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BUSINESS FORECASTING AND INNOVATION FORUM 2015 September 17-18, 2015 – Boston, MA
September 17, 3:30PM
Workshop Session: The Essential Competitive Analysis Methods and Tools
Exploring multiple methods and tools to support the ongoing intelligence needs of your organization
Craig Fleisher – Chief Learning Officer (CLO) at Aurora WDC
Craig is focused on how to enhance and lead insight-related activities in business; developing the sense making/giving culture, capabilities and processes that result in superior analysis, actionable decisions and market/stakeholder success.
For more than 25 years, his thought-leading expertise has been heavily cited in leading intl. media, publications and shared globally with many associations, public bodies, think tanks, as well as top companies including, among others, 3M, Bell, BHP, CIBC, EDS, ESSO, GE, GM, IBM, J&J, Labatt, Levi Strauss, Merck, P&G and TSX.
View presentation online at: www.businessforecasting2015.com
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The 12 Essential
Competitive
Analysis
Methods You
Need to Know to
Support Your
Organization’s
Intelligence
Efforts
Boston, MA: 16 September 2015Dr. Craig S. Fleisher
Business
Forecasting &
Innovation Forum
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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About Your Workshop Presenter
30 year background in CI, Meritorious awardee, SCIP Fellow, Thought-leader
Former SCIP President, CI Foundation Chair, Jnl of CI & Management Editor, Member of 6 editorial boards, local CI chapter chair
Teaching exec/MBA courses at universities in AU, CA, CH, CN, EU, FI, FJ, JP, NZ, SL, UK, US, & ZA among others, etc.
Former B-school dean, Univ. Research Chair, Prof. of Management, MBA/eMBA Director
Advise many top organizations globally
Author of >12 books, >100 scholarly articles
Best known for intelligence analysis, PA, PM
The Intelligence Collaborativehttp://IntelCollab.com #IntelCollab
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Two Parts
1. The 12 essential competitive analysis methods
2. We’ll work together applying what we just covered
Agenda
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Opening Exercise
Write down 3 business problems your CI efforts are needed to address (one sentence each, in ? form):
______________________________
______________________________
______________________________.
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“Intelligence analysts
inspire the future &
define reality for
decision makers --
whose actions could
alter it.”
Why We Perform Analysis
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Intelligence Analysis ComparisonWhat It Is What It Is Not
Original insights that answer “What? So what?
Now what? What then?”
Banalities, Regurgitated answers of how and
what your clients already know
Rigorous application of art, science & craft Black box process, dark science, gut instinct
Deliberate conversion of data/information,
decomposition and synthesis
Forwarded/Raw clips passed along, re-
composition and lists
Focused on meeting a client’s needs Focused on making us look busy to others
Mission-driven, detailed, deep, cybernetic Data-driven, simple, shallow, single-looped
Done collaboratively, uses networks, shared Genius @ a desk, hoards data, black hole
Future-focused, dynamic, looks over the
horizon and around the corner
Reporting history, static, looks at the present
and extrapolates linearly
Facts, Perceptions, Beliefs, Experience,
Assumptions, Projections, & Synthesis
Speculation, Rumors, Guesses, Unfiltered,
Biases, Additive, & Mashed Together
Human judgment and technology Human judgment or technology
In the realm of probabilities, relatives, options,
justifications
In the realm of certainties, absolutes, one
answer, assertions
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Stakeholders
Competitors
Customers
Suppliers
Partners
Counter-Intelligence
IP Protection
Security
Raw Data & Info (flters) Analysis Processes (channels) CI Products/Services
Inputs Outputs
Secondary
Research
Primary
Research
(HUMINT)
Technology
Industry
Markets
Opportunities
Threats
Real-world CI Process
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Today’s solutions are successful in accessing business and competitive data, and making it available to users, however…
…today’s solutions are not so successful in directly linking information to action, and
deriving its corresponding value.
That is where the effective analyst comes in…
the gapData
Action ValueInformation
Analytical Fitness:Focus on Closing the Gap
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Moving to 3rd Generation AnalysisFactor 1.
Classical Analysis
2.
2nd Gen Analysis
3.
