The SWOT Analysis explained

The SWOT analysis is one of the easiest and best-known decision-making tools. Leaders and managers employ this method frequently, but it can be used by anyone. Here is an explanation of what a SWOT analysis is, when to use one and how to write a good SWOT analysis. I have also included a worked example.

What is a SWOT Analysis?

SWOT is an acronym that stands for: Strengths, Weaknesses, Opportunities and Threats.

The SWOT analysis was developed by researchers at Stanford University, following a study in the 1960s. The study looked at various Fortune 500 companies and found that there was a difference between an organisation’s set strategic priorities and what was actually done. The study also revealed that the problem was not poor employees, but rather a lack of clear objectives. Therefore, SWOT was developed to give staff a clear understanding of a business or project.

Why is SWOT analysis effective?

The SWOT analysis is one of the most important and popular tools for decision making and strategy development. This is because of its:

• Simplicity – it is simple to learn and quick to use
• Clarity – it focusses on the key issues and aids clear communication
• Flexibility – it is applicable to individuals and organisations.

Having a coherent strategy is vital to any organisation, and equally, self-awareness is critical to personal effectiveness. But you need to be able to understand and communicate these things clearly. This is why SWOT analysis is such an important tool.

When should you use SWOT analysis?

The SWOT analysis is best used to:

• Improve situational awareness
• Develop strategy
• Identify and refine actions and goals
• Improve self-awareness (for an individual or team)
• Reflect upon a completed project or activity

The SWOT analysis was designed for organisations but it can equally be used by individuals. The SWOT process identifies crucial internal and external influences within a given situation. Therefore it gives us a snapshot of where we are and is excellent for situational analysis.

SWOT Template

The most common way to present and consider the SWOT approach is as a matrix. Here is an example template:

How do you do a SWOT analysis?

Do you want to know how to do a SWOT analysis? Don’t worry; it’s easy! Just follow these steps.

Step 1: Create a SWOT table:

The SWOT matrix is set out thus:

• Strengths and weaknesses are usually listed in the first row of the matrix; S and then W. These relate to internal factors.
• Opportunities and threats are external issues or circumstances. These create the second row; O and then T.
• In this layout, the first column, strengths and opportunities, signify the positive or helpful factors
• The second column, weaknesses and threats, are the potentially negative or harmful issues

Step 2: Brainstorm

Next, brainstorm as many different considerations as you can under each heading.

Here are some questions to help you:

Strengths (internal/personal):

• What are your/your team/organisation’s key skills, areas of experience or expertise?
• Can you define your USP (unique selling point/proposition)?
• What are your core values? What do you love, enjoy or prioritise?

Weaknesses (internal/personal):

• What do you not enjoy doing?
• Where have you failed or fallen behind the competition?
• What skill gaps do you have?

 Threats (external/circumstantial):

• What circumstances are most troubling you?
• Who is your major competition?
• Which challenge is the most important right now?
• What is the worst thing that could happen to you/your organisation?

Opportunities (external/circumstantial):

• How can you leverage your present situation?
• Who/what could most help you right now?
• How is change providing new openings?

Step 3: Prioritise

Now prioritise the lists; work out which are the top three to five things in each quadrant.

Whether you are using it as an individual or as part of a team, keep it simple and high-level; that is the systems greatest strength.

Step 4: Analyse

Look at each item in turn and consider the actions you could take. Here are some questions to help:

• How can you play to or maximise your strengths?
• What personal development goals, people and processes can help address your weaknesses?
• How can you exploit, expand or multiply the opportunities?
• What control measures do you need to put in place to limit the threats?

Now look for further relationships that you can identify across the columns, rows and diagonals.

Remember that weaknesses are often a reflection of strengths. For example, if you have a strength in that you are very good at coming up with lots of ideas, or you are a business with lots of products, a weakness might be that you find it hard to focus on just one of them.

Similarly, look at the flip side of external factors; you may find that threats can also provide opportunities. For example, a competitor could actually be a potential partner.

A failed project is always an opportunity for learning. From your analysis, how could you use that learning and pivot the idea, or re-purpose the team?

SWOT Analysis Example

Here is a short example using personal strengths and weaknesses:

First looking at the strengths I recognise that I am quite task-focused. This means I am a good planner and show determination when seeing a project through. Moving across to the right quadrant I have noted a related weakness. Because I am task-focused that means I am quite future-orientated. The downside of this is that sometimes I can forget to be content in the moment or to celebrate the success of achieving something before moving on to the next goal.

Then looking at threats I have noted down that there is increased competition in my industry, with more people entering the market all the time. This threat does lead to an opportunity in the bottom left quadrant. I have the chance to refine my USP (unique selling proposition) in order to stand out from the crowd.

Example analysis

It is more likely that I would list more items under each heading before continuing, but for the sake of simplicity let’s do a little analysis on what we already have.

How do I maximise my strengths and minimise the impact of my weaknesses? There are a few options I could consider under the ‘3 Ps’:

• Personal development: I could attend some training to improve my mindfulness and being ‘present’
• Person: find or employ someone else with a complementary skill set whose strengths/weaknesses are the opposite of my own
• Process: put some time in the diary to be more reflective on a daily basis and plan ahead to celebrate after achieving a goal

When considering the threats, I cannot control new people entering the market but I can work out how to best serve, and therefore retain, my existing clients. The opportunity of refining my USP becomes a strategic task, something that is going to require more work delving into why I do what I do, how that makes me different, who I can best serve and what extra benefit I can bring. The other items that I list in the strengths quadrant will help to develop that USP.

Making a plan from your SWOT Analysis

The ‘Right Questions’ format is an excellent way to examine this issue and so if this is something you want to pursue further then I recommend that you read my post on What are the Right Questions for Decision Making and Strategic Planning?

If you would like to explore more decision making tools then I recommend ‘The Decision Book’:

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