March 3, 2015
10 Shortcomings of SWOT Analysis
SWOT (strengths, weaknesses, opportunities and threats) often fails to look hard enough at how risks can cascade through connected systems.
If you think that the analysis you use to identify the strengths, weaknesses, opportunities and threats (SWOT) in your business is adequate, beware. It is intended to provide a 360-degree view of your risks and opportunities but often fails to fill that requirement because of superficial applications and failure to look at risks from connected systems.
If your risk and opportunity analysis techniques are lacking, you could be very unprepared for the next recession, disruptive technology or game-changing way of thinking that could soon affect you. Too often, the last domino that struck in the last crisis is the main focus of all future risk-mitigation efforts. The whole string of triggers and threatening signals that led up to that last publicized tipping point and bursting bubble are ignored.
Here are the 10 most common shortcomings for SWOT analysis:
- Underestimating the role that vertical and lateral cascading human factors can play and having fragile back-up plans
- Absence of war gaming, stress testing and disruptive failure mode analysis testing of your leadership mindset, strategy, work culture, processes, products and services
- Lack of focus on disruptive innovations; you respond to them but do not create them with proven innovation-on-demand techniques
- Assumptions that cyber security and patents are safe, so they aren’t stress tested with advanced cyber-circumvention and patent-busting techniques
- “Taboo talk rules”; uncomfortable discussion topics are avoided or not identified with focused and anonymously solicited inputs from employees
- Ignoring “Trojan horse” risks that are secretly lurking in the hearts and minds of your employees or piggy-backing on purchased technology, software, products or services
- Lack of use of “gamification” techniques to address the most sensitive threats in a disciplined, humane, engaging and effective manner
- Failure to include effective strategies to attract and retain key human talent
- Failure to identify low-profile threats that create unstoppable cascading risks — from leadership to culture to processes to bad performance to weak responses to critical situations
- Lack of use of external perspectives to challenge group-think assumptions of perceived safety and robustness
Simple SWOT analysis and risk-management techniques will not offer the protection required to survive the next economic crisis or disruptive technology. KISS concepts (keep it simple, stupid) have lost their ability to identify and protect against complex cascading risks. The world is a fragile, hyper-connected and cascading system full of surprises that will punish casual optimists and reward those who hope for the best but seriously plan for worst-case scenarios.
The World Economic Forum’s 2014 World Risk Report describes the global risks that can quietly cascade across borders and affect organizations in unsuspecting and surprising ways from a variety of threatening and linked factors. The complex dynamics that exist between developed, developing and emerging world markets is further complicated by the fact that many organizations know very little about the cascading system dynamics within their own four walls.
Classic methods that attempt to describe the risk and opportunity landscape for individuals and organizations have not kept pace with the rising complexity and interactions between highly networked workplaces, global economies and internal and external threats. We have now entered a new era where we need new ways to describe and understand the complex world we have created, which has outgrown the simple tools we like to describe it with.