In an article titled “Don’t Do SWOT: A Note On Marketing Planning” on ManyWorlds.com, J. Scott Armstrong of the Wharton Business School wrote:
The problem with SWOT (Strengths, Weaknesses, Opportunities, Threats) is that, because it mixes idea generation with evaluation, it is likely to reduce the range of strategies that are considered. In addition, people who use SWOT might conclude that they have done an adequate job of planning and ignore such sensible things as defining the firm’s objectives or calculating ROI for alternate strategies.”
Dr. Armstrong believes that “SWOT is not justified under any circumstances”, and recommends that firms “follow a formal written process” to: 1) set objectives; 2) generate alternative strategies; 3) evaluate alternative strategies; 4) monitor results; and 5) gain commitment among the stakeholders during each step of the process.
My take: SWOT should be an important component of your marketing planning efforts — but it must be done right, and in the right context.
This is ludicrous, as any quantitatively oriented marketer recognizes. The number of factors impacting the ultimate performance of a firm are numerous, and the interactions between them complicated. To simply conclude that because low performers used SWOT in their planning processes, that SWOT was even partly to blame is just not supportable.
The problem isn’t with SWOT as a process, but what most firms do with it. I’ve seen a number of firms’ marketing strategies and plans in the past few months, and they all follow a similar pattern: The SWOT analysis is found towards the beginning of the document.
This raises a chicken or egg issue: Which comes first — the identification of alternative strategies or the SWOT analysis? In most marketing plans I’ve seen, the SWOT analysis typically comes toward the beginning of the document. What this means to me is that the identification of strengths and weaknesses is applied to the current situation and strategy.
But when applied to the current situation, SWOT tends to be too general and useless. When I read the SWOT section of many plans, I ask myself “what’s the purpose of listing the things that are listed?” And usually, there is no good answer — because, quite frankly, the strengths and weaknesses identified are just regurgitations of the conventional wisdom of people within the firm. It’s as if the planning template said “here’s where you put the SWOT analysis”, so the planners have to put something in. The result: Planners mail it in, and end up including a poorly thought-out list of strengths and weaknesses.
The beginning of the plan is the wrong place for SWOT. The analysis should be applied to each of the alternative strategies identified. For each alternative, marketers should ask:
- How well could we execute this given our current capabilities?
- Is what we do well leveraged in this particular scenario?
- If we do pursue this particular strategy what is the threat to our existing and future customer relationships?
- What new opportunities would pursuing this strategy present to us?
A firm’s strengths, weaknesses, opportunities, and threats should be evaluated
within the context of the alternative marketing strategies it identifies. This begs the question, given Dr. Armstrong’s 5-step prescription for planning, of how alternative strategies are being evaluated (and how Dr. Armstrong would evaluate them), if not in the context of SWOT.
This is why I think Dr. Armstrong is throwing the baby out with the bath water. SWOT, in and of itself, isn’t the problem (and certainly isn’t the cause of poor performance). Few firms do SWOT right.
Dr. Armstrong might be right about SWOT inhibiting the generation of alternatives (when conducted at the beginning of the planning process). But his recommended process will fall short. A formal, linear process — from setting objectives, to generating alternatives, through monitoring results — that relies on “gaining stakeholder commitment during each step” isn’t viable in most large firms.
This just isn’t the way the world works. In reality, it’s a lot more iterative, a lot messier. Execs are protecting budgets, functions, fiefdoms, etc. You can’t move linearly from step 1 to 5, and the notion of “gaining commitment” is fuzzy at best, and a gross oversimplification of how decisions get made. And a formal written process will cause firms to miss what may very well be the most important part of a successful planning process: The verbal interaction and discussions that take place between executives.
This is where SWOT can help — by injecting a much-needed dose of reality into the process about what the firm can and can’t do well, and doing it in the context of alternative strategies. In fact, forcing SWOT to be applied only to alternative future strategies — and not the existing environment — may actually help firms generate alternatives in the first place.
Dr. Armstrong would have you avoid doing a SWOT analysis — for many firms, that could mean a lost opportunity to improve their marketing planning processes and results.
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