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Monday, November 23, 2009
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VOLUME 1
ISSUE 14
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Creating actionable intelligence.
Laura Bradley, Consultant/Principal Actionable Intelligence Inc.laura.bradley@actionable-intelligence.com
Thanks to Andre Lalande and Rick Collins for their editorial support.
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Summary: There are five elements that formulate the basis of actionable intelligence: market environment, customer’s business objectives, the customer’s customer, competitive landscape and market feedback. Laura Bradley shows how, when used together, these elements create strong competitive positioning and lead to actions capable of surmounting the strongest of opponents within a dynamic and evolving market.
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In my first work role where I brandished the title, Competitive Intelligence (CI), I did not know how to fully explain my function to my friends and family. Like many others, I often still find myself explaining that CI is about more than just looking at a single competitor. It is about understanding a business structure within a competitive market and the criterion that enable ongoing business success. It is also to elevate intelligence’s role in business decision making from gathering to having impact.
The opportunity to use intelligence is to create strategic actions that help in setting business strategy. The CI process, though, has often been defined as the research, analysis, and communication following problem/issue definition. Creating the “actions” often seems to be left to the recipients of the intelligence. In most cases, this gap between the base of intelligence and the options to act remains opened, even when the CI has been created.
In industries predominated by technological innovation, it appears that the final step to action creation often gets missed as decision makers become engrossed with the “potential” of the technology. Thus, creating actionable intelligence enables decision makers to weigh the potential options, in light of their business strategy, and allow them to move forward.
In many projects where competitive analysis is desired, there is always a belief that the strongest information lie within technological comparisons. But to create actionable intelligence, strict comparisons of technology, finances, or marketing strategies are insufficient to create actions in themselves. The process relies on placing the intelligence within the context of five key variables:
- Market environment.
- Customer’s business objectives.
- The customer’s customer.
- Competitive landscape.
- Market feedback.
Market environment
This variable requires research and analysis of the market surrounding the particular business. If new products or services are going to be introduced, the dynamics of the existing market place have a critical role to play. What will be the impact to the market after the introduction? Will pricing play a critical role in acceptance? Which channels are important or necessary to define success?
As more and more markets increase their competitiveness, this variable’s context takes on a stronger role. When Amazon first started selling books online many did not believe in the success of their business model. As more players saw the benefits and eventual profitability, they also tried to enter the game. To remain competitive Amazon could not rely on simple click technology or books selling based on their name or content alone. They needed to move to an environment that mimicked or exceeded that of going to a physical store. By adopting such “tools” as rating, communities, adjusting to the individual buyers’ preferences and second hand purchases, Amazon has helped increase customer value while remaining competitive.
Another aspect regarding the market environment context deals with unpredictable events. The results of the unfortunate events of September 11, 2001 have caused a tremendous focus on and/or resurgence of interest in security during the year 2002. This heightened sense of security is impacting many areas beyond simply government defense and software. Most of these opportunities could never have been foreseen and the long term impacts are still being quantified. Due to its dynamic and fluid nature, the market environment context is a piece of the puzzle which needs to be refreshed regularly in order to ensure alignment with business expectations.
Customer’s business objectives
It is difficult to create actions for opportunities that align to a goal unless the initial goal or objective is understood. It is important to document these goals before starting research and analysis and make sure they are well understood by all key stakeholders.
Experience has taught us that some goals are unachievable. Some are higher whereas others are lower than what is possible. By setting initial expectations, actions can reflect possible opportunities that have yet to be explored. These opportunities can represent greater potential or can reduce associated risks. When merged with the market environment, clearly understanding a customer’s business objectives can create a powerful set of options and opportunities.
Customer’s customer
Understanding your customer’s customer seems to be an intuitive aspect. However, we find that analysis often breaks down at this point. A business knows its customers and normally maintains a view of their activities. Unfortunately, a deeper level of analysis and documented knowledge of the customer’s business or market environment seldom are mentioned in business plans. This knowledge is mostly tacit and often remains within Sales departments to be retrieved only when requested. Another unfortunate practice is hiring of a customer’s former employee to build up a knowledge base or sense reactor.
