Summary:
Michael Finnegan’s 2010 thesis surveyed 101 executives (78 completions) from multiple countries and industries in an effort to evaluate SWOT’s viability for creating actionable intelligence in the formulation of strategic plans. The methodology defines an executive as a working professional in upper management or anyone involved in strategic planning. In this study, strategic planning refers to areas within business operations that look at all internal and external events and resources to determine what future decisions will likely yield the most success to the organization. Surveying from this population enabled analysis of primary sources to reach four particular findings.
Michael Finnegan’s 2010 thesis surveyed 101 executives (78 completions) from multiple countries and industries in an effort to evaluate SWOT’s viability for creating actionable intelligence in the formulation of strategic plans. The methodology defines an executive as a working professional in upper management or anyone involved in strategic planning. In this study, strategic planning refers to areas within business operations that look at all internal and external events and resources to determine what future decisions will likely yield the most success to the organization. Surveying from this population enabled analysis of primary sources to reach four particular findings.
- Businesses rarely use SWOT with the structure and formality reflected in the academic literature supporting the use of the technique. Processes such as researching SWOT variables in depth before conducting an analysis and ranking the outcomes of the technique are missing from the procedures followed by surveyed by the organizations of surveyed executives. Executive cited initial exposure to SWOT in college.
- SWOT’s greatest contribution to designing a strategic plan is enabling a greater extent of diversity of perspectives within and outside of the organization to come together, which Finnegan identifies as an indirect contribution to strategic planning. SWOT informally overcomes “silos” within organizations, serving as a catalyst to externalize ideas previously entrenched within a division or unit.
- Surveyed executives believe a SWOT should be completed quarterly to produce timely and relevant analysis, yet they acknowledged that SWOT is not performed as often as it should be to reach their goals, the reasons why it is not performed more often are not clear from the results but likely barriers include scarcity of time, money, comfort, and convenience. Executives typically conduct SWOT only once a year.
- No evidence of a direct contribution to strategic planning is evident from either the quantitative or the qualitative interpretations of the survey results; therefore, executives should pair SWOT with other techniques as a starting point for additional analysis. Findings indicate that the output of SWOT should not be the sole basis of an effective strategic plan. Other popular techniques cited by executives include competitor profiling, scenario planning, and financial analysis. However, no literature presently confirms that pairing a specific technique with SWOT creates actionable analysis or adds direct value to the creation of strategic plans.
A pervasive mindset found in the results of the survey is an application of the technique consisting of filling in the quadrants of SWOT and concluding that the filled in quadrants are the final output of the analysis. Finnegan found that such procedures are neither reactive nor proactive, they simply breakdown a present situation visually. One solution identified in the thesis is incorporating case studies and applied projects when SWOT is taught at institutions of higher learning.
Further research is required to identify the best pairings of techniques to add direct value to the creation of strategic plans. Other gaps in SWOT literature include best practices for the best time and place to perform SWOT, SWOT’s relative value as a communication tool and brainstorming platform, and further surveys corroborating the findings and expanding on the questions used in the study to measure the evolution of SWOT’s application.
Critique:
Another avenue of approach for evaluating SWOT’s value in strategic planning is examining the interrelationships between the vast amount of variables SWOT factors into an easier to digest profile, and to what extent the future decisions advocated in the strategic plan actually yielded measurable success for the organization via an experimental stock market game. Various groups with the same internal resources and ability to make sense of external events could be directed to play a stock market game under various conditions (i.e. group 1 crafts an investment evaluation strategic plan to buy or short stocks with or without options trading using solely intuition, group 2 uses swot, group 3 uses swot paired with another technique, etc).
Source-
Evaluating SWOT's Value In Creating Actionable Strategic Intelligence
Posts
Ricardo, from the research I conducted, it is obvious that the SWOT methodology is lacking hard empirical evidence to support the effectiveness of this methodology. It appears your article essentially states that Finnegan was unable to prove any value in SWOT to the strategic planning process. Do you believe SWOT to be an effective methodology and what questions do you believe are still unanswered about its overall effectiveness?
ReplyDeleteIt was interesting to see that the survey concluded—“surveyed executives believe a SWOT should be completed quarterly to produce timely and relevant analysis.” In my research, the Harvard Business Review suggests nine basic steps to complete a SWOT. In addition to your research, do you think companies would have enough time to complete a valuable SWOT every quarter? If so, do you think the information provided would be of value and/or utilized?
ReplyDeleteHarrison,
ReplyDeleteThe article found that SWOT does not directly add value to creating an actionable strategic plan. Yet I'm hesitant to say that the article found no value in SWOT to the strategic planning process per se. On page 58, Finnegan states that SWOT's indirect contribution to strategic formulation comes from its ability to act as a platform for multiple perspectives to come together in a structured manner for preliminary analysis, however this is contingent on the way that SWOT is done. This finding is tied to the data, all the questions asked are in an appendix. Finnegan refers to this as an indirect contribution to the strategic planning process.
