Why do leaders make strange decisions when it comes to people?
I was looking at a question raised by a friend of mine about SWOT (Strengths, Weaknesses, Opportunities and Threats), and whether the Opportunities and Threats, that are mainly analyzing the external environment, could be looked at and analyzed from inside the organization as well. So, I was very encouraged to refocus and look deeply into it to find an answer.
The origin
The empirical basis of SWOT started in 1952 within the Lockheed’s Corporate Development Planning Department. One of its thus far unknown pioneers, Robert Franklin Stewart, became the head of the Theory and Practice of Planning group at the Stanford Research Institute in 19621.
Crediting the tool to Stanford University’s Albert Humphrey, SWOT is credited to two Harvard Business School Policy Unit professors – George Albert Smith Jr and C Roland Christiensen, during the early 1950s.
Later, in the 1950s, another HBS Policy Unit professor Kenneth Andrews developed its usage and application. All professors were specialists in organizational strategy as opposed to marketing. SWOT went on to be developed by the HBS during the 1960s until SWOT became the tool that we use today.
However, there are a number of contrasting, if not contradictory, views on the origin of SWOT. One thing is true and that is, if you conduct your own review of the literature on SWOT, there is no obvious history of thinking on the topic i.e. it has no documented epistemology. In this case there is no documented history of SWOT, we don’t really know the origin – that is the answer!
Concept analysis
SWOT analysis (short for strengths, weaknesses, opportunities, and threats) is a business strategy tool to assess how an organization compares to its competition.
“Strengths” and “weaknesses” are internally-related. The former represents a facet of an organization/entity which lends it an advantage over the competition. The latter being characteristic of that same entity, which leads to a relative disadvantage against the competition.
Regarding externally-related, “opportunities” are realities in the greater environment that can be exploited to benefit the entity. While, on the other hand, “threats” are realities in the greater environment, which might lead to problems for the entity.
Refocusing
The challenges of internal analysis is that management practitioners make the common mistake of listing all the factors in which the organization is believed to be robust or most vulnerable, and they end up with a long list of factors, which would make it difficult to analyze and to translate into strategic action.
Practitioners are advised to identify and analyze the weaknesses as threats if they are out of their control.
Just think for a moment and take an objective look into the intentions staff turnover or predictive turnover. Can you control it, do you know who is leaving or staying, can you predict it? Can you stop the head hunters from approaching your top talent?
Think about the worst things that could realistically happen, such as losing top performing people to your threatening competitor. Listing your threats in your SWOT analysis will provide ways for you to plan to deal with the threats, if they ever actually start to affect your business.
In this context, staff turnover or potential or predictive turnover cannot be defined as a weakness but more of a survival threat to your organization. Ideally, an internal analysis should be prepared on the basis of an organization’s attributes in comparison to its competition, and to take another look at the internal threats. The attributes are reviewed with respect to how they contribute or limit the organization from achieving a competitive position.
SWOT proves to be too superficial and formulaic, consequently hindering performance as outputs might be misunderstood or misused. In spite of its apparent simplicity, SWOT analysis can be misused by practitioners. The correct use of the tool is essential in ensuring that the right strategic action is defined in the process. However, it remains to be a useful tool for reviewing a firm’s competitive position.
References
Prof. Dr M Amr Sadik is VP Dimensions Consulting Ltd. UK, based in Cairo, Egypt. He is an HBR Advisory Council Member, Adjunct Professor IPE Management School, Paris, and of Middle East Programs for, Victoria University, School of Management, Switzerland and HR Professor and Board Member GUEST, Latvia.
