Assemble Your SWOT Team

I’d like to say a word or two today about the dreaded SWOT analysis by which every manufacturer should live. A heavy topic for a Thursday, to be sure, but there’s a video with foul language in just a few paragraphs, so hang in there with me.

The SWOT analysis forces a company to lay out its Strengths, Weaknesses, Opportunities, and Threats, all with an eye toward minimizing drawbacks and capitalizing on strengths. In that vein, I watched an interesting video today featuring Professor Malcolm McDonald, MA, MSc, Ph.D., etc., of the Oxford Learning Lab, which specializes in marketing seminars and best practices. Don’t let the laundry list of initials after the professor’s name fool you; McDonald is an everyman with atrocious handwriting and a sailor’s tongue. One minute into the mini-lecture, he gives a name to a practice he finds all too common among companies conducting SWOTs: the SWAG, or scientific wild-ass guess.

For the record, Professor McDonald excuses himself profusely for the vulgarity, as we would expect a proper English gent to do. But he points to the SWAG as one of the main reasons manufacturers and others produce bad SWOT analyses. Why? Because management tends to produce a single version of the strengths, weaknesses, opportunities, and threats faced by the entire company. Instead, McDonald advises, manufacturers should create a SWOT analysis for each segment of the business.

Take the example of a manufacturer of etching tools, some laser-based and some of the more-traditional pneumatic variety. The laser side of the business might have opportunities and weaknesses that don’t exist in the pneumatic segment. For instance, the supply chain for laser etching products might stretch back to the Far East for diodes and semiconductors, creating weaknesses due to the cost of transporting parts across oceans and the long lead times that come with it. On the pneumatic side, the products may be sourced closer to home, but may use more steel in their construction, which exposes the company to volatile raw material costs.

That’s just one small example that points up the need for more tightly defined SWOT analyses. I’ll let the good professor explain a bit more (not suitable for young children; see: SWAG):

In another SWOT-focused video seminar I watched, the instructor noted that managers might not like the word “weaknesses,” so she replaced it with “areas of opportunity.” Don’t do this. If you start to sugarcoat the language, you might begin to think you have a magic wand that can change the complexion of things simply by giving them more pleasing descriptions. You cannot. Your company has weaknesses – you know it, and all your employees know it. Stare down those weaknesses. Make them blink. Fix them if you can.

And please, no more wild-ass guesses.

Join the conversation: How good is your company at admitting its weaknesses? Add your comment below.