LifeSciencealley Keynote Twin Cities 20080919


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  • LifeSciencealley Keynote Twin Cities 20080919

    1. 1. Competitive Intelligence Monitoring Competitive Dynamics to Anticipate Industry Change Arik R. Johnson LifeScience Alley Founder & Managing Director Twin Cities, Minnesota Aurora WDC Friday 19 September 2008
    2. 2. Emergence of the Intelligence Community & Think Tank Model for TASKING > SENSING > INTERPRETATION
    3. 3. What makes Aurora WDC different? <ul><li>Since 1995, many of the most respected companies in the world have called on Aurora to help them overcome the obstacles they’ve faced in perfecting their intelligence apparatus. </li></ul><ul><li>Aurora’s Vision is of a future where everyone in an organization can become a virtual part of this intelligence team and help their company see clearly, think ahead and break through the limits of performance and value. </li></ul><ul><li>Aurora’s Mission is to apply our intellect, experience and curiosity to finding the solutions to our clients most challenging intelligence problems. </li></ul>
    4. 5. Why do cars have brakes?
    5. 6. <ul><li>How you answer that question reveals a great deal about how you approach both Risk and Reward. </li></ul>Why do cars have brakes? Most people would say brakes help slow you down… we think brakes help you go faster.
    6. 7. Competitive Intelligence <ul><li>The controls that accompany risk management are a lot like the brakes on a car, and managing risk (of stagnation or market share loss) is the foundation of being able to exploit opportunities for reward (growth). CI inhabits the interface between the two with equilibrium its goal. </li></ul><ul><li>CI is the sensory apparatus that unites many otherwise disconnected mechanisms to enhance risk/reward visibility, understanding and predictability: </li></ul><ul><ul><li>headlights (tactical) </li></ul></ul><ul><ul><li>in-dash performance indicators (operational) </li></ul></ul><ul><ul><li>GPS (strategic) </li></ul></ul>
    7. 8. Competitors, Customers & Technologies Are Complex Interdependencies CI is about “Seeing Clearly” through Market Illusions
    8. 9. The 12 Application Priorities of CI <ul><li>Current Competitor Activities and Strategy Monitoring </li></ul><ul><li>Customers, Vendors and Other External Allied Monitoring </li></ul><ul><li>Operational Performance Benchmarking </li></ul><ul><li>Product/Service Sales and Marketing Support </li></ul><ul><li>Strategic Probabilities and Possible Futures </li></ul><ul><li>Internal Knowledge Management </li></ul><ul><li>Intellectual Property Exploitation and Protection </li></ul><ul><li>Mergers, Acquisitions, Alliance and Investment Support </li></ul><ul><li>Long-Term Market Prospects & Spotting Weak Signal Blindspots </li></ul><ul><li>Counter-Intelligence & Information Security </li></ul><ul><li>Legislative and Regulatory Activity and Impact on Business Issues </li></ul><ul><li>Executive Decision-Support, Risk Management & Strategy Planning </li></ul>
    9. 10. CI is About Decisively Minimizing Threats & Maximizing Opportunities <ul><li>Minimizing Competitive Threats, e.g. </li></ul><ul><ul><li>Understanding Threats to Current Business Status Quo: Competitors, Legislation, Technology Shifts, Obsolescence, Substitutes, Customers Backwards Integrating, Vendors Forwards Integrating, etc. </li></ul></ul><ul><li>Maximizing Market Opportunities, e.g. </li></ul><ul><ul><li>Identifying New Sales, Revenue and Profit Centers </li></ul></ul><ul><ul><li>Develop New, Innovative Products & Services </li></ul></ul><ul><ul><li>Benchmarking Cost Reduction and Efficiencies from Direct Rivals & Best-of-Breed non-competitors </li></ul></ul>
    10. 11. Traditional CI Follows a Disciplined Process for Information Collection and Analysis Deliver, Inform & Recommend Planning & Direction Secondary Research Analysis & Production Primary Research Tactical Users & Strategic Decision Makers Needs The Traditional CI Cycle
