SWOT analysis is a widely used framework for strategic planning in which managers examine their company's internal strengths and weaknesses as well as external opportunities and threats. However, companies that use this classic model run the risk of naval staring and favoring status quo strategies

Here's some concrete advice on how to sidestep these pitfalls and make your strategy session more inspiring. Start by flipping the sequence of your SWOT agenda by placing the analysis of external threats and opportunities right upfront. This avoids getting stuck in a rabbit hole where you heatedly debate your own strengths and weaknesses while paying lip service to the far more complex and important changes happening in your external environment. This is especially key if you are in search of innovative moves and more dynamic business models.

How to Examine Opportunities and Threats 

Rather than labeling external changes--for instance, an aging population or new regulations--as being good or bad, examine them without prejudice. Just call them forces or undercurrents and work hard to understand them.

1. Keep your focus on the outside world (not yourselves). How is it changing and why? Be sure to cover key forces, including social, technological, economic, environmental, and technological drivers.

2. Discourage fragmentary thinking (such as discussing just one force or one issue in isolation of others). Adopt a systems view.

3. Be honest about what you can't predict about the future: list the major external uncertainties and discuss how they may play out.

4. Assess which external changes you missed in the past and why. Are you any better this time around at scanning the periphery for weak signals? And if so, why?

How to Examine Strengths and Weaknesses 

The same caveat applies here: be careful with your labels since what is a strength or weaknesses depends greatly on your strategy as well as your benchmarks of comparisons.

5. Think in terms of core competencies rather than physical or intellectual assets, since the latter can be bought, traded, or imitated more easily than the former.

6. Depict your business model visually with arrows and feedback loops, to show how various capabilities interact and relate to your revenue/profit model.

7. Labeling something as a strength or weakness implies a reference point. Decide what yours is. Is it more past, present, or future oriented? And are you measuring against the best in your industry or the best in the breed globally?

8. Include soft issues in your assessment, such as culture, organizational climate, leadership capacity, etc.

How to Set a Clear and Compelling Strategy 

To the creative mind, there are no good or bad future scenarios per se, just good or bad strategies. You should be able to win in any new scenario if you think deeply about it and are willing to change your approach

9. Agree on an overall vision (what to do and how) that is not only robust across future scenarios but is also sufficiently adaptive when needed.

10. Clarify the balance between exploitation (strategically playing your current hand of cards) and exploration (creating new hands of cards through innovation).

11. Encourage leadership in all directions, not just top-down. Get buy-in through peer-to-peer initiatives and encourage bottom-up leadership where people educate their bosses.

12. Monitor key issues and scan for the unexpected. Try to see sooner how the external scene may alter and be fully ready to take advantage. 

Published on: Jan 28, 2015