Have you run into SWOT? Used it? It's a method some people claim will assist in strategic analysis. SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and the theory is that looking at each of those factors can help with strategy creation.
Does it work? Not according to this professor duo of Harold E. Klein (Fox School of Business at Temple University) and Mark D'Esposito (Henry H. Wheeler Jr. Brain Imaging Center, University of California, Berkeley). A couple of years ago, they wrote an article to explain.
Abstract:
The most widely used (and taught) protocols for strategic analysis—Strengths, Weaknesses, Opportunities, and Threats (SWOT)and Porter's (1980) Five Force Framework for industry analysis—have been found to be insufficient as stimuli for strategy creation or even as a basis for further strategy development. We approach this problem from a neurocognitive perspective. We see profound incompatibilities between
the cognitive process—deductive reasoning—channeled into the collective mind of strategists within the formal planning process through its tools of strategic analysis (i.e., rational technologies) and the essentially inductive reasoning process actually needed to address ill-defined, complex strategic situations.Thus, strategic analysis protocols that may appear to be and, indeed, are entirely rational and logical are not interpretable as such at the neuronal substrate level where thinking takes place.The analytical structure (or propositional representation) of these tools results in a mental dead end, the phenomenon known in cognitive psychology as functional fixedness. The difficulty lies with the inability of the brain to make out meaningful (i.e., strategy-provoking) stimuli from the mental images (or depictive representations) generated by strategic analysis tools. We propose decreasing dependence on these tools and conducting further research employing brain imaging technology to explore complex data handling protocols with richer mental representation and greater potential for strategy creation.
Click to read "Neurocognitive Inefficacy of the Strategy Process" (The Social Cognitive Neuroscience of Organizations). Click to see titles of other chapters in the volume; the links in the post no longer work now that the book has been published.)
Note: From "Away with SWOT Analysis" (The Journal of Applied Business Research):
SWOT analysis has shallow theoretical roots. They run no deeper than the tenet that, like any living organism, a business can prosper only if it achieves a good fit between itself and its environment. Although this assertion is eminently plausible, SWOT analysis also rests on the rather shaky suppositions that every strategically significant feature of a business' internal and external context can be categorized neatly as favorable or unfavorable and such categorizing affords strategic insight. While neither the SWOT matrix, shown in Figure 1, nor its conceptual underpinnings shed light on how noteworthy particulars are to be identified and classified correctly or how strategic implications are to be derived, supplemental guidelines abound. They usually are fortified with checklists, which enumerate myriad factors and forces that might affect a business.
Unfortunately, conventional SWOT guidelines offer little more than menus of assorted generic strengths, weaknesses, opportunities, and threats (SWOTs). ...
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