Quantitative SWOT Analysis (TO-WS) Makes it Easier & Faster to Build Consensus
TO-WS Analysis (Threats, Opportunities, Weaknesses, and Strengths) reviews the Current Situation and is more frequently referred to as SWOT Analysis. While rare in use, you may find Quantitative TO-WS more appropriate because:
1. Evidence indicates the best sequence for Situation Analysis begins with the external and uncontrollable Threats and Opportunities before moving to internal and controllable Weaknesses and Strengths.
2. I will introduce you to a quantitative Tool that I built to help groups generate consensus when prioritizing hundreds of options. Being unique, TO-WS brings a fresh sense to invigorating a stale tool (SWOT) that is poorly facilitated in most organizations.
3. SWOT has left a bad taste in peoples’ mouths because they create four lists, hang them on a wall, stand back, and ask: “What should we do differently?” While some answers pop out of ‘flatland’, rarely can you drive consensual answers with an unstructured style that uses a ‘global hunger’ question like “What should we do differently?”
My Quantitative TO-WS Analysis was developed in 1994 while attending Northwestern’s Kellogg Graduate School of Management because, unlike the four-list style, Quantitative TO-WS Analysis . . .
• develops shared understanding,
• making it easier to build consensual Actions,
• that ensure achieving or exceeding the Key Measures,
• established to reach the Vision.
A SWOT or SITUATION ANALYSIS Overview
This Tool describes the Current Situation by developing a shared understanding that supports WHAT Actions a group should embrace so that they reach their Key Measures (pg xxx) such as objectives (SMART), goals (fuzzy), and considerations (binary).
A quantitative view of the Current Situation displays the foundation for justifying Actions. Actions that currently work well are potentially reinforced and renewed alongside new Actions that get approved and developed.
The term used to describe Actions will change depending on your level in the holarchy. For example, an organization will refer to Actions as strategies, a business unit may use the term initiatives, a department or program office may call their Actions new products or new projects, and a product or project team may call their Actions activities or tasks. For each group respectively, the term used represents WHAT the group is going to do to reach its Key Measures that were established to ensure that the group achieves its Vision (pg xxx).
The Current Situation provides consensual descriptions of:
• Current environment (TO-WS)
- Threats (externally uncontrollable, frequent trends)
- Opportunities (externally uncontrollable, frequent trends)
- Weaknesses (internally controlled, as viewed by competitors or competitive forces)
- Strengths (internally controlled, as viewed by competitors or competitive forces)
• Assumptions made in developing analysis
• Model representing how stakeholders view the business or organization
• Input for determining WHAT Actions the group foresees, given their Current Situation, to help reach or exceed their Measures in support of achieving their Vision
SWOT analysis (or as we prefer, SW-OT) begins by defining each of the four areas: below. Understand the importance of “controllable” because you cannot allow a group to define its weakness as an opportunity for improvement. If they control the factor, label it a weakness, not an opportunity.
Strengths (what a group controls and does well). For example, strength-stimulating questions might include:
- How do you achieve your success currently?
- What do you do better than others?
- Identify what you do that you know works well.
- What do others outside view as your strengths?
Weaknesses (what a group controls but does not do well). For example, weakness-stimulating questions might include:
- What could you improve?
- Identify what you do that you know does not work well.
- What do others outside do poorly that you also do?
- Consider what should you stop doing.
Opportunities (situations, events, etc., outside the control of the group that provide unique opportunities for growth, change, etc.). For example, opportunity-stimulating questions might include:
- What are you not doing yet but could easily see yourself doing with the right momentum?
- Identify impending changes on the horizon in political or economic policy that might help.
- Which trends could provide a new opportunity for you?
Threats (changes or competitive forces outside of your control that may adversely impact the group). For example, threat-stimulating questions might include:
- What is your competition doing much better than you?
- Identify regulatory issues that could stop or hinder progress.
- Which trends are a real threat to your organization/ project?
Brainstorm each list separately. Then fully define the characteristics or attributes using a consensual method.
Analyze each list (PowerBalls provides an excellent tool for analysis) to prioritize the most important characteristics in each of the four areas. Strive to reduce the total to around six of the most significant factors for each area.
Build a matrix (see illustrations below). Opportunities and Threats on top with Strengths and Weaknesses down the side. Explain the scoring method to the group. Each member gets “9” points (an arbitrary number and you may change it if you want more or fewer points). They assign their points based on the impact or leverage that each strength or weakness has relative to each opportunity or threat. The higher the impact, the higher the number. Ensure that they don’t just spread them evenly. Scoring should be based on a business understanding. Collect the scoring. Using a spreadsheet (alumni may download), calculate the final scores for each intersection, each column, each row, and each quadrant.
Participants should think about each cell in a column very carefully, and precisely asking “WHAT can we do to seize this opportunity?” or “WHAT do we need to do to defend against this threat?” They might write their thoughts on a separate sheet of paper and when they have completely analyzed a column, go to the cells that represent the most important thoughts and put the most points in those cells.
Review the scores with the group and highlight the quadrants, rows, and intersections with the highest scores. Summarize from the list and have the group convert the most impactful concepts into a narrative action plan.
Example of Quantitative SWOT Analysis by One Person
A fictitious software company employee considers its strengths as experience, good people, creative ideas, and product integration. Its weaknesses lean towards newness to market and development time. Opportunities may be realized through integrated products, new markets, and external market research data that is available. Threats develop from a recession, other large competitors (eg, Microsoft), and hardware manufacturers. The one person may score as follows (scored from 1 to 9, with 9 indicating greatest impact):
Quantitative SWOT Analysis Discussion
The scoring indicates the most important strengths are their product ideas and integration. Additionally, development time represents their most significant weakness. Integrated products and the growth of computers capture the most favorable opportunities.
Remember that strengths matter if they help take advantage of an opportunity or fend off a threat. Also, weaknesses matter if they prevent a group from seizing an opportunity or making them vulnerable to threats. Opportunities require some strength for them to be leveraged and therefore, seized. The matrix helps to highlight which strengths, weaknesses, opportunities, and threats compel strategies, initiatives, or projects.
Eleven-Person Aggregate View Using Quantitative SWOT Analysis
In the following, you will see a real-life example with eleven participants. Note that the moderate strengths and weaknesses had little or no impact on the plan. Participants largely weighted their most significant strengths and weaknesses to develop strategies. Quantitative SW-OT analysis helps focus future efforts — products, projects, strategies, and actions. It takes a few hours to complete, but it is worth the effort when consensus becomes critical.
Again note in the example below that only the most significant strengths and weaknesses have a demonstrable impact on the planning effort. The stuff in the middle, which we call lukewarm, has little or no bearing on the planning process. Consistently we have seen that the moderately important strengths and weaknesses have little impact on planning.
[1] Frequently referred to as SWOT; or situational Strengths, Weaknesses, Opportunities, and Threats
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