#procurement #thinking

SWOT= Stupid waste of time

fisher-price SWOT
It is easy to criticise the use of four-box models. "Not another four-box model!" the team groan. But whether Ansoff's Matrix in marketing, or the BCG's Market Share / Market Growth Matrix in strategy or our beloved Kraljic's Matrix in procurement, they do help create repeatable and transparent decisions.

Well, some do.

SWOT may have a place in strategy session to engage the team after lunch, but does it have an application as an option evaluation tool?

SWOT= Stupid Waste of Time

One four box model that warrants critical analysis is SWOT Analysis. I am in the process of writing a category strategy for a client, and the governance requires that I review each potential option using a SWOT Analysis. No other four box model, not even the procurement community's two most favourite models (which I have used anyway). No, just SWOT

SWOT= Stupendous Waste of Time

Let's apply the tool to a fictitious procurement project and imagine that:

  • the requirement is a one-off project
  • the project is complex and has some uncertainty
  • the client is a relatively small customer in the market
  • larger suppliers may not be interested
  • smaller suppliers are less likely to be capable to deal with the complexity

Let's review two project dimensions using the SWOT framework:

Project scale

  • Project scale is a strength because the client is unencumbered by historical baggage and can start afresh
  • This is a weakness because the client has no recurring demand to leverage
  • This is a threat because suppliers may not be motivated to participate as there is no ongoing business
  • This is an opportunity because suppliers can potential build a relationship with a new client

Project complexity

  • Project complexity is a strength because it means the client can access external expertise to help reduce the complexity
  • This is a weakness because the client has to rely on external consultants to support decision-making
  • This is a threat because if the larger suppliers do not participate the use of local suppliers may increase complexity
  • This is an opportunity because working with local suppliers will develop their capability

I could go on, but I think you get the point. You can define project dimensions in whatever way that you choose. Or rather, whatever way the person with the marker pen chooses.

SWOT= Strategic Waste of Time

The criticisms of SWOT are as follows:

  • There is no rationale as to how project dimensions should be classified
  • The identification of weaknesses depends upon the level of insight that the team have about their relative capability
  • The same dimension can be classified in a variety of ways, which makes the choice of perspective a subjective choice
  • The logic that strengths and weaknesses are internal and threats and opportunities external classifies the source, not the impact
  • The tool is a qualitative tool that gives the illusion of 'analysis' but provides no objective or repeatable methodology
  • The use of the tool engages the team in a participative way, raising expectations that the tool will point to the next steps
  • In fact, SWOT consumes time and raises expectations but provides no indication as to what to do next
  • The idea that you 'leverage the strengths to take advantage of the opportunities' is only as valid as the choice of strengths and opportunities
  • Once the flip charts have been written up, and the SWOT analysis recorded, the next steps are no clearer than before the 'analysis'
  • What has changed is that expectations have been raised that the team have 'addressed the problem'. In fact, they have admired the problem

Significant Waste of Time

If you think I'm being harsh, read this, or this, or this. And if a consultant recommends that you use SWOT as part of category planning, ask them to provide you with a worked example showing exactly how the analysis leads to a decision. Ask them to write guidelines on how to use the output of the 'analysis' to decide what to do next

And then politely suggest that they watch this, or this or even this video, and request that they compare the effectiveness of SWOT with weighted factor analysis as an option evaluation tool using weighted factor analysis.

But not SWOT!

Do you agree? If you think I'm maligning SWOT, let me know!
Not short of ideas