Laying the Groundwork for Strategy: The Power of SWOT Analysis
Strategy is only as strong as the foundation it is built on.Before setting ambitious goals, you need a clear understanding of where you stand. This is why a SWOT analysis is the first step in our structured approach to strategic planning.
In this blog, we will break down how to conduct a practical and actionable SWOT analysis, ensuring that you extract meaningful insights rather than just filling in four boxes on a slide.
What is SWOT Analysis?
SWOT analysis is a simple yet powerful tool used to assess an organisation’s internal and external positioning.It consists of four components:
- Strengths: What are you doing well? What unique assets, skills, or advantages do you have?
- Weaknesses: What are your limitations? Where do gaps exist in resources, skills, or processes?
- Opportunities: What external trends or shifts could benefit you?
- Threats: What external risks or disruptions could harm your position?
Unlike other strategic tools that focus only on external factors, SWOT combines both internal (Strengths &Weaknesses) and external (Opportunities & Threats) insights to create a holistic picture.
Why SWOTComes First
Many teams rush to market analysis or industry trends before evaluating their internal realities. This can lead to misaligned strategies where goals are set without considering an organisation’s actual capabilities.
Starting with SWOT ensures that your strategy is built on a realistic understanding of what you can leverage and where you need to improve. It helps prevent:
- Overambitious plans that exceed internal capacity.
- Missed opportunities due to underutilised strengths.
- Over looking critical weaknesses that could derail execution.
Once SWOT is completed, we expand our view with PESTLE analysis, which examines external factors in greater detail.
How toConduct a SWOT Analysis
A well-structured SWOT goes beyond listing vague bullet points. Here’s how to conduct it effectively:
1. Start with Internal Reflection(Strengths & Weaknesses)
Gather input from key stakeholders and ask questions such as:
- What are our biggest competitive advantages?
- Where do we consistently excel?
- What do customers or stakeholders praise us for?
For weaknesses, ask:
- What internal inefficiencies slow us down?
- Where do we lack key skills or resources?
- What challenges do we struggle to overcome?
💡 Pro tip: Use data.Instead of saying "we have strong customer service," back it up withNPS scores or retention rates. Instead of "we are not innovative,"show how many new products were launched in the last two years.
2. Identify External Opportunities& Threats
Unlike internal factors, opportunities and threats are shaped by external forces. Consider:
- Market trends: Are there emerging demands we can tap into?
- Technology:Are new tools or advancements opening doors?
- Competitor moves: Are there gaps in the market they are missing?
For threats:
- Are there economic or regulatory changes that could disrupt us?
- Is new competition or technology making our offering less relevant?
- Are customer behaviours shifting away from our strengths?
💡 Pro tip: Run this exercise cross-functionally. Marketing, sales, operations, and leadership will all bring unique insights to the table.
Common SWOT Mistakes to Avoid
- Being too generic: "We are good at execution" is vague, ask yourself what does "good" mean to the organisation? What is the proof?
- Ignoring balance: A SWOT with only strengths and opportunities signals bias. Weaknesses and threats must be considered to avoid blind spots.
- Making SWOT a wish list: A strength is not what you want to be good at it is what you are currently excelling at.
- Forgetting prioritisation: Not all SWOT points are equally important. Identify the 3-5 most critical factors in each category.
What’s Next?Expanding with PESTLE Analysis
Now that we have assessed internal positioning, it is time to zoom out and analysethe external environment with PESTLE analysis. This will help refine our understanding of opportunities and threats, ensuring our SWOT is rooted in the broader landscape rather than internal perspectives alone.
📌 Next Blog: Strategy Series - Part 3: PESTLE Analysis for Strategic Awareness