These methods do not create a sufficient base of knowledge to prove or disprove hypotheses. Like the market environment context, knowing about a customer’s customer is valuable when determining “actions.” There is no value greater to your customer than knowing what their customer’s needs are and where their objectives and issues lie.
Consider the world of high technology where the value chain from components to final product and consumers is extremely long and complicated. During the market and technological explosion of the late 90’s, expectations were routinely set far too high. There was little interest in exploring how much effort was involved in changing systems and behaviors or how much money was truly available. The hype centered on the wonders of technology and how people would eagerly accept a new faster technological alternative than its predecessor. Unfortunately, many of these expectations fell short when the end user could not fulfill their exponentially increasing expectations.
Competitive landscape
At last we reach the point of competition where most practitioners bury themselves deep into understanding their competitor’s technological base, costs, delivery and foreseen customer expectations. The end result is an easy to follow comparison matrix - the desire of all Sales departments in a technology-oriented company.
Our experience and guidance has shown that the question must shift from how Sales is using “the” matrix, to what other competitive aspects may also be useful in the hands of product designers, marketing and finance. Understanding how a competitor functions within the marketplace, as well as their financial status, can be used to create critical tipping points of analysis and thus result in strong actions. What channels do your competitors use? How do they structure, market and implement partnerships? How do their financials support their market position? What kind of accounting practices do they use?
If you consider the telecom industry (easiest to pick on nowadays), one soon forgets that most (analysts included) were contributing (if not creating) to the hype developed only two short years ago. Ironically, a simple analysis of the industry’s investment of capital to revenue was THE leading indicator that the market could not continue in the same direction. In such a capital-intensive industry, there was no way of justifying the growing gap between “cash in” and “cash out” as new technology began displacing older ones at an ever increasing rate (rarely is displacement so rapid that a technology disappears in less then a year).
In an industry where growth factors (business usage, consumer usage, and even internet access usage) are reasonably predictable, it is unbelievable that so much capital could be spent without any due diligence on the part of investors. In fact, the vendors were all too eager to please and many won contracts not on the basis of superior technology, but on the basis of preferred financial terms, only to see most of those deals and businesses fail. Insurmountable debt, sunken stock prices and restated financial statements are now constant reminders of a good time gone seriously bad.
Market feedback
Actions should be determined by careful and thorough analysis of the situation. To be of value to the corporation and successful, they must incorporate the impact they have in altering market dynamics and customer expectations. This “feedback” step is often used in competitive positioning of technology. For example, when was the last time you heard “it will take the competitor 6 months to replicate this feature,” or “they will have to license this component from us.”
Experience has shown us that there is often much more effort on determining a competitor’s feature set, than on future market scenarios. A company’s planning and CI efforts should emphasize comprehension of the market relationships and activities as a significant portion of analysis.
There is often an expectation that the market will react as anticipated since the belief that the technological superiority of the product will overcome the customer’s needs. Actions create the chance to explore these possibilities and better understand the directions which may need to be introduced after the technology is introduced.
Background:
Laura Bradley is an Electrical Engineer with over 13 years experience in high tech. Her background varies from the installation of equipment, to technology strategy planning and business planning. In addition, with her team she developed both the concept and business case for IP software business in telecom. Laura’s formal career in CI commenced in 1999 with Nortel Networks. She founded Actionable Intelligence Inc.(www.actionable-intelligence.com) in 2001 to focus on selling services to high tech companies leveraging her technical depth and business knowledge. Laura occupies her free time with her two young sons and husband in the great outdoors.
Copyright 2002 Society of Competitive Intelligence Professionals
SCIP.online, volume 1 number 14, August 22, 2002.
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