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Opportunities Eat Strengths
This episode is pretty special. To me, it was incredibly enlightening. This one I’m definitely stealing right from what I learned at Pepperdine going for our Executive MBA. I want to give a little bit of backdrop if there are any new readers here. Sometimes my wife Kerri is on these shows with me, but this is a show in which Kerri and I live our lives and either speak on stages, write books, manage our team of 200 in multiple offices in different countries, but we live our life growing our what is now a six-time Inc. 5,000 company, meaning we’re one out of eighteen million US companies. We’re one of the 5,000 fastest growing, but we live our life such that when we hear something profound and very moving either to us or to somebody around us, we make sure we make a note of that in a physical way. We will take notes, we will journal, sometimes I get out of recorder, but in some way, shape or form, we make a note of something that we know is going to move our company. If people read it on the blog, it could move their company as well.
This one is profound and I’m going to jump right in. I have blogged, written about, done meetings and done speeches from the stage on doing a SWOT analysis: Strengths, Weaknesses, Opportunities and Threats. I want to draw a line in the sand. You may never hear me say SWOT again unless I’m studying a competitor. If I’m going to do a SWOT analysis on say our company, Income Store, or a company I’m consulting, I’m going to do what is referred to by the high-level strategic thinkers and what many corporations have known for close to a quarter-century. I am going to do an OTSW because you want to look at your own company opportunities first, threats second, and maybe strengths and weaknesses, but often you don’t even bother with the strengths and weaknesses. I’d like to give you a real-world example. I’ve spent a quarter-century evaluating our team, listing out our strengths and listing out our weaknesses.
Every January, every third or fourth or fifth year, I’m pursuing a different direction for the company, or at least that’s what I thought I was doing. When I was shown by these professors that if I went through the whole SWOT and saved my analysis, my diagnosis and my recommendations until the end, there was a great likelihood I was breezing by the strengths and weaknesses and focusing on the opportunities and threats. At first, I’m like, “What difference does it make? What is the point of looking at this way if you’re eventually going to get to opportunities and threats?” As the week went by, it became very clear that you can get confused, you can minimalize certain things, and you can certainly over-amplify certain things when you do a SWOT. It’s impossible to over-amplify things or minimizes things when you do an OTSW.
An opportunity is far stronger than your greatest strength. Click To Tweet
I’m going to give you an example and it’s incredibly profound. Let’s look at Income Store and let’s say we reverse the clock to August of 2018. Facebook, Mark Zuckerberg, gets called into Congress and the world figured out that he was selling everybody’s data: all their names, phone addresses, emails and everything. It’s not from the Facebook platform, but through the paywalls. I’m making this up, but let’s say Rupert Murdoch’s news agency had a paywall with Facebook. They would share traffic and the ads would be on Rupert Murdoch’s section, but Facebook would get a slice of the revenues from the ads because it was technically on Rupert Murdoch’s section. I’m not saying this is how it happened. As a matter of fact, this is not how it happened. If Rupert Murdoch’s group then sold those emails, they were the Facebook emails, that would be technically sold through a paywall. The government told Zuckerberg, “You either shut in your three big paywalls down or you’re done.” It did cost him $26 billion, but it cost Income Store about $1 million a month.
We had to pivot. We had to make some major decisions. I did do a SWOT, but it turns out I didn’t do a SWOT because I looked at the strength and weaknesses of our team and we’ve been pivoting for several years. We can manage pretty much anything in any platform. What I was really staring at was the opportunity and threats of the landscape. What kept jumping up after a series of meetings was the opportunity in eCommerce through a platform called Shopify. Not my strengths and weaknesses, but the opportunity of Shopify was so amplified that it literally negated my current team. We had maybe one person, not even that you could say was an expert in eCommerce at the time.
Now, we might have two dozen and we had to go find them. We had to build them. We had to partner with other companies to immediately graft in the strength, the S of SWOT. The point I’m trying to make is the opportunity. When you look at an OTSW from now on, I want you to picture the letter O three times larger than the S, W, and the T three times larger than the S, W. It’s an OTSW and I want you to look at it that way. I’ll give you one more example that hopefully this can sink in. Let’s say your family owns the largest general contractor building skyscrapers in the world. They are elite. You’ve got 2,000 employees. You have the greatest architects, the greatest engineers, even the greatest bridge builders. You’ve got the greatest concrete people, steel, everything. You’ve got it. If your company was doing a SWOT, Strengths, Weaknesses, Opportunities and Threats, you would never have seen several years ago the opportunity for what now Jack Ma has with Alibaba, which is getting bulk Chinese goods to America. I know it sounds insane but understand this now.
If you were not the greatest construction company building skyscrapers, but you were say a private equity group or a large hedge fund like Bain Capital or Norwest or Elantra. You didn’t evaluate strengths and weaknesses first, you were looking at opportunities and threats first. You then would not have immediately wiped out the opportunity that was in front of everybody worldwide several years ago. The only reason Jack Ma jumped on it is he had a slight head start being closer in China, but there was a number of American private equity groups that were also seeing the same opportunity, thinking the same thing and poking into Chinese relationships to see if they could be the one to bring this massive quantity of goods to the insatiable appetite Americans have four eCommerce and quick delivery of products. I don’t know if that was the greatest example. I’m going to say it this way.
Opportunities and threats dominate and steer business. Click To Tweet
Every January I’ve said for a few years now that I want you to do a SWOT analysis on your company to see if there is an S-curve. If you’re not sure what an S-curve is, go to Today’s Growth Classics. It’s a different show. It’s the number one most downloaded episode we have in history. I recommend strongly, if you have not heard that in over a year, you got to hear it again. Every January, you have to evaluate your company for an S-curve. It’s why Income Store’s growing like a weed. It’s why it doesn’t matter what happens to the world’s landscape around us or what happens to our management. We will continue to double this company because we know the models of growing business. I can understand an S-curve like GE did at GE Capital days when Jack Welch stepped in and added twelve revenue streams in several years.
I understand and we understand the concept of an S-curve. However, the difference is I’ve been teaching it wrong. You do not sit down the first week of January with your team when everything is finally slowing down and settling and you can think and breathe clearly and do a SWOT. You do an OTSW because the S, W might get in the way and you might say, when an opportunity is in front of you, “We don’t have engineers for that or we don’t have this for that.” Who cares? An opportunity is far stronger than your greatest strength. Huge threats are stronger than your greatest strength can handle. Opportunities and threats dominate business and steer the business. I hope this helps. Take care.
- S-Curve – past episode