The fundamentals of SWOT analysis is said to havebeen developed by Edmund P. Learned et al. of Harvard University in their book Business Policy, Text and Cases (1969). Albert Humphrey of Stanford University developed it further,based on data from Fortune 500 companies in the United States. Humphrey initially named the method as SOFT Analysis. According to him:“What is good in the present is Strength, good in the future is an Opportunity; bad in the present is a Fault, and bad in the future is a Threat.”As Humphrey presented the concept at a seminar on “Long Range Planning” in Zurich, Switzerland, in 1964, Urick and Orr suggested a change from Fault to a Weakness and started popularising the method as SWOT Analysis ever since.(Humphrey’s later reference to ‘Urick and Orr’ is of uncertain provenance.In some literature, they are believed to be Lyndall Urwick and John Leslie Orr, widely regarded as two British management theorists.)
INTERNAL AND EXTERNAL FACTORS
A high degree of clarity regarding the defining factors within an institution, both its strengths and weaknesses in relation to atask or project underconsideration, is necessary information for strategic planning.
Strengths define the strategic advantage of an institution to take up the proposed task. Itincludes the strengths of human resources (staff, volunteers, board members, and target population), physical resources (location, building, equipment), financial resources (grants, funding agencies, other sources of income), systemic resources (programmes you currently run, systems you have adopted), and legacy-related resources (popular appeal, reputation in the community, culture and traditions).The weaknesses define the lack of items defined under the title of strengths.
It is advisable to evaluate your strengths and weaknesses from yoursas well as other’s perspectives, which couldprovide a holistic estimate of the individual and the institution. Further, care need to be taken that one is not overly modest not to report one’s true strengths nor audaciousenough to cover up one’s weaknesses. Such an approachcan interfere with the authenticityofa SWOT analysis.
The external factors consist of both opportunities and threats offered by the outside world to an individual or institution preparing to take up a new project —arealistic appreciation of which isessential for any strategic planning. The opportunities define the predicted trends in society that could support the project and the threats define and foresee troubles for the project.
The opportunities include the anticipated developments in the economy (local, national, international), funding sources (foundations, donors, legislatures), demographics (changes in the pattern of age, race, gender, culture of those your project would serve), physical environments (place of your institution: rural or urban, connectivity), legislation (new legislations at local, national, and international levels). Threats are all those external factors that are either expected to affect your project adversely.
A TYPICAL SWOT ANALYSIS
SWOT analysis could be done through one-on-one interviews or through group brainstorming sessions. It could also be set in a group game mode. In all cases, it is important to define upfront what you want to achieve through the analysis. After setting the goals of a SWOT analysis, the information required by all the four quadrants of the SWOT matrix is collected. Only insightful information that enrich and further thediscussions need be considered.
In the next step, the SWOT matrix is carefully developed, with proper editorial pruning. The SWOT matrix is now presented to the brainstorming group, which will draw up a plan of action, the to-do list corresponding to the issues presented in the SWOT quadrants.
The members of the group may find it difficult to list the weakness easily due to the sensitivity to other members of the group or due to the blind spots in self-evaluation. They must be encouraged and empowered to be factual and actual.
APPLICATIONS OF SWOT ANALYSIS
A SWOT analysis could also serve as the basis for exploration of a creative solution to a difficult problem. It helps individuals and institutions to identify thebarriers that limit their possibilities and bring home to them the options for introducing and managing change in the system.
A well-implemented SWOT analysis also supports clarity of communication among the stakeholders of the project as well as that withthose of the worldoutside. Further, a SWOT analysis could also be usedto advancea decision-making process, if the goals of the discussions are properly set at the outset. It could be used in a tool for pre-crisis planning and preventive crisis management.
More importantly, a SWOT analysis serves as a solid basis for strategic planning for an individual and institution. Strategic planning seeks to build on strengths, minimising weaknesses, seizing opportunities, and counteracting threats as revealed through a typical SWOT analysis. Different SWOT strategies to this effect include the Strength-Opportunities (S-O) strategy, Weakness-Opportunities (W-O) strategy, Strength-Threats (S-T) strategy or the Weakness-Threats (W-T) strategy. The S-O strategy targets the opportunities that match well with the innovative strengths of the product/s of the institution. The W-O strategy, on the other hand, targets overcoming the weaknesses to help create opportunities for new products and services.
The S-T strategies aims at employing the product’s strengths to diminish threats and market risks while the W-T strategy buildsplans to prevent the product’s weakness from attracting external threats.
A SWOT analysis canalso be developed into a powerful tool of creative thinking by clearly defining Strengths, Weaknesses, Opportunities, and Threats. The SWOT lists have to be pruned and prioritised in order to serve the founding purpose. The options thus generated need to be carried through to the later stages of strategy development.
More than using it to develop a generic self-portrait of the individual or the institution, it may be applied specifically to individual projects, products, and services. A suitable SWOT analysis could also define the Unique Selling Proposition (USP) of the individual or the institution and contribute to the Core Competence Analysis.
ALTERNATE FORMS OF SWOT ANALYSIS
1. TOWS Analysis
In order to equip an institution with capabilities for strategic planning, the first thing managers must identify are the threats from outside, say experts. Hence theirpreference to reverse the order of SWOT analysis and replace it with TOWS analysis. The emphasis on the external threats and emerging opportunities would render better focus onthe analysis; the TOWS strategies thus developed would,in turn,become more purposive, many studies say.
2. SWOC Analysis
The term “Threat” in the SWOT analysis has its originsinmilitary strategy and,therefore,some experts recommend changing it to either “Challenges” or “Constraints” in order to lendthe analysis greater positivity. That is the origin of Strength-Weakness-Opportunities-Challenges (SWOC) analysis. People will then normally approach a challenge with more openness than whenapproaching a threat, which will enhance the use of the analysis.
3. SOAR Analysis
A Strengths-Opportunities-Aspirations-Results (SOAR) analysis is another strategic planning tool that helps focus an organisation on its current strengths and vision forthe future in order todevelop its strategic goals. Other than SWOT, which is more or less a top-down approach, SOAR analysis engages all levels and functional areas of the organisation to produce better results. Rather than focusing on the perceived threats and /or weaknesses, SOAR analysis helps the organisation build upon its current achievements. The book by Jacqueline Stavros and Gina Hinrichs, Thin Book of SOAR: Building Strengths-Based Strategy (2009) throws light on this method.
4. PEST Analysis
Professor Francis Aguilar of Harvard university is regarded as the author of the Political-Economical-Social-Technological (PEST) Analysis. He reports the rudimentary form of the method in his 1967 book Scanning the Business Environment,calling it theETPS analysis, which was tweaked later into the current acronym. It precisely analyses the opportunities and threats offered by different societal instances in more detail than done in a SWOT analysis.
Whether it is SWOT or TOWS or SWOC or SOAR or PEST, all these analyses endeavour to realistically estimate and evaluate the context of creativity and act as a springboard for innovation!