CHAPTER SEVEN
A New Twist on SWOT
Socrates believed an unexamined life was not worth living. Honest self-evaluation can be a powerful tool to help you quickly and deeply understand your areas of strength and weakness while helping you take advantage of opportunities and stay aware of threats.
A classic tool for accomplishing this is a SWOT Analysis. SWOT, which stands for Strengths, Weaknesses, Opportunities, and Threats, can be used on an individual basis, but is most powerful when used by a group of people to evaluate a business or team.
A BUSINESS CASE FOR SWOT
There has been much written about focusing on strengths in the psychology and, more recently, business literature. Since Freud, the field of psychology has been built on the medical model. When I (Stephen) was teaching psychopathology in a graduate psychology program, many students were frustrated to learn the traditional textbook definition of “normal” was “the absence of pathology.” In other words, anyone who doesn’t exhibit signs of abnormal behavior is considered in psychological terms to be “normal.” Many leaders define their teams in the same way—if the team is not fighting, they are fine.
One of the many problems with that approach is how self-limiting it can be. Just because a team, or small business, is getting along does not mean they are performing at their optimal level. As a former mental health therapist, I’ve had many people ask me what the difference is between psychology and coaching. Here’s a helpful illustration:
Fundamentally, the work of a psychologist is to take someone from pathology and dysfunction and return him to normality. The work of a coach is to take someone who is normal and help her become exceptional. Isn’t this a similar goal of a strong leader or manager—to take the team he has been given and help them maximize their potential?
In the mid 1990s, a growing number of psychologists began to speak out about the inherent limitations of the medical/pathology model. They introduced a “strengths-based approach” that much of our current leadership literature is based on. Martin Seligman, Ph.D., former president of the American Psychological Association, has promoted this new model extensively in his best-selling works Learned Optimism (1998) and Authentic Happiness (2004). He found numerous examples of people who were more satisfied and happy, both personally and professionally, when they were able to work in a position that emphasized their strengths rather than their weaknesses.
The SWOT tool does exactly that. It helps us focus on our strengths, the current capabilities our people possess to get the job done. It also looks at the strengths that exist in the marketplace, or external opportunities. By focusing on these keys, we move from monitoring the absence of pathology and dysfunction to discovering the person’s performance and potential.
However, we know that weaknesses exist and they won’t go away if we ignore them. Without becoming obsessed with them, a SWOT analysis takes an internal assessment of reality. Threats also exist to any business, and they, too, must be honestly addressed. So the SWOT assessment gives place to looking at these current and future challenges outside of one’s internal world. In this way, you are able to take an accurate snapshot of your business at any time. Here is how this picture of reality should be framed:
| INTERNAL REALITY | EXTERNAL REALITY | |
|---|---|---|
| Positive | Strengths | Opportunities |
| Negative | Weaknesses | Threats |
This SWOT exercise is simple in its process, yet profound in its results. Great leaders and great coaches help others look at reality both in the present and the future with a clear view of strengths, weaknesses, opportunities, and threats. As you go through this analysis, give yourself enough time to carefully consider each question. Some of the questions may be more applicable to managers, others to business owners and executives, and still others to teams. Feel free to adapt the questions to your specific situation.
Strengths
1. What do clients and outside partners say is your top strength?
2. What do you currently do better than anyone else?
3. What were your motivating factors and influences in starting this business or taking a leadership role?
4. What achievements have you found the most satisfaction in doing?
5. To what do you attribute your current level of success?
6. How do you measure success? What does success look like to you?
7. What are the top five reasons a client should buy from you and not from your competitors?
8. What are the top five reasons a company should hire or promote you?
9. What are two real-life examples where you or your team showed creativity and ingenuity?
10. What are two real-life examples where you or your team demonstrated critical thinking and were open-minded to trying new ways?
Weaknesses
1. What are two or three areas your staff or team members complain about the most?
2. What are two or three areas your clients or customers complain about the most?
3. Of the following areas, which ones do you do the poorest in: customer follow-up, timely billings, marketing, sales, being detail oriented, customer satisfaction, empowering team members to make decisions, and so forth?
4. What does your competition do better than you do?
5. Which areas do you, your employees, or partners procrastinate the most on?
6. How do you position your company in comparison to your competitors? (The cheapest, most expensive, generalist, specialist, small, big, focused, diverse, and so on.)
7. If you could change three things about your company, what would you change? What would you change first? Why?
Opportunities
1. Who are the people who already have a relationship with your potential clients? How can you start to build a relationship with them?
