SWOT analysis is a traditional strategic planning tool. As you may know, the acronym SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. Almost all of our clients at Flagship Futures Group (FFG) have used this, and many have misused it—maybe even dangerously—in their strategic planning process.
Companies’ Strategic Planning Process
What many companies call “strategic planning” is, at best, a multi-year (usually three- to five-year) operational plan. Their process starts with a review and revision of the organization’s mission, vision, and values. It moves on to the SWOT analysis. From there, a handful of key initiatives for the next three to five years are developed. Finally, performance goals, both operational and financial, are set for this period of analysis and a profit-and-loss forecast is created based on these performance goals. Alas, they all go home happy since they have worked on their future.
The two main reasons why almost every corporate executive and those aspiring to loftier leadership levels desire to participate in these “strategic planning” sessions are:
1. “Strategic” is one of the sexiest words in corporate life
2. These people believe that they are actually doing something “strategic” for the long-term success of the organization.
Why Most Strategic Planning Isn’t Really Strategic?
The so-called “strategic planning” of most companies can be somewhat misleading and detrimental to the long-term success of the organization, because the starting point of this three- to five-year planning process is today, but should be at some time in the future. Moreover, the main distraction is the SWOT analysis because the said analysis is based on the organization's current status.
Leadership aggressively challenges the SWOT but from the wrong perspective. They analyze the organization's current Strengths, current Weaknesses, current Opportunities, and current threats. This analysis may be appropriate for the development of a three- to five-year operational plan; however, how far in the future will this analysis take them? How long will the current status in these vital areas be valid?
A Different Strategic Perspective
For truly strategic thinking, we at FFG prefer to use the term futures thinking—a different take from the usual perspective. We strongly believe that the leadership team must attempt to identify the organization's future strengths, future weaknesses, future opportunities, and future threats. Developing a future SWOT is a much different and challenging task than what one experiences every day or can expect over a short-term planning horizon.
Identifying the future perspective of these five vital areas requires the ability of a strategic leadership team to scan the environmental horizons and identify the microtrends and nanotrends that will impact their organization five to ten, or more, years out, and then think backward to today. This ongoing analysis leads to the identification changes in the organization’s competitive environment and the need to develop the organization’s future SWOT elements.
Developing a Future-Oriented Perspective
An organization can start developing a future-oriented perspective by doing the following:
- Challenge the assumptions underlying the current SWOT analysis. Are these assumptions valid? What circumstances would invalidate these assumptions?
- Actively scan and monitor the environment using a Political, Economic, Social, Technological, Environmental, Legal (PESTLE) Analysis, mainly looking for changes in any macro, micro, or even, nano trends identified.
- Regularly report on the condition of the future environment. This reporting should be as regular as the organization's current operational and financial reporting (at least quarterly).
- Assign accountability to each C-suite member for actively monitoring the future.
- Conduct an in-depth futures thinking and planning meeting at least annually.
Change can happen quickly. Today’s SWOT elements will probably not be tomorrow’s SWOT elements. If you rely on the current SWOT to plan your future it may, in fact, kill it.
If you think your perspective may need a major shift, give us a call (1-800-891-2312) and let’s talk about how we can help.