Why do even the most capable leaders often miss sweeping global trends that could dramatically impact their business? A significant part of the problem lies in the standard SWOT analysis—Strengths, Weaknesses, Opportunities, and Threats—widely used in strategic planning. While SWOT has its merits, it’s time to evolve this methodology for a more dynamic approach.
The Limitation of SWOT: Inside/Industry Myopia
SWOT analysis inherently directs leaders to focus inwardly, examining their company and industry-specific challenges. This focus creates what can be termed as “inside/industry myopia.” By honing in on internal and industry-centric issues, leaders may overlook broader global trends that could profoundly affect their business. Although SWOT helps executives understand their immediate environment, it fails to account for external influences from other industries and distant markets.
The Role of SWOT in Middle Management
Despite its limitations, SWOT remains a valuable tool for certain purposes. It’s particularly effective for gathering insights and ideas from middle managers who are more engaged with day-to-day operations. This tool enables them to identify internal strengths and weaknesses and spot immediate opportunities and threats. However, for senior leadership, SWOT’s introspective nature can be a distraction, pulling them into operational concerns instead of focusing on strategic, high-level trends.
Introducing SWT: A Broader Perspective
For senior leaders, an updated approach called SWT—Strengths, Weaknesses, and Trends—is more suitable. This method retains the introspection of SWOT but expands the scope to include global trends beyond the company’s immediate industry or geographic region.
Strategic Thinking vs. Execution Planning
Strategic planning involves two critical activities: strategic thinking and execution planning. Strategic thinking involves generating big-picture ideas, while execution planning focuses on implementing these ideas effectively. SWOT is excellent for execution planning, helping middle management create actionable plans based on internal and external factors. However, senior leaders require a tool that aids in strategic thinking without getting bogged down in operational details.
Emphasising Inherent Strengths and Weaknesses
In the SWT framework, senior leaders must conduct a deep dive to understand their organisation’s inherent strengths and weaknesses. This requires confronting harsh realities, as Jim Collins famously advocates. Recognising immutable weaknesses allows leaders to avoid situations that would demand strength in these areas. Conversely, understanding core competencies helps leaders leverage the strengths that have historically driven success.
Focusing on Global Trends
Senior leaders must shift their focus from immediate opportunities and threats to identifying significant global trends. These trends include technological advancements, changes in distribution, product innovations, and shifts in markets, consumers, and society. Instead of worrying about local competitors, leaders should ask broader questions: Is there an international company that could disrupt our business? Is there an emerging technology that could revolutionise our industry?
Mining Ideas from All Levels
To feed the strategic planning process effectively, it’s crucial to mine ideas from every organisational level. For frontline employees, a simple question—“What should the organisation start, stop, and keep doing?”—can yield valuable insights. Middle management should conduct a standard SWOT analysis to provide a detailed view of current operational realities. Meanwhile, senior leaders should employ SWT to understand and prepare for broader trends.
Staying Ahead of the Competition
By using SWT, senior leaders can better anticipate industry-shaking trends and develop strategies to address them. This approach not only helps stay ahead of the competition but also allows for the identification and mitigation of potential threats from new rivals. Understanding and planning for global trends ensure that your business remains agile and competitive in an ever-changing market landscape.