Analysis 3.0
Expertise
Aggregation
Individual Expertise
Done mostly in silos
Collaborative
Socialized
Integrated
Managed networks
Thinking Style System 1 predominant,
Geniuses behind desks
Some System 2 applied
Improved, tailored solutions
Asks better questions, fuses
human judgment +
computational power
Methods Range 6-10 MBA type methods
(SWOT)
Extrapolation, Descriptive
24-36 BCA methods
(Wargaming)
Probabilistic, Explanatory
100+ on-demand, P/S, frames
Explanatory, Predictive
Structure+
Organization
Mostly un-structured analytics
Bolted on to existing function
Semi-structured analytics
Supports specific function (-s)
Agile, Structured analytics
Hub and Spoke, Disbursed
expertise
Tasking Mechanism Client requested (mostly pull)
Convenience, analyst-driven
KITs (some push), calendared
Client and analyst-driven
365x24x7 push + pull, OODA
loop, Mission-driven
Input Sourcing Manual, library/info specialists Some automation & networks All networked & crowd-sourcing
Tech. Support Tools Files, notebooks, batch
computation, libraries
Dynamic spreadsheets, desktop
databases, adapted IS
Modeling, data-mining, mach.
Learning, customized solutions
Media Forms Used 2D, text-heavy, static 3D, digitized, tagged Real-time, dynamic visualization
Initiatory Process Reactionary, as-needed basis Some proactivity +on demand ABI, real-time analytics
Analyst’
Development
“Weakened” warriors, surviving T&D plans, improving Analytically Fit, innovating
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Self-Diagnosis:Where are You?
Looking at the last slide, assign a score of 0-3 for each of the 10 factors.
Calculate the average scores across all 10 factors to gauge your unit’s competency level:
0-.8: Lagging Analysis Unit
.8-1.7 Among the Typical Analysis Units
1.8-2.3: Analysis is a Potentially Valuable Organizational Competency
2.4-3: Analysis Practice Leader
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Technique
1. BCG Portfolio Planning 7. Product Life Cycle Analysis
2. Competitor Analysis featuring the
4 Corners
8. Scenario Analysis
3. Driving Forces Analysis 9. STEEP Analysis
4. Financial Statements & Ratios
Analysis
10. (Actionable) SWOT Analysis
5. Industry Analysis featuring the 5
Forces
11. Value Chain Analysis
6. Issue Analysis 12. Win Loss Analysis
Agenda: The 12 Essential Analysis Techniques
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Apple Inc. is a spectacular success and reached an unprecedented market value of over USD$700b in 2012
It is a global, diversified corporation with well-known, category leading products
Like most corporations, some of its business units are growing, some shrinking, some lead, some follow
Applying the BCG growth/share portfolio matrix to Apple Inc. can shed light for the analyst on Key Intelligence Questions (KIQs) about its investment priorities, strategies and tactics.
Case 1: Applying the BCG Portfolio Planning Analysis Matrix to Apple
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10x 1x 0.1x
Dogs: Low Market Share / Low
Market Growth (Apple Example:
Apple retail stores, iMac/Mac)
In these areas, the market presence of
the business is weak, so it's going to
take a lot of resources to generate
headway. The business does not
experience the scale economies of the
larger players, making it difficult to
generate profits. Low market growth
compounds the problem, meaning that
a major innovation or turn-around
strategy may be in order for the unit.
Stars: High Market Share / High
Market Growth (Apple Example:
iPhone)
Businesses in this cell are
established and the growth
occurring in this market space is
promising. There should be some
strong opportunities to make
further investments and resource
allocations to these SBUs, and
business leaders must be decisive
and act effectively to realize them.
Cash Cows: High Market Share /
Low Market Growth (Apple
Example: iPod, iPad, iTunes)
Businesses in this cell are well-
established. They have an easier
time and more resources available
for making the most of new
opportunities. Nevertheless, since
the new opportunities in these
slow-growing markets are likely to
be limited, some resources should
be allocated to opportunities where
the growth potential is higher (see
Stars).
? / Problem Children: Low Market
Share / High Market Growth (Apple
Example: MacBook Air, AppleTV)
Most companies have at least a few
questions marks, and these are the
SBUs that are often most important for
competitive analysis. These are the
opportunities that aren't generating
much revenue right now because
market share remains small, but the
potential to be a great success is there
due to the high growth in the market.
The BCG Matrix Applied to Apple
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Costco Wholesale is the market leader in the North American wholesale clubs industry
Its top competitors are BJ’s Wholesale and Sam’s Club, a division of Wal-Mart
Applying the Competitor Analysis, and particularly using a method called Four Corner’s analysis, can shed light on its capabilities, limitations, strategies and tactics
Competitor analysis can help the analyst address a variety of common “Key Player Profile” KITs and KIQs
Case 2: Applying Competitor Analysis feat. the 4 Corners to Costco
• Selling fewer items increases
sales volume and helps drive
discounts.
• Costco's focus on driving
sales also helps explain why
it offers better pay and
benefits than competitors.