2. What are you doing to position your company as being on the cutting edge as a leader in the industry?
3. How could you better use the media to position yourself and your company as experts?
4. How could you take full advantage of:
• Changes in technology (for example, online social networking web sites, blogs, autoresponders, e-commerce, outsourcing)
• Changes to the marketplace, both locally and nationally
• Changes in government policy related to your field
• Changes in social patterns, population movement, changing demographics, lifestyle changes, and so on
• Changes in buying cycles and needs (faster turnaround time, lower prices, more selection, better quality, customization requests, and so on)
Threats
1. What are the five greatest obstacles your company or team currently face?
2. How does rapidly changing technology affect your business model?
3. What are the current trends in your industry?
4. How does the economy affect your business for good or bad?
5. What are you currently doing to identify, train, and retain your top employees?
6. What would happen if your top three people were hired away by your most aggressive competitor?
7. How long would it take you to be up and running if your company was robbed or your building burned down?
8. What is the worst-case scenario you fear the most?
9. How can you better prepare to minimize the damage this would cause if it ever came true?
QUESTIONS FOR DEEPER SWOT ANALYSIS
The following four questions are best used after you have already answered the earlier questions because they are based on comparing and contrasting two areas of the SWOT grid to determine different strategies needed for success.
1. How can your current strengths be leveraged to take advantage of developing opportunities? What are the strengths you will need to develop in the next 12 to 24 months to better position yourself or your company to profit from and quickly take advantage of new opportunities as they arise? This is called an S-O analysis, the upper tier of the SWOT grid of Strengths and Opportunities. 
2. What specific ways can your strengths be used to counteract potential threats? How can you create an environment such that your team’s creative thinking, ingenuity, and exceptional follow-through can flourish and not be diluted by perceived or real threats? This is called an S-T analysis, a cross tier of the SWOT grid of Strengths and Threats. 
3. How can your weaknesses be overcome to tap into developing opportunities? What additional opportunities could you benefit from if you didn’t have these weaknesses? What are two ways you could use delegation, outsourcing, or technology to minimize or eliminate your weaknesses? This is called a W-O analysis, a cross tier of the SWOT grid of Weaknesses and Opportunities. 
4. Can you change your weaknesses by adding to or changing your team so that you can quickly counteract real threats? How does your team decide whether something is a real threat versus a perceived threat? How can you empower your team to take decisive action, instead of being paralyzed, in the face of a real threat? This is called a W-T analysis, the bottom tier of the SWOT grid of Weaknesses and Threats. 
BUSINESS IMPACT STORY: LAW FIRM AVOIDS IMPLOSION USING SWOT
In my company, The Rainmaker Institute (www.TheRainmakerInstitute.com), we have coached, trained, and consulted with more than 6,000 attorneys from hundreds of small law firms across the country. Like most service professionals, attorneys are very good at being technicians; they know the practice of law, but very few understand the business of law. I have used the SWOT tool dozens of times with my clients and found it to be very helpful in presenting them with insight into how they can build on their strengths, what kinds of people they need to hire next to better take advantage of opportunities, and to assist them in creating a plan for success. Below is a typical case study inspired by my work with three of my recent law firm clients.
The “Smith Law Firm” (not their real name) is located in Los Angeles and focuses on general business litigation and commercial real estate transactions. They have 5 partners and 15 associate attorneys. Bob, the founder of the firm and the biggest rainmaker, is getting ready to retire next year. Revenues have been steady, but most new work is brought in by Bob and one other partner, a litigation attorney with poor interpersonal skills.
In working with the firm, I had all of the partners and two of the associates work through the questions at a one-day retreat. Here’s an overview of what they found.
Strengths of the Firm Were Easy to List:
• The founder of the firm is well recognized and respected in the community. He has been selected as a “California Super Lawyer” every year for the last five years, he regularly speaks at industry events, and is cited in local newspapers as an expert.
• The firm had a good diversity of practice areas that allowed for a wide variety of clientele and cushioned them against any sudden economic downturns.
• Overall, the firm had a great win-loss record and their top litigator was excellent in the courtroom.
• The firm’s revenues have increased by at least 10 percent every year for the last six years.
• This pattern of growth was a great recruitment tool to capture the attention of bright young associates, but even that wasn’t enough, because many of the larger firms had suddenly increased new associate pay by 10 to 15 percent in the past year.
Their Major Weaknesses Were:
• Bob and the litigator were really the only lawyers well known in the industry, and most attorneys outside the firm didn’t even like the litigator. The firm would face a crisis in significantly fewer referrals when Bob retired in 12 months.
• When talking to the news media about elevating a few partners, signs of infighting began to occur because everyone wanted to be recognized as the next “Super Lawyer.”
• Who the next managing partner would be after Bob left was a big question. The litigator has already stated at several partner meetings that he is the natural choice because of how much money he brings in to the firm each year. He also, not so quietly, insinuated that he might leave the firm if he is not chosen. The other three partners have had closed meetings where some said they would leave if he is given the top position.
• With the increased competition in the industry, the sales cycle with new clients was growing longer and it was becoming increasingly difficult to land the most lucrative deals.
