have a plan for how to seize them; some might even be threats.

“Threats” that are unlikely or uninsightful

What if Google decides to copy us? What if a competitor launches a new product? What if the global economy collapses? What if we suffer a major security attack? What if consumers decide they’re no longer comfortable with online commerce?

Sure, that would change things. If any of those are already happening, or more than a 75% chance of happening, then you need to say so and grapple with it. Otherwise, I can list twenty more ways the company could die; so what?

The Landscape: A replacement for the SWOT

Returning to the original purpose of the SWOT: We want to highlight salient facts about ourselves and the outside world, which result in insights about what is most important, which in turn we can use as a primary input for creating a strategy.

The first insight is to identify “salient” things, both external and internal to the company, but not to presume which ones are “strengths” or “weaknesses” or “opportunities” or “threats.” Those value judgements will become apparent as you build the strategy.

The Landscape includes much more than that, culminating in an artifact containing the analysis and insights we all hoped the SWOT would deliver:

1. Pivot Points instead of labelling “strengths” and “weaknesses” (article)
2. Decisions & Consequences leading to a self-consistent strategy
3. Durable Leverage leading to long-term competitive advantage (article)
4. Operational Challenges separating internal struggles from winning the market
5. Existential Mysteries forcing you to face difficult truths

Stay tuned for future articles where this new process will be documented in detail.

Printed from: A Smart Bear
https://longform.asmartbear.com/swot/
© 2007-2024 Jason Cohen      @asmartbear