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From SWOT to Systemic Strategy

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When we published our post about how to take the SWOT analysis to a whole
new level we received a lot of attention and some good questions.
One of the best is below:

And here is our reply:

The SWOT analysis can be a helpful brainstorming tool as a first step to
understand our current reality. As you rightly point out, the “categories” can overlap. If
I may say from the perspective of working with the Theory of Constraints for two
decades, the reason for this is that when we list items in the SWOT, we are already
making assumptions that need to be challenged. It is not that the material we gather with
the SWOT is not valid, but we need to process that material in such a way that we can
use it to build a true strategic direction.
We can do this using the Core Conflict Thinking Process that quickly allows us
to “photograph” our current reality and then systematically challenge the assumptions
(mental models) that are keeping us stuck. This is how we identify breakthrough
solutions that become the building blocks of our strategy to achieve a clearly verbalized
goal. We have done this dozens of times with leadership teams over the years and it
requires effort but the outcome can be truly transformative.
So how do we move from SWOT to Strategy?
First, we have to point out that every human organization, be it a team or a
corporation, has two fundamental drivers or needs: one is connected with fear/control
and the other is connected with vision/growth. If we do not acknowledge and respect
these ever-present and legitimate needs, we cannot build a viable strategy.
How does the Core Conflict help us build a viable strategy?
We start with tangible things that are real and present and hurt us in our current
reality and we categorize them as Undesirable Effects (UDEs). The items in the SWOT
under “weaknesses” may well be UDEs but only if they are real and present and hurt.
Otherwise they are perceived weaknesses that may be assumptions. The items in
“threats” may also be UDEs if they are real and present and hurt, otherwise they are
perceived threats , i.e. assumptions, so we need to investigate those further, because, as
you mentioned, they may not be threats at all.
overarching UDE and place it in the diagram as the position D. The reason we put up
with this UDE every day is not because we are crazy but because we are trying to
protect a need connected with fear or control. Asking ourselves why we accept to live
with this UDE prompts us to verbalize this as3 the need in the B box. Once we have
verbalized our current undesirable reality in D, we can verbalize what our desirable
reality would look like and then the specific need connected with vision/growth that
prompts us to see that reality as desirable.

With the needs clearly verbalized, we can now verbalize a common goal that is
realistic because it acknowledges and respects those needs. This is the goal of a robust
strategy. So now we have a “snapshot” of our current reality. The next step is to
systematically surface all the assumptions (mental models) that underpin this snapshot.
This is where other items from our SWOT analysis may will fit in now.
By challenging the assumptions between D and D’, we unveil the building
blocks of a robust strategy. These are called “Injections” in TOC and are essentially the
various projects necessary to achieve our goal. We can connect these projects together
with a logic of sufficiency to build a Future Reality Tree. This is a visual map of how
we get to the goal. This is our strategy.
Building a Core Conflict and a Future Reality Tree requires some guidance as
skill and experience are needed but it is a transformative and exhilarating exercise.
However, even the best strategy is no good unless we have a way to implement
it reliably. For this purpose we can use other Thinking Processes that break the strategy
right down into Intermediate Objectives and then into the exact tasks that can then be
scheduled in a network of synchronized projects. To make sure these projects are
carried out on time and within budget requires finite capacity scheduling and this can be
achieved using the Critical Chain method.
Starting off with a SWOT analysis can be useful because it is familiar and
therefore comfortable. By processing the results by using the categories of UDEs,
conflicting positions, needs, goal and assumptions from the Core Conflict Thinking
Process, we can transform the raw material in the SWOT analysis from simple input
into real information on which to build a robust strategy.