Fail to plan, plan to fail. 😤
Words we’ve all heard, but how often do we wing it as strategy professionals when we know we should have a concrete plan?
It doesn’t need to take weeks to build out a solid strategic plan for your leadership team. SWOT analysis is a simple, familiar tool you can use today to:
- Grab a quick, comprehensive overview of your competitive landscape.
- Get up to speed quickly with new and emerging competitors.
- Figure out the factors impacting the future of your business.
- Identify where to invest time and resources to maximize your ability to reach your org’s targets and goals.
In this article, we discuss how to build a solid strategic plan using SWOT analysis. Here’s what we cover:
- What is SWOT analysis in strategic planning?
- Why is SWOT analysis important when building a business strategy?
- What are the benefits of SWOT analysis for strategy planning?
- How to perform a SWOT analysis to build a strategy.
- Example of using SWOT to plan and strategize.
- 9 practical tips for SWOT.
Let’s go. 🏃♂️
What is SWOT analysis in strategic planning?
Let’s break that down a bit.
First, the SWOT analysis framework itself. We’ve explained what SWOT analysis is a number of times. Nothing too difficult to get a handle on here. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. A pair of internal factors (strengths and weaknesses), and a pair of external factors (opportunities and threats). (Explore the four elements of SWOT analysis in detail.)
Second, SWOT specifically applied to strategic planning. While you can apply the SWOT framework to almost anything (including yourself, or your projects), you’ll most often perform a SWOT analysis on your business, or on one of your products. You’ll do this to figure out a strategy for improving performance.
Why is SWOT analysis important in strategic planning?
This is key, because any good strategic plan will give details on:
- Where you are now.
- Where you want to be.
- How you’ll get there.
A SWOT analysis helps you answer these questions.
First, where you are now. SWOT analysis helps you figure this out by calling you to examine your own strengths and weaknesses as they are right now. Some things you’ll do well. Others less so.
You’ll also take stock of opportunities and threats. These two external factors force you to look outside of yourself at the wider market. New market trends might present opportunities for new business. Competitor developments might constitute threats.
The second question, where you want to be, comes down to your own ambitions as a business. But the third, how you’ll get there, you’ll be able to answer in light of what you’ve learned from your understanding of where you are now.
If you want to expand your market share by 30% in the next three to five years, you might need to eliminate some existing weaknesses and take action to defend against certain threats. You’ll want to make the most of your strengths and build on them as you move to take advantage of opportunities in the market.
In other words, by answering the three questions outlined above, of where you are now, where you want to be, and how you’ll get there, you’ve actually already begun creating your strategic plan. And you use the knowledge gained from an initial SWOT analysis to do that.
What are the benefits of SWOT analysis for your business plans?
Ok, so why the big fuss? Surely you can do all this without a SWOT analysis?
While you might be able to avoid doing a SWOT analysis in the formal sense, no matter which approach you use, you’ll end up having to consider some variation on the old SWOT theme. There’s no avoiding it. You need to understand the market, and the factors within it that can help or hurt you.
That includes your competitors. In fact, conducting a competitor SWOT analysis on your primary competitors is often a good call.
You also need an objective understanding of what your business, and its products, does well and poorly. Without such an understanding, you won’t know what needs promoting versus what needs improving.
• Gives a more comprehensive understanding of the competitive landscape.
• Helps you avoid strategic blind spots.
• Makes sell cycle issues more visible.
• Informs brand positioning strategy.
• Can bring you up to speed with markets and competitors quickly.
• It’s diverse, and can be applied to strategic plans for go-to-market, marketing, or broader business strategies.
How to perform a SWOT analysis for solid strategic planning
Step one: Identify internal and external factors
Internal factors (strengths and weaknesses) are within your direct control. External factors (opportunities and threats) are beyond your control and will come and go, but you can control your responses to them.
The classic 2x2 SWOT matrix is a good tool to use here. It’ll help you bucket each factor according to it’s role as something inside or outside your scope of control, as well as whether it’s something positive or negative.
Step two: Prioritize identified factors
If you’re a competitive intelligence professional, you’ll already be familiar with the fact there are too many competitors out there for you to possibly keep close tabs on them all. That’s why you prioritize your competitors, tiering them according to the business value of winning against each one.
It’s the same with SWOT. When you do a thorough job, you’ll start uncovering all kinds of factors affecting the trajectory of your business. If you want to figure out how exactly to move forward, you’ll have to prioritize the most important factors.
To prioritize effectively, reacquaint yourself with your company vision. Where do your leaders want to be in a year, or three, or five? What are your business’ OKRs (objectives and key results?) Some of the factors you’ve uncovered will lend themselves more strongly to helping your business achieve these goals. These are the ones you should prioritize.
Again, if you want to increase your market share by 30%, but your product line has a pressing weakness, it’d make sense to fix that weakness as a priority. Especially if, for example, market research shows this feature is of increasing importance to customers, or you suspect some recently churned accounts left because of this weakness.
Step three: Putting it all together
SWOT analysis can encourage you to look at each factor in isolation. You separate threats from weaknesses, and strengths from opportunities. But, when it comes to strategic planning, you need to consider the relationships between positive and negative factors, as well as internal and external factors, to arrive at the strongest business strategy possible.
For that reason, it always pays to spend quality time thinking through how each factor relates to and feeds into every other factor. This is time-consuming, but it’s perhaps the most enlightening part of the entire process.
Consider our earlier example. Your product line has a pressing weakness, and that weakness is found in a feature that’s more and more important to customers. The fact that customers value something you don’t do well is a potential threat. If you address your product line’s weakness, though, you can potentially mitigate this threat quickly.
