Chapter 20. Comparing Maps with Other Tools (SWOT & BMC)
One of the big barriers to learning a new tool, like Wardley Maps, is not knowing if it will add more value than the tools you’ve previously invested time and effort in mastering. So, in the final chapter of this (and each subsequent) book we’ll take a high-level look at some popular tools and compare them with Wardley Maps. The first two we’ll start with here are the SWOT analysis and the Business Model Canvas.
SWOT Analysis
In the modern organisation, when talk turns to strategy, the thoughts of most leaders turn to a SWOT analysis — comparing your Strengths, Weaknesses to rivals and exploring market Opportunities and Threats. The aim is to match an internal strength with an external opportunity to create a ‘strategic fit’ between what the market needs and what you do better than rivals, which forms the basis of your competitive differentiation.
The origins of the SWOT analysis are unclear, but it’s been around since the 1950s or 60s, making it older than any of the executives (and many of the organisations) still using it today. Either this speaks to the enduring power of the SWOT analysis or the lack of evolution in business strategy over the last 60 years. So let’s take a deeper dive into the SWOT analysis process, before remarking on some positives and negatives of this tool.
Process
One completes a SWOT analysis by gathering a small group of people with knowledge of your organisation and the market you’re focusing on. You then:
- Determine the scope and objective of the analysis (enter new market X, launch new product Y etc.)
- Gather relevant data (ex, market research, customer surveys)
- Identify the main competitors in this space
- Analyse the strengths and weaknesses of your organisation compared to these rivals
- Discuss the opportunities and possible threats looming in this space.
The final step is to create a SMART (specific, measurable, achievable, relevant, and time-bound) plan leveraging ones strengths (to exploit opportunities) whilst addressing weaknesses (to guard against threats).
Fig. 70: Typical Output of a SWOT Analysis
Positives
The positives of running a SWOT analysis is that it’s relatively straight-forward and inexpensive to run, (which may explain its enduring appeal to executives). As a collaboration-based tool a SWOT analysis also encourages everyone attending to contribute, which taps into the collective intelligence of a group. And finally, if relevant data for points 2 and 3 in the process above can be gathered beforehand the entire SWOT analysis can be performed in an afternoon, making it a quick way to ‘do strategy’.
Negatives
However, a SWOT analysis has some known deficiencies:
- No User Needs — In the typical example above (fig. 70) there is nothing about user needs. Now, we might be tempted to enter one of the “new niche markets” mentioned in Opportunities but, if we don’t understand what the users there need, (or whether we’re capable of satisfying those better than rivals) then deciding to enter those markets based on this information alone is a huge leap into the unknown
- No Competitor Comparison — Done right a SWOT analysis compares one’s strengths and weaknesses with rivals yet, as it’s hard to get good data about rivals, many organisations ignore this. You may believe your strength is an “innovative mindset” (see fig. 70) but if you’re ignorant about rivals then your supposed ‘strength’ may be a relative ‘weakness’ and disastrous if you try to compete on this
- Oversimplification — The simplicity of a SWOT analysis, (reducing a complex reality down to a few bullet points) is part of its appeal but it also leads to superficial thinking. Setting strategic priorities from the SWOT in fig. 70 would require significant further thinking, but we only have a summary of the information we need and therefore there is very little we can challenge here or learn from
- Unclear Priorities — A SWOT is a poor guide for choosing the opportunities we should prioritise (unless we accept the order of the bullet points means something, but this is unclear). Rarely will a real insight — a sudden and unexpected shift to a better story that leads to breakthrough action[1] — be uncovered. And if we’re not uncovering new and unexpected paths to victory is this even strategy?
- Static Snapshot — A SWOT analysis is also a snapshot in time with little guidance into how the situation is changing. If we use this to create a detailed SMART plan, we risk committing ourselves to a course of action in the future based on a rather superficial understanding we had of it in the past. The danger is that we start to act in a world the way it was, rather than adapting to how it’s becoming.
Conclusion
Relying on a SWOT for strategy means much important thinking remains hidden from view, making it difficult to challenge, hence why a leading strategist wrote that it’s “a dreadful way to start a strategy process”.[2] A SWOT analysis can be useful if used at the right time — for discussing WHAT you might do better at than your rivals — but this comes after you’ve answered the other questions further up the ‘hierarchy of strategic thinking’[3]:
- HOW are you going to do something (tactical decisions), which requires you first to decide
- WHY you’re making this move and not that one (strategic decisions), which requires you to understand
- WHERE your options for action are (situational awareness), which you get from seeing the landscape — and for that you’re going to need a map you can challenge (rather than a table of options you can’t).
