Market Myopia: Blame the SWOT!

We’ve observed for decades how market-leading firms eventually fall behind startups because they just couldn’t see the future, what Harvard Business School Professor Clayton Christenson labeled the innovator’s dilemma.

So why do leaders miss seeing sweeping global trends that are about to broadside them? I put a big part of the blame on the standard SWOT analysis used in strategic planning —the age old tool used to identify an organization’s Strengths, Weaknesses, Opportunities and Threats. It’s time to update this methodology.

Inside/Industry Myopia

Almost by definition, the SWOT process drives leaders to look inward at both their company and industry challenges, creating what I term “inside/industry myopia”.  The traditional SWOT analysis, while helping executives see the forest and the trees, it tends to lead them to forget that there’s a world outside the forest. The SWOT, with this introspective focus, isn’t the right tool to spot the trends from other industries and distant markets that CEOs need to factor into their plans.

I don’t want to throw the SWOT away. It still has its place in the strategic planning process. It’s an excellent tool for gathering ideas and input from middle managers who are more internally focused and closer to the day to day operations of an organisation.

SWT Instead

For senior leaders I propose replacing the SWOT with the SWT—an updated approach that identifies inherent Strengths and Weaknesses within the firm while exploring broader external Trends beyond their own industry or geography.

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