SWOT analysis - common pitfalls
Have you ever performed a SWOT analysis and the results didn’t quite give you the answer you were hoping for?
If the answer is yes, then you probably fell a victim to one of the common pitfalls of SWOT analysis.
But what is SWOT analysis in the first place?
“SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework used to evaluate a company's competitive position and to develop strategic planning.“
SWOT analysis can be performed for almost anything - from businesses, to people, to political situations. It gives us clarity on the weak spots, on potential upcoming problems and thus helps us make better decisions. The best way to do a SWOT analysis is in a group setting.
So, what could go wrong?
Well, here are the most common SWOT analysis pitfalls I encountered.
1. Doing the SWOT analysis alone
There is a reason why SWOT analyses are done in a group and that is - you simply don’t have the entire picture on your own.
Especially when it comes to something as big as a company, there are many things that need to be accounted for - from sales data, to financial data, to development speed, to the current and upcoming partnerships deals, even to the vision of the CEO.
Unless you can allocate weeks for in-person meetings with the people from those departments, the next best option is to simply sit together and brainstorm.
2. Mixing up internal and external information
In a SWOT analysis you need both external and internal data. External data goes to Opportunities and Threats, which could also be called market opportunities and market threats. The company has no influence on those things.
The internal data goes to Strengths and Weaknesses, which are things that can be addressed internally and which are in the control of the company.
When you see Opportunities, it is very easy to think “ah, opportunities for improvement“, but that is a mistake. How will the company improve is a discussion that comes after we complete the SWOT analysis.
3. Only looking at external information
I was asked to do a SWOT analysis recently and so I did, with a note that due to my lack of internal data access, I can’t calculate important KPIs like LTV (customer life time value), CAC (customer acquisition cost), retention rate, etc.
That data - how long do we keep our customers, how expensive is it to find new customers, what is our pricing and how much can we afford to change it - that data is an important part of a SWOT analysis, and it can be either a Strength or a Weakness. Not knowing it might be the difference between going out of business and getting ahead of the competition.
4. Forgetting that SWOT analysis is only as good as today
SWOT analysis presents the information we gathered today - the current status of our company and the current competitive and economical situation. It gives us a static picture of where we are now, but will probably be outdated in 4 months, when our metrics, clients, products and teams will have changed and when the external factors might no longer be the same.
Doing a SWOT analysis and then using it for the next year is like driving but only looking once every hour. Chances are the situation has changed and we need to readjust.
5. Thinking that SWOT analysis will give you a magic bullet
It might, but not the way you imagine it.
The main purpose of a SWOT analysis is to provide clarity - what is going well and what is not going that well. Those might be obvious things on their own, but put together they paint a detailed picture where we can see relationships and come up with solutions.
The take away might be something as ordinary as realising the need to improve the website on mobile devices or to optimise the internal processes, or to change the sales process. But if the result is 100% improvement, then that’s all the magic bullets you need.