In a high tech world, we are sometimes tempted to quantify, define and plan with a hopeful certainty about the outcomes. It is common for leaders and teams to specify a view of the future or of the market and create surefire (they hope) means to be successful. It is also common for people to assume that all within an organization are disposed to work together enthusiastically and seamlessly.

Plan A will lead to 30% sales growth this year! Our new product will blunt Competitor X’s market share and result in 10% incremental profit. All we have to do is get everyone on board with the new strategy, shift the execution focus and convince the potential customers and we will win!!

We do similar things in competitive intelligence. We start with a noble goal of understanding what every significant competitor is trying to do. Add to that knowledge of the market forces at play. Then, almost magically we hope, the organization will snap to attention to devise the tactics needed to overcome the competitive gaps (leading to the 30% sales growth, of course). More than that, we will be universally welcomed for our valuable contribution to the organization. Let the praise rain down on our heads.

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CI techniques, Competitive Intelligence, strategy, Strategy Effectiveness, strategy evaluation

“I don’t need the exact figure. Just give me the ballpark number.”

This is how I sometimes do business when I am trying to buy a new car. When I am early on in deciding which car to buy, knowing that one of the candidates is about $25,000 and the other one is about $40,000 is enough information for me. The ballpark number is a useful approximation for my initial purpose. (Later I will bargain about the exact car and sales price.)

In competitive intelligence, we are often asked to assign a number to something a competitor is doing.

For instance, our management might want to know how much research and development money has been spent on the latest product from our competitor. This isn’t a number that most companies will report publicly. So what do we do? Give up? No, rather we fall back on the article of competitive intelligence faith that there is always an ethical way to give a good answer.

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analysis, analytical techniques, approximations, CI techniques, Competitive Intelligence, management, product marketing

The difference between where we are and someone else is at the moment is a “gap”. The gap could be positive (that is, we are in a better position) or negative (our position is worse). In competitive intelligence, we study gaps (especially the negative ones) because we want to know and explain what our competitors are doing to create a significant advantage for themselves.

(See a video presentation on this topic by clicking here.)

So, we study and communicate the gaps and then we are done?

Nope. Identifying the known gaps (though not necessarily easy) is only the first step in a robust gap analysis process. Here are the 5 steps to comprehensively think through gaps, to create simple tracking methods and to ultimately get to the actions that will close the gaps.

1. Start with the “known” gaps.

“Known” gaps are the ones for which there is general agreement about their identity and significance. For instance, we may know that competitor X is about to introduce their new product which is 20% faster than any product that we have. Since there has been a press announcement, live demonstrations which seem to confirm the claims and an established track record for the competitor, we can firmly believe that the product and the claims for it are real. Furthermore, we know that our customers highly value performance. Hence, this is a gap that is well characterized and is significant to our competitive position.

To assemble a starting list of known gaps, solicit input from the management, business development, marketing and sales teams. For each gap that they identify, make sure that it is specific and well described, that the impact is estimated and each competitor which is better is noted.

There will be some of these gaps which cannot be fully described. These are the “potential” gaps.

2. Create a backlog of “potential” gaps.

“Potential” gaps do not meet the full criteria to be considered as known gaps. There may be information missing about the exact nature of the gap or its impact. Using the preceding example, if we hear that our competitor is introducing a “faster” product sometime in the future, we might conclude that this could be significant to us. However, it could make a large difference if it is 10% faster in three years or 50% faster in six months. Without more information, it is also very difficult to assess the potential significance of the gap. Still, knowing the competitor well may lead us to believe that “where there is smoke, there is fire.” The proper action is to keep track of the potential gap and to assign someone (e.g., the competitive intelligence function) to collect information about it. Then, when the uncertainty threshold is crossed and the evidence is more substantial, the potential gap can be escalated to a known gap status.

How do we look even further back in time to find things that lead to the potential gaps?

3. Make a list of triggers which may lead to gaps.

Triggers are not gaps. Instead, they are events, activities, announcements and such that may signal gaps in the future. Why are they important? They are important because companies rarely operate in a vacuum. Public companies, especially, signal much of what they plan to do through all types of disclosures. If we are attuned to these disclosures, we get hints of future strategic directions. Continuing the faster product example, it is entirely possible that the competitor had made patent filings years before the product was announced. They may have purchased the assets of another company with specific technology competencies. They may be actively making venture investments in small companies with complementary products. In an ongoing business, all of these types of triggers are predictable. A trigger list can serve to organize the monitoring of such triggers. Then, when several of them have “tripped”, it may be reasonable to investigate whether or not a competitive gap is imminent.

Triggers are often driven by broader forces in the market.

4. List the key trends which affect the market.

It starts to get a little fuzzier in this category. Nevertheless, tracking demographic, technology, product, legal and other areas is important. In technology, the broad trends of things getting smaller, faster, cheaper and more communicative is not a revelation to most people. More recently, the trends toward more social media, lowering energy consumption, increasing recycling features and more emerging market support are becoming important. The key to trend monitoring to find the ones that most affect customers (and, therefore, their buying decisions). After an important trend is identified, then it is critical to understand the rate at which the trend is being responded to in the market. The goal is to eventually identify the triggers (see step 3) which more concretely describe when and how competitors might gain some advantage.

