COMPETITIVE INTELLIGENCE: SIGNALS AND NOISE

Alex King, Amplio Services

Today

• This presentation will show…

• There is a large, unfulfilled need for better Competitive Intelligence in bidding

• Money, or the lack thereof, is not the biggest barrier to meeting this need

• Broadly speaking, the biggest problem is not a lack of information, but distinguishing between what is and isn’t relevant

DEFINING COMPETITIVE INTELLIGENCECompetitive Intelligence, what is it?

What is CI?

• Definition: Using information about things outside your organisation, to improve decision making within your organisation – me, 2015

• Winning bids is a relative achievement. You win by offering better value than your competitors.

• Competitive Intelligence (CI) is legal and ethical. The practice of illegal activities is called ‘industrial espionage’. It is not to be encouraged.

What CI do bids need?

As a minimum, any strategic bid should have the following CI:1 - Customer Hot Buttons2 – Bidder Comparison Matrix3 – Win / Loss Analysis4 – Price to Win

THE NEED FOR BETTER CI…So why should I care?

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For Bid Managers…

In a survey of 178 bid professionals conducted with the Association for Proposal Management Professionals (APMP) “better competitive intelligence” was ranked as the 3rd quickest way to improve bid performance 1

1 How technology is changing Bidding (2014). Amplio Services

For Price to Win analysts…

In another survey of Price to Win analysts, 60% said that “better Competitive Intelligence” would have the quickest improvement on their results 2

2 Price to Win Survey (2014). Amplio Services

For Customers…

Customers are also complaining that bidders fail to distinguish themselves and create a unique value proposition 3

3 Bids & Proposals Customer Survey (2014). Amplio Services

CI: REASSURINGLY INEXPENSIVEInterpretation is a bigger barrier than cost

Porters Four CornersCompetitors tend to be more ‘defensive’ when they are close to achieving their goals

“When you have a hammer, every problem looks like a nail” – Abraham Maslow 1966

The better current results are, the more current strategy is likely to prevail

Intentions asides, how good is the competitor at executing a strategy?

Annual Reports“We have witnessed the benefits of the Group’s long-standing focus on credit quality and the diversification of our income streams which have allowed us to deliver record profits” 4 – RBS, 2007

Motivational Drivers: Noise

4 Annual Report and Accounts (2007). Royal Bank of Scotland5 Advances in Prospect Theory (1992). Daniel Kahenman & Amon Tversky

People are approximately twice as motivated to avoid losses as they are to seize opportunities 5

MANAGEMENT ASSUMPTIONSCase Study: Vince McMahon, CEO World Wrestling Entertainment (WWE)

Management Assumptions

In 1982 Vince McMahon acquired his fathers regional wrestling entertainment company.

Vince McMahon decided that wrestling needed glamour and celebrity.

Management Assumptions

He recruited ‘Hulk Hogan’ as the face of his company and promoted a 1985 Pay-Per-View (PPV) event ‘Wrestlemania’ featuring Mr. T, Muhammad Ali and Cyndi Lauper.

Wrestlemania remains a runaway commercial success today.

Management Assumptions

Vince also felt that Bodybuilding and American Football needed more glamour and celebrity. His attempts to launch spin XFL (‘00) (to complete with NFL) and WBF (‘91) ended in disaster. XFL last one season and was one of the lowest-rated prime time programs… ever 6

6 WWF drops XFL (2001). CNN Money

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Key Lesson One

It is human nature to repeat patterns of behaviour that bought success in the past. Understanding formative experiences of a leader is a far better predictor of future behaviour than bland statements of intent in annual reports.

Key Lesson Two

Human nature is biased towards avoiding losses rather the pursuing gains. Despite Vince’s success with PPV, the biggest risk to his business was networks refusing to broadcast his show…So in 2014 he launched his own network.

Capabilities: Noise

SSWOT analysisThere is no meaningful distinction between internal and external possibilities. Peer reviews tend to result in the most senior persons opinion becoming the consensus, with some highly unlikely ‘wild cards’ thrown in for good measure

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Capabilities: Signal

Blind Spots78% of SCIP respondents said that “developing strategy” was a key driver for CI in their company, compared to 33% for “driving sales” 7

This mirrored an earlier finding that 60% of members were funded by strategy or marketing, compared to just 13% by sales or business development.

7 Career Planning Survey (2012). UKCIF

CAPABILITIESCase Study: Millennium Challenge 2002

How not to do War Gaming

Millennium Challenge 2002: A War Gaming exercise to test of the U.S. ability to fight a generic middle east opponent.. Cost: $250mParticipants: >13,500

Blind Spots“My belief at the outset of Millennium Challenge was that Blue [America] believed it had a monopoly on pre-emption, and it would strike first…I was going to get in the first blow” - Lieutenant General Paul Van Riper, 2004

• Used small boats and suicide bombs to sink a U.S. aircraft carrier fleet in the first 48 hours

• Used civilian motorcyclists to carry communications (i.e. not satellite phones)

• Constantly retreated rather than fight pitched battles

Key Lesson Three

Paul Van Riper’s team stunned the US military because they understood their blind spots. They didn’t need a SWOT analysis or focus on high impact, low probability scenarios.

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A repeat of Hannibal?

72,000 - 86,000 Romans faced 32,000 - 50,000 troops led by Hannibal at the Battle of Cannae (216 BC).

Unsurprisingly, the Romans attacked first, using their numerical advantage, straight up the middle.