• Many of the partners are over 60 (an increasing occurrence in law firms) and have a difficult time connecting with young business owners. The partners can name several potential clients they had lost to other firms in the last few months that have younger partners.
Opportunities Abound for This Firm:
• Bob needs to start introducing other partners to his media contacts and getting them some coverage. He needs to start deferring to them when the media calls asking for a comment.
• Bob needs to immediately start taking on fewer cases so that he can spend more time with other partners introducing them to his referral sources and build the relationship bridge between them.
• A full-blown effort is needed to cross-train younger attorneys with stronger interpersonal skills in the art and science of litigation to offset the harshness of their primary litigator.
• With the transition of leadership there was a prime opportunity to put a fresh face on the firm, to attract younger, faster-growing companies, and entrepreneurs who wanted to work with an experienced attorney, but didn’t want to pay the high fees the most senior partners demanded.
• At this point, most new clients coming into the firm were doing so because of well-formed relationships with the founder. The firm has the chance to branch out and try different methods of marketing such as: speaking and giving seminars, public relations, networking at trade association events, and online marketing.
Threats to Their Success:
• Professional jealousy is a hallmark among many lawyers. Bob would naturally spend more of his time introducing certain partners to his media contacts and referral sources. This would inevitably cause some jealousy among the partners not so introduced.
• Credibility is the foundation of success for most professional service firms. The founder was the key to the law firm’s credibility and the firm would have to move fast to start gaining more credibility in the community by: publishing articles, building an online presence, speaking at industry events, and seeking out media attention.
• If the firm does not start on the plan soon enough they would find themselves staring down the barrel of the proverbial gun and run out of time for Bob to make all the necessary introductions to ensure a continuity of referrals.
• Bob may feel left out and may unconsciously sabotage the plan by refusing to involve other partners in the cases of his best clients or by not helping enough partners build relationships with his top referral sources.
Even though many of the partners found these statements rather obvious, it was powerful for them to lay everything on the table and discuss the possibilities openly. In the course of a day we were able to outline most of the major issues and develop a game plan for the firm based on the Deeper Analysis Questions. Like all game plans, the result depends on follow through, which is where business coaches or leaders can be worth their weight in gold.
TOP 10 WAYS TO USE THIS TOOL
1. As a business coach or consultant, the SWOT Analysis tool can be a powerful way to start off your relationship. Go through each question with the client or leadership team to help them gain a clear understanding of their current situation. This tool can be used to help clarify goals, create a game plan, outline key roles and objectives, create a better team, and assign the right people to specific tasks and responsibilities.
2. As a speaker or trainer, have your people break up into small groups, either by practice area, client focus, or department, and guide them through each step. After each section, have every group give a three-to-five-minute presentation on what they found. Switch up the teams before you go into the “Deeper Analysis Questions” section. End the training session with each team discussing its 90-day action plan.
3. Have your client, team, or department focus on how delegation, outsourcing, and technology can be better used to showcase their strengths, overcome their weaknesses, tap into new opportunities, and uncover hidden threats. Many times, people become too focused on only the skills and people in front of them instead of using creative problem solving.
4. As an internal coach, use this tool every year with every major department and leadership team as part of your strategic planning process. This can help you:
• Uncover new trends (both positive and negative)
• Talk about what’s going wrong (a common mistake in business is talking only about what’s going right)
• Discuss what additional training the team needs to stay on track
• Think strategically about recruiting new talent
• Determine where to allocate time and money for new initiatives
5. Managers, executives, and leaders have a tendency to either gloss over problems or focus only on problems. Either one discourages their teams. Using the SWOT analysis will lend balance to your planning sessions, alternately emphasizing the positive and the negative.
6. Schedule a planning retreat with your leadership team using the SWOT tool. Divide into teams and have each team tackle one of the four areas. Bring the team together for mini problem-solving presentations and have other members analyze their solutions.
7. Go to www.authentichappiness.com, Martin Seligman’s web site. It offers a wide variety of free assessments and questionnaires to help you determine your natural strengths and abilities.
8. Use the SWOT tool to create a profile of the perfect job candidate. Specifically look for someone who fills the gaps in your current team. Do not make the mistake of surrounding yourself with people just like you. People who are too much like you not only often have your same strengths, but also your same weaknesses.
9. As an external coach, put together a half-day or full-day retreat. You can offer to take firms through the SWOT process for a flat fee. Having an outsider act as a guide, facilitator, and coach can be very powerful because of her objective perspective. We recommend charging $2,000-$10,000, depending on your market, because of the preretreat work you will have to do. Armed with this in-depth information, propose an ongoing coaching and consulting program to help them maximize their strengths and discover how to tap into new opportunities as they arise. Internal coaches could use a similar approach.
10. Offer a home study course or self-study program that people can purchase from your web site that includes a series of down-loadable audio programs, worksheets, group teleseminars, and some limited coaching sessions from you. This can be a great entry point into a small business or start-up.
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