How do we maintain all of this information? Simple. Create four spreadsheets and track the known gaps, potential gaps, triggers and trends. Last, establish action plans.

5. Assign actions for all areas.

Known Gaps

Assign each one to a person that must define and execute an action plan to close the gap. This usually must be a manager with sufficient authority and ability to work across organizations because all know gaps must be “significant.” Put another way, these are hard problems to solve but their resolution is critical to a company’s competitive position.

Potential Gaps

Assign these to the competitive intelligence function and require a periodic report to a responsible manager. The goal is to actively determine whether to demote the gap if it is insignificant or to escalate it when it can be fully characterized. The escalation process must be a part of a regular review cycle or it could become ineffective due to its irregular or inconsistent use.

Triggers

Assign these to the outward facing functions of your organization. These may be the business development or product marketing teams. Their responsibility is to look for the specific trigger information and feed it back to a coordinating competitive intelligence function. The CI team then coordinates the evaluation of the triggers and decides when a potential gap has been identified.

Trends

Assign these to the market research team and the technology team. Their mission is to help the organization understand when a trend accelerates to the point where there are specific, compelling market responses occurring. Once the responses are being seen, then triggers are identified for each competitor to understand how they intend to act.

Gap analysis can be a straightforward, organization energizing and fruitful process. The keys are to discriminate the different types of information, assign the responsibilities correctly for each and establish a process of regular review with management.

A more complete treatment of Gap Analysis can be found at http://tinyurl.com/yk8fcq6 or on my website at http://www.jthawes.com.

business strategy, CI techniques, Competitive Intelligence, Early Warning, future focus, gap analysis, management, strategy, Strategy Effectiveness

Would it make a difference who said it?

Of course it does. When President Obama says something people notice more than when you or I do.

It is the same way in corporations. By the very nature of their positions high level managers are entrusted with more latitude and responsibility. Hence, when they make a statement about the company, its prospects and its performance, people listen more intently.

This phenomenon ripples down the organization. For example, a senior vice president’s words are more significant than those of the director of product marketing. This effect is not a tremendous insight until a competitive intelligence professional makes good use of it. And here is how that is done.

First, you need the competitor’s organization chart.

Wait a minute, you say. I can’t get that. It’s proprietary information and I am an ethical practitioner.

What if you construct it from public information? Perhaps it wouldn’t be perfect or complete but most of the major slots would be filled. Six easy steps will get you there.

• Get a tool to help manage the information. I prefer OrgPlus from Human Concepts. This tool allows you to capture organization information in a spreadsheet. The spreadsheet information can be imported into the program to generate graphical organization charts. Updates are easily managed either in the original spreadsheet or in the chart.

• Start at the top. Public corporations must identify all major corporate officers. You will also get the major divisions of the company. Additionally, I like to include the directors of the company since exploring their interrelationships is often insightful for acquisitions and mergers. (It is a separate useful task to map the director relationships.)

• Comb the records of major conferences. Many companies will send representatives to speak at major industry conferences. When they do, they will include their bio which will identify their title, division and key responsibilities.

• Check standards organizations. For most companies, there are important industry standards. An individual company may be a leader or follower in a standard but they will often send senior people to participate. Look at the committees and subcommittees for the company representatives.

• Search social networks. LinkedIn contains a treasure trove of business information. Every current employee is a clue that fills in an organization chart. Each should be added to your database.

• Google. Finally, use a search tool to look for presentations (PPT, PDF) given by company employees. Also do a general search by company and title (usually at the VP and below level).

Now you created this wonderful collection of names and titles and you have imported it into an organization charting tool, what’s next?

Simple, you apply the understanding that all utterances are not equal. The “king’s words” matter most. Put another way, the organization level and position suggest the importance of statements.

Here are some practical ways to apply this understanding.

• Examine press releases. Often, the importance of a release dictates which company official will be quoted. The most important notices will include quotes from an executive officer (up to and including the CEO). Less important releases will be signaled by the quotes from lower level employees (e.g., product managers). Though it is possible that a sly company might try to misdirect attention by downplaying a release, this is unlikely in my experience. The exercise of ranking press releases will attune you to how the competitor values its public statements.

• Track public forums. Public companies regularly present information to the financial community. This is usually the SVP, CFO, COO and CEO responsibility. There are other public forums including the conferences and standards bodies that are attended by lower level officials. If you know their place in the organization (e.g., division, level), you can surmise the interest of their organization. If you know their interest over time, you can use this information with other data that you have accumulated to improve your guesses of their strategic directions.

• Monitor comings and goings. The addition to or subtraction from an organization is always information. The arrival of a prominent outsider may signal dissatisfaction with the current organization. Or, maybe it signals a new strategic direction. Similarly, a departure may indicate that an existing strategy has lost its advocate. Admittedly there are many reasons for people changing companies. However, knowing more about their organizational context will suggest richer implications of the change.

If you create a company’s organization chart, apply the implications and track this over time, you begin to get a deeper sense of how a competitor works. After a while, you might begin to feel that you know the people (though you may never have met them). You begin to understand what drives them, to guess at the challenges they face to execute their strategies and to grasp their strengths and weaknesses.

This understanding is precious.

Now you can tell your own king how to compete more successfully.

CI techniques, Competitive Intelligence, marketing communications, organization charts, press releases, professional titles