How to Conduct a SWOT Analysis

Office workers conducting a SWOT analysis around a white board
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When evaluating a company's performance, it's helpful to have tools for conducting a thorough and systematic review. A SWOT analysis is one such tool that any leader should know how to use in business.

A SWOT analysis is used to identify the Strengths, Weaknesses, Opportunities, and Threats relative to your company, unit, group, or a product, service, or program for which you are responsible. It lets you focus on specific areas and discover actions that can help build on strengths, minimize or eliminate weaknesses, maximize opportunities, and confront threats.

These evaluations are often conducted with a team and used to inform a strategy or strategic plan. The process is relatively simple and involves the following steps:

1. Select a SWOT Facilitator

While a manager, team. or project leader can lead their own SWOT analysis, it is often helpful to use an independent facilitator in order to free up the leader to fully participate and not bias the input from others.

2. Brainstorm a Company or Unit's Strengths

Go around the room and solicit ideas from participants. Areas of strength for a company or unit include leadership abilities, decision-making abilities, innovation, productivity, quality, service, efficiency, technological processes, and so forth. Record all suggestions on a flip chart. Avoid duplicate entries.

Some issues may appear on more than one list. For example, a company or unit may have a strength in an area such as customer service, but may have a weakness or deficiency in that area as well. At this point, the goal is to capture as many ideas on the flip charts as possible. Evaluation will take place later.

3. Consolidate

Post all flip-chart pages on a wall. Even though you've made every effort to avoid duplicate entries, there will be some ideas that overlap. Consolidate duplicate points by asking the group which items can be combined under the same subject. Resist the temptation to over-consolidate by lumping lots of ideas under one subject. Often, this results in a lack of focus. Simplify your list as much as possible while still capturing distinct areas of strength.

4. Clarify

Go down the consolidated list item by item and clarify any items that participants have questions about. It's helpful to reiterate the meaning of each item before discussing it. Stick to defining strengths just now, and restrain the team from talking about solutions at this point in the process.

5. Identify the Top Three Strengths

Sometimes the top three strengths are obvious and no vote is necessary. In that case, simply test for consensus. Otherwise, give participants a few minutes to pick their top issues individually. Allow each team member to cast three to five votes (three if the list of issues is ten items or fewer, five if it is long). Identify the top three items. If there are ties or the first vote is inconclusive, discuss the highly rated items from the first vote, and vote again.

6. Summarize Strengths

Once the top three strengths are decided, take a moment to discuss how the group defines each one. Summarize these definitions on a single flip-chart page. Now you have a clear, agreed-upon view of your company or unit's top strengths.

7. Repeat for Weaknesses

Similar to strengths, areas of weakness for a company or unit include leadership abilities, decision-making abilities, innovation, productivity, quality, service, efficiency, technological processes, and more. Follow steps 2-6 to narrow down the core weaknesses you need to address.

8. Repeat for Opportunities

Areas of opportunity include emerging markets, further market penetration, new technologies, new products or services, geographic expansion, cost reduction, and so forth. Repeat steps 2-6 to discover the top three opportunities your company or unit should seize in the near future.

9. Repeat for Threats

Threats may include the entrance of a new competitor, legislation or regulations that will increase costs or eliminate a product, a declining product or market, and so on. These are external forces that could impact your company, not internal issues (those would fall under weaknesses). Repeat steps 2-6 to form your list of primary threats.

10. Make a Plan

Performing a SWOT analysis is a great way to develop a picture of where you are and where you need to go. Following these steps gives you a process for efficiently getting results in a way that involves and energizes a team. Once you've finished, you have a better understanding of the internal and external realities facing your company or team, which enables you to chart a course forward.