Performing a SWOT Analysis

In August 1805, Emperor Napoleon fought what was arguably the most important battle of his military career.  In a brilliant display of strategy, he devised a system of matching his strongest soldiers with the enemy’s weakest, in a move that students in military colleges still study today as the Ulm Manoeuvre.

What business lessons can you learn from one of the greatest strategists in history at the top of his game?

Unfortunately I couldn’t interview him for this article, but I’d be willing to bet that Napoleon’s thought process went something like this:

• How can I get my strongest men to fight their weakest men at just the right opportunity while protecting the rest of my army from the threat of counterattack?

Notice the bold print.  This type of thinking is called a SWOT analysis.

SWOT Analysis

A SWOT Analysis is a tool that achieves competitive advantage by comparing your strengths to your competitor’s weaknesses, and analyzing the opportunities and threats that are present.  It has a remarkable similarity to Napoleon’s tactics.  Whether in corporate strategy, project management, or your personal life, making the decisions between various options that each have their own pros and cons is essential to becoming a strong leader.

For example, it can be used by program or portfolio managers to decide between the most advantageous projects given limited funds.  Project managers can use this tool to decide between multiple potential deliverables.

By analyzing the internal factors (strengths and weaknesses) together with the external factors (Opportunities and Threats) SWOT analysis sharpens your focus onto the strategy that will work the best for your organization or project.

It is normally plotted on a 2 x 2 matrix.

SWOT stands for:

• Strengths
• Weaknesses
• Opportunities
• Threats

Strengths

The top left quadrant of the SWOT analysis contains the elements that your organization or project team excels at.  The best source of this information is customers or clients if you are in a position to ask them, but even if you aren’t I would suggest you can get a pretty decent SWOT analysis anyway.

Use this checklist to assist in brainstorming to find your strengths:

1. What have we excelled at in the past?
2. What have others said that we have excelled at?
3. What awards have we won?
4. What resources, equipment or facilities do we have that others don’t?
5. What can you do cheaper than others?

Weaknesses

Underperformance in an organization is often ignored or kept quiet, but can be the missing link that causes the company to turn its fortunes around.  The top right quadrant is for listing your weaknesses.  The checklist questions are:

1. Think of your top 3 project failures.  What was the principle cause?
2. What criticism have you received from others?
3. What business relationships, clients, or customers have you lost?  Why did you lose them?
4. What internal conflicts has your organization experienced?
5. What sales have you lost?

Opportunities

Opportunities are the actions the organization could do that are most likely to succeed in achieving the organization’s goals.  They are found in the bottom left quadrant of the SWOT analysis, and they fall into the categories of:

• Economic:  The future market demand for the product or service.  Changes in interest rates or currency exchange rates.  Future products/services from competitors.
• Technological:  An increase in sales due to better technology.  Also, a decrease in costs to produce the product, or a better competitive position because of fast rollout of technology.
• Social:  Demographics, such as population shifts, and attitudes toward issues such as health and wellness.  Irrational market ‘love’ of certain products.
• Political:  The tax environment and tariffs.  Opportunities from future changes in regulations.

Here are five questions for the opportunities quadrant.

1. What are the three biggest changes in your industry recently?
2. What technology has opened new doors?
3. How can you reduce costs in your existing business?
4. What trends are occurring in your market (lifestyle, demographic, etc.)?
5. What new products have your competitors pursued?

Threats

These are the potential negative effects from factors outside the organization’s control.  A strong corporate strategy requires a strong analysis of threats and related action plans.  Threats can be classified as internal or external.

• Internal:  Employees leaving, equipment breaking down, harmful corporate reorganization, decreasing quality of work, loss of client relationships.
• External:  Market demand, increasing supplier costs, systems and processes becoming obsolete, technological factors, acts of God.

Here is the checklist for the Threats quadrant:

1. Where have you recently lost business?
2. What changes have occurred in your industry that could result in lost business?
3. Which competitors are your biggest threat?
4. Which part of your business is the most valuable?
5. Which part of your business is the most under threat (likely to decrease)?

Example

This example shows the types of things that one might put into the 4 quadrants of the SWOT analysis matrix:

SWOT Analysis Template

Please try our free [download id=”1825″] template. It also includes a handy checklist for the typical types of things you might see in the matrix.

Let us all know in the comments how you’ve used a SWOT analysis and share some of your Napoleonic (hopefully) results.  We’d love to hear from you.