Short of hovering over every employee interaction, it's difficult to get an objective, big-picture sense of your business. SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis comes pretty close.

Used by Cobb Hill Construction, a $15 million design/build company in Concord, N.H., that works on residential, light commercial, new homes, and medical and dental offices, SWOT helps the business identify what needs improvement, gets employees to look at trends within the construction industry, and helps boost company morale. “[It's important to] get a problem on the table without scapegoating anyone, and to talk about it being a system problem and not a personal problem,” says Cobb Hill Construction owner Tom Avallone. “Employees can identify something they have a finger on and discuss how it can be done better. Doing this becomes part of the culture.”

USING SWOT SWOT analysis began appearing in business texts in the early 1970s. Some critics say it's simplistic and that the end results are sloppy. But, says Ben Dattner, a professor of organizational development at New York University and principal at Dattner Consulting, a Manhattan-based organizational effectiveness consulting firm, “SWOT analysis can be very helpful for getting teams to step out of daily work and consider the organization's 30,000-foot view and its competitive environment. By structuring the conversation to include potentially good scenarios as well as potentially bad ones, businesses can avoid the trap of seeing the world through rose-tinted glasses, or of denying organizational dysfunction or threatening marketplace developments.”

In SWOT analysis, strengths and weaknesses are internal —what a company does well or needs to work on. Opportunities and threats are external, “places we can move into in the market, places we should give more attention to, or a new opportunity,” Avallone says. Many companies consider “opportunities” and “threats” as ways to go after the competition — find their weaknesses and capitalize on them. Avallone disagrees. “This is not a tennis game, trying to beat your opponent across the net. Think of it as golf. What are the opportunities to do better than par? We want to do better at our golf game, not salivate over [competitors'] weaknesses.”

ONGOING PROCESS Avallone introduced SWOT 13 years ago after Cobb Hill Construction signed its first $1 million commercial contract. “I wanted a sense of whether everyone at the company was onboard with growth, change, and bigger commercial projects,” he says.

Now, each January or February Avallone arranges a dinner away from the office. He divides the 50-person company into groups that meet on different nights. “More than 15 in a room is chaotic,” he says, and “less than 10 is not enough.” He finds that a heterogeneous group works best. “It makes people stretch themselves, and it's a more enlightening, empowering mix.” Employees are in a safe environment where they can bring up any issue. And they also take time to discuss market trends and regional construction topics they have discovered in newspapers, magazines, or at contractor association meetings.

A scribe takes notes, and Avallone synthesizes the material after the meeting. He then holds a companywide follow-up in the spring to determine annual goals and objectives. “[SWOT] truly has helped us identify areas we should pay more attention to,” he says. “That's how we got involved in the medical and dental [remodeling] — $2 to $3 million a year every year for the past 10 years.”

Stacey Freed is a senior editor for REMODELING.

Successful SWOT Analysis

  • Draw clear lines of what is within the organization's control and what is not.
  • Encourage employees to be open — to look at how things are versus how they wish things could be — and to consider different, possibly even unpleasant, scenarios.
  • Reward people for candor, creativity, and out-of-the-box thinking.
  • Make sure there isn't groupthink or censorship.
  • Have a mechanism for follow-up, action, and/or strategic planning based on the discussion.
  • Don't allow the SWOT analysis to be a one-time event. Hold periodic follow-up and check-in meetings.
  • It may be helpful to invite an outsider who can capture ideas and help people be candid without being biased or particular to one agenda or approach.

—Ben Dattner, professor of organizational development, New York University, and principal, Dattner Consulting