The end goal
So what’s the end goal of all this? What are you trying to do?
According to respondents from our 2023 State of SWOT Survey, there’s not really one single most important metric to use when measuring SWOT’s success. Instead, it’s about identifying whether you’ve managed to successfully convert the findings from your SWOT analysis into a set of recommendations that are then followed up on and actioned. That’s the end goal of a SWOT analysis.
State of SWOT Report
Download your copy to learn...
- The five top challenges you face performing SWOT, and how to solve them.
- The best ways to measure success or failure post-SWOT.
- Whether SWOT is falling out of favor in modern businesses.
- The best alternative frameworks and how they compare with SWOT.
- The future of SWOT analysis.
SWOT analysis strategic planning examples
Here’s an example of how to build a strategic plan via SWOT analysis.
Let’s say you work for a business that manufactures security cameras. You want to figure out a vision for the company’s future, so you perform a SWOT analysis.
- Reliable hardware with the lowest failure rate in the industry.
- Excellent picture quality.
- Loyal customer base.
- Slow growth in recent years.
- No longer an innovator.
- The customer experience is difficult and unintuitive across the industry. If you can fix this, you may win market share.
- Your size and available capital puts you in a position to acquire smaller firms going through tough times in the present recession.
- Lack of innovation puts you at risk of disruption from competitors or alternatives.
The strategic plan
At present, very few manufacturers have figured out how to develop camera management and recording software that rivals third party developers. As a result, customers have to source the hardware and the software separately.
You believe there’s an opportunity in the market for a provider who can figure out both, improving the buyer experience while giving you the opportunity to bundle multiple products together.
You don’t have the in-house expertise to do this from scratch yourself, but a small software business, failing due to lack of outside investment, has just become available for purchase.
Your size and available capital puts you in a position to acquire them, shortening the time to market for a software solution while adopting their in-house expertise for yourself.
• Position yourself as an innovator again by succeeding where so many others have failed.
• Offer a key additional USP other competitors may struggle to match, fixing your biggest present threat.
• Eliminate your biggest existing weaknesses.
• Take advantage of your strengths as a trusted brand with a trusted product to branch out into a new line of camera management software.
• License or white label your software to competitors for even greater profit potential.
The above business strategy takes advantage of two approaches to SWOT analysis called matching and converting.
Matching has you match opportunities with strengths, and threats with weaknesses, to identify a competitive advantage (or competitive disadvantage). Converting has you brainstorm ways of turning threats into opportunities, and weaknesses into strengths.
9 practical tips for conducting a SWOT analysis on your business
When we surveyed our community for their opinions on SWOT analysis for the 2023 State of SWOT Report, we found that people consider one of SWOT’s biggest limitations to be its vulnerability to blind spots.
So when it comes to performing a SWOT analysis for strategic planning in practice, it’s important to guard against SWOT’s limitations while getting the most out of its strengths. If you're facilitating a strategic planning session that includes a SWOT analysis, it becomes even more crucial to be aware of these limitations.
1. Perform SWOT analysis at least semi-frequently to be sure you’re not losing touch with your competitive environment. 44.5% of all respondents to the 2023 State of SWOT survey had performed at least one SWOT within two months of taking the survey.
2. SWOT is especially useful for understanding how you’re positioned against your competitors. Doing some competitive positioning? Incorporate a SWOT analysis.
3. Don’t just perform a SWOT analysis on your own business. Conduct a SWOT on your primary competitors for an even more comprehensive overview of the competitive landscape.
4. SWOT is a very recognizable framework. So use it not just to make sense of findings yourself, but also to communicate those findings to others.
5. SWOT can be a time-consuming exercise. Make the results go further by converting your SWOT findings into enablement assets like battlecards.
6. Don’t take this all on yourself. Involve others from around the business, but don’t be surprised if your findings differ depending on which groups (leadership, middle management, etc) you involve.
7. SWOT shouldn’t be an empty intellectual exercise. The whole point is to create a set of recommendations that are then actioned. To measure how successful your SWOT analysis has been, measure how thoroughly its recommendations are actioned.
8. It’s simple, but inverting the acronym order and conducting a “TOWS analysis” where you focus on external forces first can give you a fresh perspective.
9. SWOT is a diverse tool, and can be applied to almost anything. Apply SWOT analysis to your products, to yourself, even to your projects. For even more practical tips, check out this guide to SWOT analysis for project management.
“The great thing about SWOT is that everybody knows it. It’s very big in business and MBA courses. And so I think it’s a really great, really powerful tool, as this is something many people in the organization know about. It’s also very visual. Very quickly, you can communicate a holistic view of a company or competitor.”
~ Pat Wall, Head of Competitive Intelligence at Imperva
One final piece of advice: even once you've built an informed strategic plan with SWOT analysis, it still makes sense to pressure test that plan against various scenarios. Business wargaming can help you here, as you bring together reps from across the business to role play scenarios that can uncover weaknesses in your strategy.
Download the State of SWOT Report
We had far more questions about SWOT analysis for our survey-takers.
🎯 Which SWOT applications offer the best ROI?
👍 How do you measure the success or failure of a SWOT analysis?
🔮 What does the future hold for SWOT analysis? And how do you overcome its inherent challenges?
Want to dig deeper into the reasons why modern attitudes towards SWOT are the way they are? Want to read the real comments and opinions of practitioners to learn how to improve your own application of strategic frameworks in your business?
Grab your no-cost copy of the report today and upgrade your competitive intelligence toolkit. 🧰