What is SWOT Analysis?
SWOT analysis is considered a tried and true method for strategic analysis. The acronym stands for strengths, opportunities, weaknesses, and threats. SWOT analysis can be applied to any organization, Product, or personal business due to its flexibility. Most Product Managers work with SWOT analysis using the four-quadrant diagram, but in this article, we’re going to go a few steps further and also discuss how to evaluate the SWOT analysis internally as well as externally. Let’s start by breaking down each letter in the acronym.
Strengths
Characteristics of a product that give it a competitive advantage over its competitors. Things like what talent do you have on your team, what resources might you have that the competition does not, cash flow, patents, proprietary technology. Strengths are things that are within your control.
Weaknesses
Weaknesses are characteristics that put your product at a distinct disadvantage amongst the competition. These are negative factors that detract from your ability to be competitive in the marketplace and are areas you will want to improve. Look at things like your product location, either physical location or search results online. Are you lacking in equipment that the team needs to be efficient, or are you in need of additional engineers or UX designers to stay ahead of the competition in terms of pace and skill set? These are things that you have internal control over.
Opportunities
This quadrant refers to elements in the environment that you should take advantage of and exploit in an effort to gain an edge over the competition. Opportunities will look like trends in the marketplace that luckily align perfectly with your product. Events that pertain to your industry are a great opportunity to get your product in front of potential users/customers. You can also promote positive user/customer feedback to help boost your product. Opportunities are external factors that you don’t have full control of.
Threats
Threats are elements in the market that may cause harm to your product. These are external factors that you will not have control over, and you may want you to consider doing a separate risk analysis like the Ansoff Matrix to have a contingency plan. Threats come in the form of sudden and unexpected shifts in the market, new market trends that steer users in a new direction (away from your product), new developments in technology, and new competitors that enter the market are all examples.
Performing a SWOT Analysis
To effectively perform a SWOT analysis, you’ll want to start by evaluating the current market as well as the product that you’re creating. As you can see in the SWOT diagram there are two types of inputs; internal and external. Internal factors are strengths and weakness from within the organization or team that you have full control and/or influence over. External factors such as opportunities and threats are things that come from the external environment that you don’t have control over but should plan and prepare for so that you have a strategy in place to maximize the opportunities and mitigate the risk. To have a full understanding of the strengths, weaknesses, opportunities, and threats of your product you’ll want to gather with your full team and brainstorm. It’s helpful to get feedback from everyone on the team to avoid overlooking any blindspots.
Team meetings where you brainstorm with a whiteboard or post it’s a great way to get a visual. You can create a grid on a whiteboard or on a wall and have everyone on the team individually add to each section of the grid. After a few hours of brainstorming with the team, it should be pretty clear where the products strengths, weaknesses, opportunities and threats are. A well-done SWOT will be a great visual assessment that outlines the assets as well as the liabilities of the product.
Performing a SWOT analysis at the early stages in the development of a product allows an organization to decide whether success in a new product is obtainable. A SWOT also allows the organization to set achievable goals and objectives while also keeping an eye out for threats that may arise. The SWOT diagram creates a snapshot of a product during a specific moment in time and does not take into account the changing market. Because of this, it’s a great exercise to do at the beginning stages of product development that is then repeated throughout the products’ life cycle.