Jumping straight to action based on ‘strengths and opportunities’ alone is a trap many organisations that use SWOT analyses fall into. Russell Ackoff, the eminent management thinker, warned about this danger when he wrote that “it is better to do the right thing wrong than the wrong thing right”. For, by doing the ‘right thing’ now (i.e. focusing on satisfying user needs) you develop the new strengths your organisation will need in future. But continuing to do the ‘wrong thing’ (because it’s your current ‘strength’) risks trapping you on an ever-narrowing path where users neither want nor need what you’re offering. We can see this in the failure of successful companies like Kodak,[4] Nokia and IBM, who chose to play to their ‘current strengths’ (in colour film, Symbian phones and servers, which were still large market ‘opportunities’ at the time) but failed to adapt to and exploit changes in their industry (the shift to digital, smartphones and cloud computing).
With no user needs pointing the way and the oversimplification of the Landscape into a static snapshot in time a SWOT analysis — though useful at the end of a strategy process — is a truly ‘dreadful way to start one’.
Business Model Canvas
Another popular (and more recent) tool that’s widely used for strategy is the Business Model Canvas (BMC). This describes nine categories that should be considered when making a strategic move, (ex, launching a new product, entering a new market). These categories cover everything from the ‘key partners’ needed to create a ‘value proposition’ for key ‘customer segments’ to the ‘key resources’ and ‘cost structure’ required and potential ‘revenue streams’. This is a clear, thorough overview of how to create value from a strategic move.
Fig 71: Example Business Model Canvas for Netflix
Positives
The BMC balances simplicity with thoroughness. Its nine categories force an organisation to consider all the resources and information they will require, while presenting this on one page so it’s clear for everyone to see. The nine categories cut across traditional functional lines, (‘value propositions’, ‘customer relationships’, ‘channels’ and ‘customer segments’ cut across traditional marketing and sales lines; whilst ‘key resources’, ‘cost structure’ and ‘revenue streams’ cut across operations and finance) to create a holistic view of how the organisation creates value by acting together. This encourages widespread collaboration and learning.
Negatives
However, and somewhat like a SWOT analysis, the BMC doesn’t show what your strategic priorities are as it’s unclear from simply looking at a BMC what is the most important thing to focus on first. We have no idea if the order of components within a category has any meaning — for example, in ‘customer relationships’ on the Netflix BMC above is ‘self-service’ more important than ‘ease of use’ or are they equally important?
While the BMC shows that people from different functions must work together to create value it doesn’t provide any guidance on HOW they should do this. The response to this is usually that, ‘the BMC is a tool for strategy development and not execution’ but this risks falling into the trap discussed earlier[5] of dividing strategy into ‘thinkers and doers’ — with ‘thinkers’ creating unrealistic plans the ‘doers’ can’t implement.
The BMC has ‘customer segments’ but, like the SWOT, it provides no insight about what these users want or need. The BMC is very much focused on describing what the organisation has and how it’s going to push its products onto the market, (described in its ‘value propositions’) but, as we have no ‘voice of the user’ here, we can’t challenge the assumptions that users want or need what we’re offering.
Using the BMC as an executive summary of a thinking process is not a bad way to use it, but it severely limits its utility as a tool for creating real strategy as it doesn’t facilitate further analysis or the discovery of new insights. We’re left with the simple choice to either accept these findings or reject them, as we have no way of challenging them. For that, we’d need something else — such as a map.
Conclusion
Aficionados of the SWOT and BMC will (rightly) point out that these tools are summaries of a deeper process, in the same way a map is the summary of a cartographer’s work. But unlike a map, which provides a neutral view of a Landscape we can challenge and learn from as we try to discover better paths forward, the SWOT and the BMC tend to be used as final documents where judgments about what to put in or leave out have already been made, leaving us with one choice — accept or reject what’s presented as it’s next to impossible to challenge anything, as critical information and thinking has taken place elsewhere. What we have in front of us is the end of that process, because the SWOT and BMC are tools for communication, not strategy.
If, for a moment, we revisit the example we gave in Book One, Chapter 12 of a hotel receptionist in a foreign city giving us written instructions to reach a destination, we can see the main problem with the SWOT and the BMC. Having a clear set of instructions — such as, these are the strengths we have and the opportunities we’ll go after (SWOT), these are the capabilities we need to deliver value (BMC), or this is how we get from the hotel to our meeting — is a perfectly adequate approach if there are no unseen changes en route. But change is a constant and unforeseeable events can make previously optimal routes impassable, at which point our written instructions are no longer a useful guide. Ou choice now is to go back to the hotel to get new instructions or, in the business world, run another ‘Strat Session’ to create a new SWOT or BMC, but this takes time and resources. The alternative is to start with a map of the Landscape and use that to course correct when the situation changes. Over the last 10 chapters in this book we’ve shown you how to create a map of your Landscape and in the next book we’ll show you how to use that map to anticipate change and find new paths forward.
1 ‘Seeing what others don’t’ Gary Klein
3 See chapter 12
4 See Book One, chapter 5
5 See Book One, chapter 1
