Wear your SWOT Analysis Backwards, It’s COLD Outside!

snowy trail-69822_640It’s that time of year.  Some are lucky enough to avoid it, but for most, it happens as we roll in to December.  Sure, it’s cold, but I’m referring to the annual strategy planning cycle.  We’ve all been there.  With a new year on its way, execs want to take a fresh look at the strategic plan to identify new opportunities, solidify revenue targets, and align investment.  A variety of strategic plan templates exist, and most begin with similar content:  executive summary, company mission, market analysis, competition.  A SWOT analysis – Strengths, Weaknesses, Opportunities, and Threats – is a time-tested component of the plan.   I’ve recently realized the advantage of doing SWOT analysis backwards.

The SWOT layout takes you down a chilly path

SWOT, TOWS

The SWOT matrix organizes helpful and harmful factors into internal and external categories.   Strengths and weaknesses, internal factors, are addressed in the top row.  Strengths give your organization a competitive advantage:  brand reputation, strong customer base, patents, or exclusive access to distribution channels.  Weaknesses hold you back:  lack of nimbleness, high cost structure, or lack of market presence in various geographic regions.  External factors are covered in the bottom row.  Opportunities may include unmet customer needs, loosening of regulations, or wide adoption of new technologies.   Put simply, threats are the opposite of opportunities.

Go outside BEFORE you look in the mirror

My mom always told us kids to look in the mirror before went out in the snow to make sure we were properly bundled up.   But when building a strategic plan, it makes more sense to consider what’s happening outside your company before you look too hard at your skills and risks inside.   Doing a SWOT analysis backwards is smarter.

This is not my idea.  I came across it while reading Michael Watkins‘ book, “The First 90 Days:  Critical Strategies for New Leaders at All Levels.”  tf90d-book-coverWatkins, a consultant and co-founder of Genesis Advisors, found it challenging to implement an effective SWOT analysis with his clients.  As he describes in this HBR post (free registration is required), clients would get stuck in the top row of the matrix, rambling on and on about what they were good and bad at.   As an experiment, he tried running the exercise “backwards,” forcing the first discussion on the external factors in the lower row.   He found that, after doing so, his clients were more effective in discussing their specific strengths and weaknesses in the context of the opportunities and threats.  This lead to a much crisper identification of potential strategic initiatives and tactics.  Which is the whole point of the exercise.  His conclusion:  ditch SWOT.  Cover the same topics, but in reverse order.  Use TOWS as the handy acronym.   It may give you the image of frost-bitten feet, but it will lead to a better result.

After reading this, I realized that I’ve had similar experiences  using the SWOT matrix.  Watkins’ suggestion makes a lot of sense.  What about you?  Have you run a SWOT analysis backwards?  How did it work?

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