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Identify competitors future plans and strategy
Predict companies likely reactions to yours and other rivals’ competitive initiatives
Determine the match between a competitors strategy and its capabilities
Understand a competitors weaknesses, resource gaps, blind-spots, and/or vulnerabilities
Overview: Main Objectives of Competitor Analysis/Profiling feat. the 4 Corners
Competitor Insights Profile
Drivers: Goals and Objectives
Current Strategy
Capabilities and
Resources
Assumptions
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A form of electronic commerce that allows consumers to purchase goods over the Internet, on-line business to consumer (B2C) retailing is one of the fastest growing global sectors.
Already over USD$250b in the US alone, the industry has grown in double digit rates since its founding only about 2 decades ago.
Major companies like Amazon.com, Apple.com and eBay are revenue leaders.
Traditional “bricks and mortar” retailing has taken the brunt of share losses from online retailers.
Even online retailing is being impacted by the rapid growth in mobile commerce.
Case 3: Applying Driving Forces Analysis to On-line B2C Retailing
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Time-tested concept based on industrial-organization economics
Industry analysis helps the analyst understand the forces economically impacting an industry and its participants
Provides the context about the markets within which businesses directly compete for customers
Supports the development of competitive actions to cope with and, ideally, influence or change the forces in favor of the firm.
Overview: Main Purposes of Industry Analysis
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Case 4: Applying Industry Analysis to the Quick Service Restaurant (QSR) Industry
Quick service restaurants (QSRs) conveniently and consistently offer tasty food at lower prices
Industry leaders include McDonald’s, Subway, Burger King, KFC & Pizza Hut
Large segments in Asian, Bakery, Burgers, Pizza, Sandwiches, etc.
Presence of strong global brands, customer loyalty, consistent quality and service
STEEP trends help (convenience) and harm (health consciousness) the industry
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Overview: Main Objectives of Driving Forces Analysis (DFA)
Understanding DF’s is the first step toward establishing a framework for analyzing critical trends, especially as they impact the competitive environment facing an industry
DF’s indicate the external factors likely to have the greatest impact on a firm and its industry in the near future
Understanding DF’s help decision-makers understand what changes an organization needs to make to constructively address the driving forces of its competitive ability
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Case 5: Applying FR&SA to UnitedHealth Group
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Overview: Main Objectives of FR&SA
Financial ratio and statement analysis (FR&SA) is used as a tool for providing critical insight about a company’s financial condition and future competitive ability.
Information can be obtained very quickly, especially for publicly held companies.
Information is usually freely available, reliable and requires a relatively low investment to perform analysis.
Can compare a company’s performance with it’s past performance and identify trends.
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Founded in 2004 and headquartered in Menlo Park, California, Facebook, Inc. is a large social networking website. With over USD$5b in 2012 revenue, it offers advertisers a unique combination of services including a timeline, news feed, messages, lists and mobile apps.
As the company quickly grew, it faced a variety of external challenges, some like privacy concerns, child safety and censorship became “issues.” Many of these issues are listed and described in some detail at: http://en.wikipedia.org/wiki/Criticism_of_Facebook
Already facing increased competition from formidable rivals like Google, and losing popularity among the teens that powered its early growth, government policy makers and regulators in many countries have put the company in their sights and want to restrict its discretion to operate.
Case 6: Analyzing Facebook’s Issues
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Overview: The Main Aims of Issue Analysis
Issues are controversial inconsistencies caused by gaps between the expectations of corporations and their stakeholders
Issue analysis aids in the firm’s management efforts by enabling managers to anticipate changes in their external environment and to become more pro-active in shaping their external environment through their influence on public policy. It is a key part of issues management
Issues management is a process by which organizations identify issues in the stakeholder environment, analyze and prioritize those issues, develop responses to the issues, evaluate and monitor the results
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Research in Motion was founded in Waterloo, ON in 1984 by Mike Lazaridis
He wanted to commercialize Budgie, a system that wirelessly displayed information on a TV screen
The company became synonymous with mobile data at the turn of the century.
Today, it is named after its famous device and struggles to regain traction in a competitive market with rivals that want to leave it behind.
Case 7: Applying the PLC to the Blackberry Smart Phone
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Product life cycle (PLC) analysis describes the evolution of sales as a function of time.
The model asserts that similar to living organisms, products [i.e., classes (soft drinks), brands (7Up), or forms (diet colas)] pass through 4 stages during their life.
Stages: (pre-Intro/NPD), Introduction, Growth, Maturity, Decline.
Overview: PLC Analysis
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Founded by Bill Gates and Paul Allen in 1975, Microsoft is one of the most successful computing-industry companies of the last 3 decades.
It has seen 3 major shifts occur, all of which it successfully navigated from the front: 1) MS-Dos, 2) Windows, 3) Office Suite.
Today, it faces a new breed of challenges and rivals, from large rivals like Google, Linux, Apple, open sources, the cloud, and its own momentum.
