The SWOT Paradox
?Strategy is about connecting the external with the internal. If we assess the organization internally, we see strengths and weaknesses. We can categorize those factors in the external environment as opportunities and threats. The acronym of those four letters spells SWOT.
SWOT analysis is the most used tool in strategy, but often, it is used wrongly. Let’s focus first on how to apply a SWOT analysis. If you are developing three strategic options or strategies, you can assess each with a SWOT analysis. However, here is where many companies fail; you cannot use one SWOT analysis to define the status quo and then use it to pick the best course forward.
Let me illustrate this with a short example. Kieser Training is the name of a franchise that offers training facilities in several cities in Switzerland and Germany. Kieser’s facilities are very functional. The value proposition offered by Kieser is short muscle training that prevents back pain and other forms of injury. It offers no cardio training and no free weights. It offers no protein bar. There is no music and no classes. Kieser customers do about 8 to 10 exercises per session and finish the training in about 30 minutes. Clearly, Kieser is different from almost any gym that you know. It’s for people who don’t like to go to a gym but do it for prevention. There is no fun promised.
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If I asked you to assess whether Kieser has no cardio equipment, free weights, and mirrors, would you consider this a strength or a weakness? In all likelihood, your answer is going to be, “It depends”. If Kieser is successful in the chosen niche segment, customers will be happy that they do not always see themselves exercising in the mirror. However, if they want to attract a wider audience, if they want to attract people who like variety in their training and people who like to socialize in the gym, the facilities are considered to be a weakness.
In other words, whether an attribute is a strength or a weakness depends on your chosen strategy. Therefore, you cannot build your strategy based on a generic SWOT analysis. This is what I call the “SWOT paradox.”
However, you can assess a current or a concrete potential strategic option with a SWOT analysis.
Group Vice President @ABB -Accelerating Change for Better Future and Results
1 年Absolutely agree. I would also add, that when SWOT is done inside out, it not only misses the G2M strategy, but also any customer or market innovation opportunity.
Loved the perspective Stefan. I use SWOT a lot in my work. Hope you are keeping well. Blessings of the Season. ??
Self-employed
1 年Thats a Good point. So its means that SWOT analysis better to use for selected target, right??
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1 年Great points. Also most of what many organisations do in the name of SWOT Analysis in strategic planning sessions of not SWOT Analysis but SWOT listing. I suggest companies must talk of SWOT MANAGEMENT rather that SWOT analysis. Most do SWOT Analyses but they do not manage their SWOTs. Second, most also in many organisations the definitions of strengths, weakness, opportunity and threat are assumed, vague and often lose. Without shared, common , clear and accurate definitions how possible is to do good SWOT work? Is the strategic planning session itself the right time to pay serious attention to SWOTs? I feel the following are critical to address; 1. Defining strengths 2. Defining weaknesses 3. Defining opportunities 4. Defining Threats
Gift-spotter. Executive Coach. I raise one's awareness of their own gifts to foster change and personal growth. If I can help you on your journey professionally or personally, please reach out.
1 年Great points Stefan! I love this! For anyone who reads this, I would encourage addressing the vision, mission, and goals before even landing on the business level strategy. If your example in that article can clearly define their "why we exist" as "no-frills, preventative maintenance training for 50-somethings or wannabe athletes (emphasize the detail niches)" then you can much more clearly apply a SWOT and eliminate those variables like mirrors, music, etc. Same applies for VRIO. How do you know if it's valuable without first laying down the Vision, Mission, Goals?