SWOT analysis: concept, essence, preparation

A common mistake in agile transformations is that the organisation gets so caught up in making changes and changing that it fails to recognise the values it should be preserving as it changes. As a result, transformations will not only be more costly than necessary, but can easily become damaging.

SWOT analysis is an excellent example of a traditional management tool that is recommended in agile organisations. The proper use of the technique can also help to avoid the above problem, among others.

The concept of SWOT analysis

The SWOT analysis is an easy-to-understand strategic analysis and planning tool, which is mostly used by traditional management methodologies at the beginning of the decision making process, even during the pre-decision phase. Its purpose is to identify and raise awareness of the external and internal factors that support or hinder the organisation in achieving a given (specific) goal, be it a project goal, a higher-level business goal, or even other non-business goals (e.g. non-profit/government goal, crisis prevention, etc.).

Factors considered in the SWOT analysis:

Internal factors:
– Strengths
– Weaknesses

External factors:
– Opportunities)
– Threats

The results collected during the analysis can be visualised using the so-called SWOT matrix below:

 

Are we analysing ourselves?

The SWOT analysis highlights the importance of a balanced assessment of the situation.

While it is often common practice to analyse market realities and opportunities (i.e. external factors), many organisations are not aware of their own strengths and weaknesses, i.e. internal factors. However, even with the best possible knowledge of the market, there is no guarantee that future decisions are appropriate to the situation.

An accurate understanding of our strengths will help us identify which market opportunities can be easily exploited by the organisation, thus providing an important input for prioritising market opportunities. Likewise, strengths can show which market threats can be addressed with ease and confidence, and which ones may pose serious risks due to a lack of appropriate strengths.

As mentioned above, a good understanding of our weaknesses will show us which market opportunities may be too challenging to exploit – even to the point where it is better to let the opportunity go – and which market threats need our attention.

It is important to emphasise that the characteristics of an organisation cannot be classified as fixed strengths or weaknesses, the nature of a particular characteristic always depends on the specific objective. For example, if the organisation is made up of highly skilled but uncommunicative lone wolves, this can be considered a strength, while the nature of the organisation’s tasks requires individual work, but as soon as concerted action and close teamwork is required, this characteristic becomes a weakness.

Carrying out a SWOT analysis

The two main steps in a SWOT analysis are analysis and decision/planning.

Analysis of the situation

The aim of the SWOT analysis is to assess the situation as thoroughly and comprehensively as possible. As much as we would like to, there is no way to check that the analysis has identified all the strengths, weaknesses, opportunities and threats. However, the following practices will help to make the analysis as accurate as possible:

– Be very clear about the objective you want to achieve/test.  All four categories of SWOT are so general that if not narrowed down to a very clear objective, the analysis will become overwhelming and the results useless.
– Let’s start by gathering the external factors.  As we have shown earlier, market reality can influence whether an internal feature of an organisation is a strength or a weakness, so it is worth clarifying the external situation first.
– Broad participation. The SWOT analysis is not a one-man job. The more different perspectives can be brought to bear in the analysis, the more complete the result will be. Therefore, involve as many of the relevant areas of the organisation as possible in the analysis, and possibly different professions within each area.
– Discussion. The way to a good SWOT analysis is through discourse and lively professional debate, give it time and space.
– Balance. If the SWOT matrix is suspiciously one-sided, it is worth setting a numerical target, for example, at least five items in each category.

Decision-making and action plan preparation

Having analysed the situation, we now have a SWOT matrix. However, this is not the key to success, just as important is the evaluation of the matrix and the decision-making process. There are several techniques for evaluating the matrix, the usefulness of which depends on the original question that inspired the SWOT analysis.

If we started the SWOT analysis with an open question (e.g. what kind of product to develop), the questions we asked based on the matrix are broader. For example:

– What are the opportunities that our existing strengths can exploit easier? By identifying and exploiting these, we can gain a market advantage.
– How can we avoid the dangers? How can we avoid being confronted with our weaknesses? These questions may point to the need for a strategic shift, or even encourage a segment change or entry into a new market.

If the analysis is done after a decision has already been made (e.g.: it is announced that the project will start), the questions are more focused on how the decision has been successfully implemented. For example:

– What are our strengths that are particularly important to achieve this goal?
– What are our weaknesses that pose a significant risk (in terms of achieving the target) and what are we doing to change them?
– What are the opportunities we should definitely take (to reach our goal)?

Although some of the questions may seem to apply to only one field of the SWOT matrix, it is important to evaluate all observations in the context of the whole matrix when making decisions.

It is important to note that a SWOT analysis is not just a meeting. The matrix and action plan produced only shows the knowledge of the organisation at the time of analysis. The more volatile the external and internal environment, the more important it is to regularly check (either through SWOT analysis or other techniques) the insights and decisions made during the initial analysis.

SWOT analysis in an agile environment

As we indicated at the beginning of this article, although SWOT analysis is one of the traditional management tools, it can also be of great use in agility. In addition to the above, it is useful for example:

– At the beginning of agile transformation,
– At the start of new product development,
– Before planning a new release,
– During a product-level retrospective meeting, or even
– During a team-level retrospective meeting

In addition, a SWOT analysis can also be useful if (for example as a Scrum Master or Product Owner) you feel that the steadiness in your organisation/team is out of balance. If there is an unrealistically high level of optimism, then an awareness of weaknesses and threats can help, but if pessimism or apathy has taken hold of the team, then taking stock of strengths and opportunities can help to find the right balance.

You can learn more about using SWOT analysis in an agile environment in our Agile Leadership and Advanced Scrum Master training.

SWOT analysis literature

The online literature on SWOT is almost endless. A few useful articles on the subject:

A brief description of the use of SWOT in retrospective meetings:
https://www.funretrospectives.com/swot-strengths-weaknesses-opportunities-threats/ 

A more positive SOAR technique based on SWOT analysis:
https://theagileacademic.com/2019/07/29/soar-not-swot-analysis/ 

SWOT analysis in portfolio level planning using the Scaled Agile Framework (SAFe) methodology: https://www.scaledagileframework.com/portfolio-vision/