What will the future look like for Microsoft? Will it still lead in 10 years?
Case 8: Future Scenarios for Microsoft
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A scenario is a detailed, consistent description of what the future may look like and is based on a set of assumptions that are critical for an economy’s, industry’s, or technology’s evolution.
Scenario analysis is a structured way of developing multiple scenarios that address two common decision-making errors —under-prediction and over prediction of change.
The overall purpose of scenario analysis is to build a shared baseline for strategic thinking and provide strategic early warning.
Overview: Scenario Analysis
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Case 9: STEEP factors affecting Walt Disney World
• Social: Woman having less kids, aging population, “coolness” factors
• Technological: High use of virtual reality, more integrated experiences
• Economic: Less discretionary spending during recession, loss of some pricing power, cheaper labor
• Ecological: sustainability needs, warming weather patterns
• Political: Need to stay “neutral,” revenue generation potential of parks, large employer with many voters
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• Social, Technological, Economic, Ecological and Political/legal (STEEP) or PEST (Political, Economic, Social, Technological – sometimes referred to) factors
• Aspects of the environment that can affect the competitiveness of industries and firms within them.
• These factors are considered to be beyond the influence of an individual firm.
• Used in monitoring, scanning and supporting most business or strategic planning exercises.
Overview: STEEP Analysis
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Case 10: A Better SWOT Analysis for Whirlpool
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Overview: A Better SWOT Analysis• SWOT stands for strengths, weaknesses,
opportunities and threats• It is based on assumption an effective strategy
derives from a sound “fit” between a firm’s internal resources and its external situation
• A Better SWOT Analysis is systematic, actionable
Numerous environmental
opportunities
Highly favorable situations in
a firm’s environment
Major environmental threats
Highly unfavorable situation
in a firm’s environment
Substantial internal strengths
A resource advantage relative
to competitors and the needs of
markets the firm serves
Critical internal weaknesses
A limitation/deficiency in one
or more competencies relative
to competitors
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• Lowe’s Company, Inc. is headquartered in Mooresville, NC.
• It is a home improvement retailer that has stores throughout the US, Canada, & Mexico.
• Lowe's is enjoying easing pressure as the NA housing market slowly improves. Steady price increases are a good sign of a recovery in housing.
• It returned (in 2013) to offering what it says are permanent low prices on many items across the store, instead of fleeting discounts. Will its margins improve?
Case 11: Lowe’s and the Value Chain
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Value chain analysis (VCA) is a method used to identify a firm’s potential sources of economic advantage by reviewing its internal core competencies in light of its external competitive environment to achieve optimal resource allocation.
Source: Porter, M. (1985): Competitive Advantage.
The Free Press, NY
Overview: Value Chain Analysis
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• A major B2B product manufacturer, that had historically outsold the competition, began to notice a steady dip in their proposal win rates.
• As the company’s executives explored why this was happening, they sensed that they were missing the mark in their pursuit efforts. This contrasted sharply with what execs were hearing from their pursuit teams, who shared that they were simply getting “beaten on price.”
• How can they get the real scoop when Sales says 1 thing, Marketing another, and District Managers a third? How can they turn their sales rates back around and re-capture their market leadership?
Case 12: B2B Win-Loss Concerns
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• Cost effective, insightful, and ethical method for gathering information about your market, customers, and competitors.
• WLA identifies your customer's perceptions of specific sales situations and how you compared to your competitors.
• The analysis provides information about the performance of both your firm and your competitors.
• This information can then be used to focus sales staff more effectively in the marketplace and also to inform research and development of products.
Overview: Win Loss Analysis (WLA)
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ClosingExercise
1. Think about these 12 methods.
2. Identify 3 KITs/KIQs you are currently facing.
3. Match up one of the intelligence methods to that KIT/KIQ and consider how it might help you derive new insights.
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Summary: About The Mastering Intelligence Methods (MIM) Series
• 12 essential methods
• Short video introductions
• Narrated slide decks
• Connections to KITs
• Practical applications
• How to apply the method
• End-of-Course Learning Assessments (Quiz)
• Find it at http://intelcollab.com/intelcollab-courses/
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Your Presenter:
Dr. Craig Fleisher
Dr. Craig S. Fleisher is Chief Learning Officer and Director, Professional Development at Aurora WDC.
Connect with Dr. Fleisher via:
Web: http://IntelCollab.comEmail: [email protected]: http://twitter.com/CraigFleisher
Aurora WDC is a leading advisor and partner to organizations of all kinds worldwide on matters related to intelligence in business.
Learn more and follow Aurora WDC via:
Web: http://AuroraWDC.comEmail: [email protected]: http://twitter.com/AuroraWDC