Risks Associated With SWOT Analyses
SWOT is an acronym for a specific type of analysis. The letters stand for strengths, weaknesses, opportunities and threats. By looking at these four major points, organizations theoretically can formulate plans of action for the future and become more efficient and competitive. Even though SWOT is widely used and does have some key advantages, this type of analysis also poses some significant risks.
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Objectives and Process
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SWOT analyses create a simplistic presentation of a company's strengths, weaknesses, opportunities and threats. The data does not indicate how each item relates to the company's overall objectives and vision -- that is, data does not provide the company with a process to initiate in future operations. In many cases, the analysis is only a starting point to identify where the company should go in the future, with much more research actually being needed before members of management can proceed with a specific plan of action.
Prioritization
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SWOT analyses have no guidelines about how to list data in each section of the analysis, aside from that each point usually uses a number or bullet point. At a glance, managers have no way to identify which points are of higher priority, with all points appearing fairly balanced. Furthermore, SWOT analyses ignore how each point interconnects, which puts managers at risk for not understanding the full implications of the SWOT data. For example, many small strengths can work together to address a single major weakness. Without the ability to prioritize and understand full implications, it is more difficult for managers to establish a definitive plan of action.
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Subjectivity
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A major problem with SWOT analyses is that they always are prepared under a narrow lens -- normally only one person is assigned to complete an analysis on behalf of others. Although the preparer may collect data for the analysis from other people, how he interprets that data is a matter of the preparer's education, experiences and general beliefs. Two preparers may come up with two very different analyses based on their backgrounds. This subjectivity means managers might not get an analysis they feel is worthwhile and that the preparer dictates to a large degree the next steps managers take.
Conflict and Time
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Because what a preparer puts in a SWOT analysis is somewhat subjective, each point in the analysis is a potential point of contention. People with different backgrounds, education, beliefs and experiences may debate and challenge everything the preparer has done, which in the worst case scenario nullifies the preparer's efforts. Even when these debates are professional and cordial and result in a better analysis that leads to better plans, they still take time to complete. If managers don't accommodate this, they risk adopting plans for the sake of deadlines, not based on the results of thorough investigation.
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