Be Careful with SWOT Analysis. Risks

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Be Careful with SWOT Analysis. Risks
Bernhard Keim, Business Consultant, Germany

I am not that happy with SWOT Analysis. My issue does not concern the tool itself, but the way it is often used. People like to make some statements with it, but the list in each of its quadrants can be endless. Everything is true, but what does really matter from all the points listed? So be careful with cherry picking (giving selective attention to particular things) to draw conclusions from a SWOT-Analysis.
Here's an example of what I mean. Let's think about the situation of a horse shoe manufacturer 110 years ago:
  • Strengths: how did it help you to be the best horse shoe manufacturer?
  • Weaknesses: did it make a difference for your future, that your marketing was weak?
  • Opportunities: there were a lot of competitors you could buy for little money.
  • Threats: there are automobiles coming up, but how can these loud and unreliable vehicles affect the business?
If you had been the boss of such a company: what might your reaction have been?
Now think of today: are you sure that your company is not acting like the horse shoe manufacturer? Too often SWOT makes people think more sophisticated, but inside the box.

Risks of SWOT Analysis: Biases
Jaap de Jonge, Editor, Netherlands
I agree Bernard that giving selective attention to particular findings and then drawing strategic conclusions based on that is a dangerous tendency of human beings when performing a SWOT analysis. By the way, the same applies to performing PEST analysis.
We call the underlying human tendencies for this phenomenon conformation bias and anchoring bias.



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