SWOT Analysis – Objectively Identifying Them

Some great sage of olden times once said “Know thyself”, why? Because we are not all the same knowing what I can do well and what I need lots of help with gives clarity to the path that I should tread. And this is particularly so with running a business. Not only should I know myself (the human being) but I should also know my (enterprise) self as my business is not just me.

The classic way to conduct this process is by undertaking a SWOT analysis. (Some people refer to this as TOWS, just to be different). SWOT stands for strengths, weaknesses, opportunities, and threats. The “SW” part of the process refers to issues, matters, resources, etc that are internal to the organization The “OT” part refers to factors that impact an enterprise from without.

For example, a strength might be the technology that your company is the sole licensee of in a particular geographic region. Whereas a weakness may be a lack of capital. An opportunity could be the chance to gain market share from a competitor who is known to be having problems. A threat could be a larger competitor buying out the struggling competitor just referred to.

So, that’s the idea. Now here is the big issue with undertaking a SWOT analysis – making it objective and complete in the important details. Let me talk about objectivity.

Objectivity refers to concluding your situation in the same way that an external, dispassionate, unbiased, and knowledgeable consultant might do. However, the problem is that most owner-operated concerns would find it far too expensive to have such a consultant to undertake this process. That means you (and your staff) must conduct the analysis. So that which should be objective must be carried out subjectively.

The problem with analyzing the business using internal resources is that our character foibles can get in the way of being dispassionate and unbiased. Indeed conducting a SWOT analysis amongst the key people in an organisation can be a recipe for an open display of quite passionate debate about things in the business that may or may not be important. Producing an effective analysis can be derailed by these types of discussions if they are not focused on important issues and can make owners or managers wary about conducting such a process.

Things can be said that people do not want to hear. Statistics can show that people do not want to see. Events can be discussed that people would rather forget about. Important information can be downplayed or rationalized away in the course of the debate to maintain the status quo or protect someone’s position.

So, if you are going to conduct a SWOT analysis (which I highly recommend) it must be in an environment where it is safe to say just about anything. The participants should be briefed before the process on the fact that the analysis has the sole purpose of improving the business. It is not about point-scoring. It is about truth and honesty. It is about getting to the real facts and position. The person “sponsoring” the process (usually the owner of the enterprise) must show strong leadership here and welcome honesty and vigorous debate as long as it occurs with the health and improvement of the enterprise firmly fixed in the minds of all participants.