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VOL. 128 | NO. 91 | Thursday, May 9, 2013

Market Myopia: Blame the SWOT


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Why do leaders miss seeing sweeping global trends that are about to broadside them? I put a big part of the blame on the standard SWOT analysis used in strategic planning –Strengths, Weaknesses, Opportunities and Threats. It’s time to update this methodology.

Almost by definition, the SWOT process drives leaders to look inward at both their company and industry challenges, creating what I term “inside/industry myopia.” The traditional SWOT analysis, while helping executives see the forest and the trees, it tends to lead them to forget anything outside the forest. The SWOT isn’t the right tool to spot trends from other industries and markets that they need to factor into their plans.

The strategic planning process comprises two distinct activities: strategic thinking and execution planning. Strategic thinking is coming up with a few big-picture ideas. Execution planning is figuring out how to make them happen.

SWOT works great for planning – the focus of middle management – resulting in a laundry list of accolades and fixes. However it tends to pull executives down into operational issues, distracting them from the much bigger forces around the globe that can take the company by surprise if not prepared.

For senior leaders I propose replacing the SWOT with the SWT – an updated approach that identifies inherent Strengths and Weaknesses within the firm while exploring broader external Trends beyond their own industry or geography.

In the SWT, senior leaders do a deeper dive – and face the brutal facts of their reality. They need to call out inherent weaknesses that will likely never change – so they can say no to situations that would require the organization to be strong in those areas. At the same time, leaders need to be crystal clear on the inherent strengths or core competencies of the organization that have been the source of its success.

Like an individual’s innate strengths and weaknesses, which tend to be baked in by age 5, an organization has the same. So it’s less about changing them and more about playing the hand the firm was dealt.

In turn, instead of sizing up a company’s immediate opportunities and threats, the senior team should rise above all this and look at the major trends – significant changes in technology, distribution, product innovation, markets, consumer, and social trends around the world that might shake up not only the business but the entire industry?

Think beyond the competitor down the street. Is there a company on the other side of the globe that’s going to put you out of business? Is there a new technology coming onto the startup scene that could change the way all companies must do business overnight?

Therefore, to feed the strategic planning process properly, the key is using different techniques for different levels of the organization. From frontline employees, ask one simple question: “what should the organization start, stop, and keep?” From middle management, require a standard SWOT.

And demand the senior team go deeper and broader using the SWT.

Verne Harnish is the founder of Gazelles. Michael Synk is the founder of In-Synk and is the Gazelles coach in Memphis. Contact Michael at msynk@in-synk.com.

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