Now, whether this indirect contribution is better attained by SWOT or something else has not been tested.
Personally, I believe that SWOT can be an effective technique when either an external factor changes the way the company does business or when the company management proactively considers a change of direction, however only as a supplementary technique and not a primary one.
To add rigor and lessen bias, I think that outsourcing parts of the SWOT to a trusted consulting firm with experience in the relevant industry to honestly appraise the strengths and weaknesses of the company in the context of opportunities and threats is ideal; with group discussion with all the "silos" of the business and with a sample of customers to determine what the business does well or poorly.
A company looking to expand a particular service to a new state will want to take a look at the market outlook for the service over the next few years, along with addressable market space, competitor analysis, and their own strengths and weaknesses. SWOT provides a structured way to obtain preliminary analysis and sources to feed into a larger analysis.
Harrison,
ReplyDeletePertaining to what questions need to be explored to address SWOT's overall effectiveness, establishing best practice in regard to when to perform a SWOT, who to involve, and what sort of data best adds value to the SWOT versus what data does not are all questions that need to be addressed.
Furthermore, the way SWOT is taught needs to be reexamined, I don't know if standardizing the way the technique is applied is the answer, but at least having a schema of different ways the technique is applied today and the relative robustness of each application would be ideal. The way surveyed executives apply SWOT seems to be more along the lines of a "screenshot in time" instead of forward looking.
And of course, the question of whether or not SWOT actually yields measurable improvement to strategic planning has not been tested. I think this would be difficult to test "in the field" because sensitive private information about company's plans for the future would be exposed to the researchers, and any breach in confidentiality would cause turbulence in the competitive landscape. In this study, strategic planning is defined as "areas within business operations that look at all internal and external events and resources to determine what future decisions will likely yield the most success to the organization." Such a group activity can be modeled after the real-world, but I think findings would be industry specific.
Joy,
ReplyDeleteI share your concerns about the scarcity of time. When asked how often SWOT analysis is conducted, most respondents selected "yearly". Here is the breakdown:
36% chose yearly
22.7% chose N/A
13.3% chose quarterly
10.7% chose monthly
10.7% chose every 6 months
6.7% chose every 2 years
The next question pertained to how often SWOT should be conducted under ideal circumstances. The breakdown here was:
29.3% chose quarterly
21.3% chose every 6 months
21.3% chose annually
13.3% chose monthly
12.0% chose N/A
2.7% chose every 2 years
I am of the opinion that how often SWOT should be conducted for timely analysis is contingent on the rate of change in the industry. In a mature industry with no indicators of disruptive innovation, the desire to conduct a SWOT quarterly is likely to be arbitrary. On the other hand, in a high growth market with volatile competition or in any industry with disruptive competitors I could see value in a quarterly SWOT analysis.
I'd be interested in knowing the relative company sizes of the respondents who chose different answers, because a well done SWOT could take a smaller firm an entire quarter to get around to doing a SWOT and in a fast growing industry the information collected at the beginning could already be outdated.
What is not clear to me is if the new SWOT should be entirely new or merely an update on the previous one under such a quarterly system.
The article highlights uses for SWOT beyond an analytic tool. An unintended finding of the research was SWOT’s use as a communication tool, conceptual tool, and brainstorming platform as ways in which an organization benefits from the implementation of SWOT, but further research on these indirect outcomes of SWOT and their effects on an organization is needed to assess the actual extent of their benefits (p.68)
Ricardo - Great to see this thesis resurface and add to some continued exploration of the technique – I really enjoyed reading through some of your thoughts and the comment dialogue.
ReplyDeleteHaving now been in the business and security space for a few years, I still think that most of the four findings of my initial research hold true. The 1st and 2nd findings, in my experience, are certainly accurate - and because of this (and some of what Joy alluded to) - is why I believe the exercise is not completed as frequently as the surveyed executives initially answered (Quarterly). In actuality, I see this being used ad hoc (as you mentioned), or Yearly in areas where routine assessments are performed, but no more frequently than that.
As for the 4th finding, I still believe that SWOT's true value starts and stops in its ability to deconstruct complex issues in to simplified concepts, and gather various perspectives from areas of an organization - but it will not yield any type of actionable outcomes or options. Which to me means that it can help on the front end of analysis, but needs another technique to help 'reconstruct' some valuable insight.... which would be a great future thesis topic to explore!
Mike,
ReplyDeleteThank you for reaching out. In class we discussed whether the auxiliary benefits of SWOT warrant its usage in strategic planning and intelligence projects. To have a definitive answer, we identified that more research is required in at least two specific areas.
The first area relates to the 4th finding and identifying additional techniques that can take the "output" of SWOT to create actionable insight in a repeatable manner.
The second area relates to whether the auxiliary benefits of the process and output of SWOT are greater than what can be expected from the output of merely throwing people from different divisions together and prompting them to talk about the issues they face in an unstructured manner.