Hannibal anticipated this most likely threat and countered it by retreating, then surrounding the Romans creating a stunning upset.

CURRENT STRATEGY

*Past performance is not a reliable indicator of future returns and you may not get back your original investment.

Signal: (Real) Win-Loss Analysis

Rarely is the question asked: is our children [organisation] learning? – George Bush 2007

10 Campbell & Sedikides (1999). “Self-threat magnifies the self-serving bias”

“Individuals tend to ascribe success to their own abilities and efforts, but ascribe failure to external factors” 10

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More Noise: Re-organisations

Few activities contain more noise and red herrings than trying to make sense of a competitors re-organisation. A typical re-org has little to do with strategy. It is a way to avoid legal liabilities when getting rid of people and has certain tax benefits when done in a specific way.

The Devil has too many advocates

“A significant part of future strategy is a continuation of current strategy, as most companies run on inertia, and modification to strategy is almost always tactical and incremental, at ‘the margin’” 8 – Ben Gilad, author of Business Blind Spots

8 Business War Games (2009). Ben Gilad

Get back in the box

“it’s easy to suggest that people ‘think outside the box’…but most battles take place within the box, and the art of war gaming to a large extent is defining successfully what this box is for a competitor’” 9

9 Business War Games (2009). Ben Gilad

SO WHAT?Turning CI into ghosting, win themes and Position to Win

Generic Competitor Strategies

There are three generic ways companies compete. These are called ‘Value Disciplines’: 11 12

Being the CheapestHaving the best QualityUsing Customer Intimacy

11 Competitive Strategy (1980). Michael Porter. 12 Customer Intimacy and other Value Disciplines (1992). Michael Treacy & Fred Wiersema.

Generic Customer Buying TypesWe assess whether this customer can be assigned a ‘Customer Buying Type’ 13.

• Budget-Limited customers cannot afford the capability they want but will spend all their available budget and usually be disappointed

• Capability-satisfied customers buy only what they need at the lowest available price

• Best-value customers trade price against capability. Educated ones understand the trade-offs between value and price.

13 Larry Newman (2011). Shipley Capture Guide v3.0, p122

How to InfluenceCost Leadership Focus Strategy Technical

Leadership

Capability Satisfied Supply pricing information and create a compelling event to speed up the decision

Help your customer explain the key trade offs between extreme positions

No Bid

Budget Limited Highlight the risks of emerging technology vrs certainty of current pricing

Explain ‘tipping points’ to your customer to keep requirements moderate

Demonstrate the whole life cost argument (usually new products have cheaper support costs)

Value for Money Highlight the risks of emerging technology vrs the benefits of proven solutions

Explain ‘tipping points’ to your customer to keep requirements proportional the budget

Technology Roadmaps that highlight ‘false economies’ of yesterdays technology

The Gold Standard

The gold standard of Competitive Intelligence is when you understand it well enough to create counter-intelligence and misdirection for your competitors

Key Skills to Take Away

Thorough Win-Loss, Executive Profiles and Blind Spot analysis

Re-organisations, annual reports and pseudo-strategy

Signal Noise

Focus on what your strongest competitors most likely moves will be

SWOT and worrying about every competitor who could enter a bid

Ghosting your competitors with logical win themes

Giving disproportionate attention to low probability events

Legal NoticeThe photos in this presentation are used under a Creative Commons license, credit for them is attributed to:

– “RBS Bailout”. Source: http://www.worldfinance.com/wp-content/uploads/2013/10/Bailouts-659x380.jpg accessed: 24/08/2014– “Ed Strangler Lewis”. Source: http://images.nypl.org/index.php?id=101407&t=w accessed: 24/08/2014– “Wrestlemania 29”. Source: http://mms.businesswire.com/media/20140401005638/en/409823/5/WM+29.jpg accessed: 24/08/2014– “XFL”. Source: https://upload.wikimedia.org/wikipedia/commons/8/8f/XflNight.JPG accessed: 24/08/2014– “Wrestlemania 1”. Source: https://ringthedamnbell.files.wordpress.com/2015/03/wrestlemania1.jpg accessed: 24/08/2014– “Kiss My Ass Club”. Source: https://images.rapgenius.com/9a298e04daab243bac4dd99063d0016a.500x375x1.png accessed: 24/08/2014– “Millennium Challenge 2002”. Source: http://www.pbs.org/wgbh/nova/military/immutable-nature-war.html accessed: 24/08/2014– “Real War”. Source: http://devxstudiv.org/uploads/posts/2010-09/14/36421-2-fd23d64f610dd35a5453438347e51f8b.jpg accessed: 24/08/2014– “Battle of Canne”. Source: http://www.thehistorykids.net/CRJ/media/cannae.png accessed: 24/08/2014– “Organisational Restructuring”. Source: http://smallbiztrends.com/wp-content/uploads/2011/11/6122.jpg accessed: 24/08/2014– “BT internet Kiosk”. Source: http://www.perfectpixels.com/limeys/photos/kiosk2-lg.jpg accessed: 24/08/2014– “Too Big to Fail? – New Coke: things you need to know!”. Source: https://nicheiima.wordpress.com/2013/09/12/too-big-to-fail-new-coke-things-you-need-to-know/ accessed:

24/08/2014– “Operation Mincemeat”. Source: http://walkergeorgefilms.co.uk/images_126/stories/gallery/display/010.jpg.jpg accessed: 24/08/2014