What is SWOT Analysis?
SWOT analysis is a technique used in Six Sigma to evaluate a project or an entire company. You’ll identify four facets of your situation:
S– StrengthsW– WeaknessesO– OpportunitiesT– Threats
The first two categories are internal. They exist within your organization.
- Strengths are things that you do well.
- Weaknesses are things that you don’t do so well.
The last two categories are external. They exist in the environment. In other words, the marketplace in which your org operates.
- Opportunities are elements that your org could use to improve its situation.
- Threats are elements that could cause harm to your org.
Why Would You Use SWOT Analysis?
A SWOT analysis is good for giving you a high-level view of your company or a project. It can help you to:
- work to your strengths
- shore up or make allowances for your flaws
- take advantage of changes in the marketplace
- minimize risk by defending against known threats.
When Would You Use SWOT Analysis?
When you:
- have an objective
- need a plan of attack
- want to see why an existing project isn’t going as well as hoped.
Perform a SWOT analysis:
- after developing business objectives
- (also see project plan business objectives and Hoshin Kanri)
- before deciding on a strategy
How often would you revisit it?
When changes occur in the environment. For example:
- technology breakthroughs
- market shifts
- consumer attitude changes.
When your business objectives change.
To continue building on previous success.
To revisit strategy when you’re not meeting goals.
How to Create a SWOT Analysis
Who participates in a SWOT Analysis?
Stakeholders. This includes:
- subject matter experts
- team members
- business planners
- product owners
- managers
- marketing team
What are the important considerations?
It’s important that you focus on your business objectives when you use a SWOT analysis. For example, your org might be great at growing apples. But if your primary focus is producing orange juice, that isn’t a useful strength. Unless, of course, you can apply it to growing orange trees. Only use traits that apply to your business objectives.
Step 1: Assemble your group
Get your stakeholders together for a brainstorming session. You’ll need a group leader. This person will guide the process.
Step 2: Run through your objectives
Make sure everyone understands the business objectives.
Step 3: Explain the categories
Ensure that the categories (strengths, weaknesses, opportunities, threats) are clear to all.
Step 4: Write down suggestions
Avoid judging ideas as they come in. Keep the pace brisk and write them down. You’ll cull later.
Step 5: Groups pick their top tens
If you have enough people, separate them into groups based on their stakeholder types. Ask each group to discuss and decide on a list of their top ten suggestions in each category.
Note: You don’t have to divide groups this way. However, you’ll often end up with some surprising insights if you do. This is because each group will have a unique perspective.
Step 6: Consolidate your data
If you separate into smaller groups for step 5, put together a small group of representatives from each. Go over each group’s top tens and consolidate them into a final top ten in each category.
What to do next
Your next step is to use the results from your SWOT analysis. Feed them into your process for developing a business plan.
Firstly, match your strengths to opportunities. These are the areas in which you have a natural advantage. They should receive high priority in your planning.
Secondly, match your weaknesses to threats. These are areas in which you’re most at risk. Fixing these should receive high priority in your planning.
Finally, once your priorities are listed, it’s time to move onto the planning stage. Try feeding your SWOT results into a Hoshin Kanri exercise.
Examples of Using SWOT Analysis
Health Care Company Example
A medical center wants to offer more integrated health care to its patients. Its director decides to use a SWOT analysis to figure out the existing situation.
Step 1: Assemble a group
The director plans an afternoon session a fortnight in advance. She leaves a skeleton crew working to handle walk-ins and emergency cases. The rest of the staff attend the SWOT session, including the administration and cleaning staff.
Steps 2 & 3: Explanations
The director explains the business objective: to offer more integrated health care. She goes through the basics of a SWOT analysis.
Step 4: Suggestions
Going through each category, in turn, the team members offer their opinions on the center’s strengths, weaknesses, opportunities, and threats. The director delegates a staff member to write these up on a whiteboard.
Step 5: Groups pick top tens
The director separates team members into groups by job function. Doctors in two groups, nurses in one group, admin staff in one group, and cleaning staff in one group. Each group uses the whiteboard suggestions to put together lists of what they consider the most important strengths, weaknesses, opportunities, and threats.
Step 6: Consolidate your data
The director found some interesting insights. Nurses rated ‘lack of training in computer system’ highly; admin staff didn’t. She makes a note to check the training schedules for each staff member. Cleaning and admin staff rated ‘common areas get dirty during the day’ as a high-level weakness.
| Positive | Negative | |
|---|---|---|
| Internal | Strengths The computer system allows doctors to see a patient’s whole health plan. We have general practitioners, nutritionists, podiatrists, acupuncturists, and naturopathists. | Weaknesses The computer system doesn’t alert doctors when a patient’s health plan changes. Daytime cleaning isn’t happening reliably in common areas. Communication between doctors and nurses isn’t great. |
| External | Opportunities We’re the only medical center in a 20-mile radius offering a wide range of medical services. Social media support groups are making more patients aware of the benefits of integrated health plans. Studies are showing that natural medicine can have big health benefits. | Threats Insurance companies might baulk at paying more for integrated health plans. Rumors of a large corporation starting up a business in this state next year. |
The next steps
The director can see that communication will be a keystone in the business plan. Information needs to flow correctly between medical staff and patients. She puts together a task force to develop a plan of attack.