    11. 12. CI is About Better Decision-Making <ul><li>Strategic Decisions </li></ul><ul><ul><li>What Business are We in and Where are New Opportunities for Growth? </li></ul></ul><ul><li>Operational Decisions </li></ul><ul><ul><li>How do we structure those business units to most effectively compete for and win Market Share? </li></ul></ul><ul><li>Tactical Decisions </li></ul><ul><ul><li>Which customers are available to us and how can we convince them to select us over any and all functional equivalents? </li></ul></ul>
    12. 13. Porter’s Five Forces Model
    13. 14. Impacts on Planning & Execution Your Company’s Plans and Execution Vision and Grand Strategy Strategic Plans Market Success Operational Projects and Programs Tactical Execution Other (More-or-Less) “Uncontrollables” Competitors’ Plans and Actions New Forms of Competition X Y Z P Q R A B C Indirect Competitors Direct Competitors Government and Regulatory The Economy Technology Market Trends Industry Rationalization Other Unknowns
    14. 15. CI is a Critical Element in Strategy COMMERCIAL MARKET STRUCTURE & RESOURCES Strategic Position Strategic Position Competitive Position Market Attractiveness Scope & Context Strategic Issues Insight Stakeholder Score Card Financial Position Growth Economic Profitability Critical Success Factors & Key Performance Indicators Performance Monitoring & Incentive Compensation Organizational Design Projects & Resources CAPITAL MARKET MANAGED PERFORMANCE Chosen Strategy Scenarios & Options Creativity Strategy Execution Strategy Formulation
    15. 16. Key Intelligence Topics (KITs) <ul><li>Process of Interactive Dialog with Decision-Makers through KIT Interviews; Consists of 3 Protocols w/Subtle Differences: </li></ul><ul><li>Strategic Decisions/Issues </li></ul><ul><li>Key Marketplace Players </li></ul><ul><li>Early-Warning Topics </li></ul>
    16. 17. KITs – Strategic Issues <ul><ul><li>Strategic Investment Decisions: Identify and assess changes in the competitive environment, possible future investments, including alliances, acquisitions, etc. </li></ul></ul><ul><ul><li>Should we expand our current production capacity or build new capacity with a more cost-effective manufacturing process? </li></ul></ul><ul><ul><li>What plans and actions must we take to maintain (our) technological competitiveness as compared with competitive alternatives? </li></ul></ul><ul><ul><li>New Product Development and New Market Launch: Assessment of leading competitors and the status of competing technologies.How and when will the competitors respond and how could they affect our plans? </li></ul></ul><ul><ul><li>Sales & Marketing Strategy as Positioning in the industry. </li></ul></ul><ul><ul><li>Protection of IP and proprietary information and technology: Competitors efforts to acquire or undermine it, and are there others interested in it? </li></ul></ul><ul><ul><li>Provide advice for developing the company’s ongoing strategic plan by assessing the role of risks and opportunities in achieving our business goals. </li></ul></ul><ul><ul><li>Globalization & Outsourcing in the Industry: How/with whom should we proceed? </li></ul></ul><ul><ul><li>International Market Development: Assess the current competitive situation and describe the most likely future situational scenarios. </li></ul></ul>
    17. 18. KITs – Key Players <ul><ul><li>Context-specific Company & Market Profile Assessments of our competitors, including strategic plans, competitive strategies, financial & market performance, organization & key personnel, R&D, operations, sales & marketing, etc. </li></ul></ul><ul><ul><li>Identify Emerging Competitors, particularly those coming from different industries. </li></ul></ul><ul><ul><li>Describe & Assess Current & Future Competitive Environment, including: customers and competitors; markets and suppliers; production and product technologies; political and environmental; and the industry’s structure, including changes and trends. </li></ul></ul><ul><ul><li>New Customers, their changing needs and future interests: What are they and how are our competitors trying to satisfy them? </li></ul></ul><ul><ul><li>Identify and assess new industry/market players, including: suppliers, distributors, customers and/or competitors, that are considering entry into our business. </li></ul></ul><ul><ul><li>New Technology Development: Who are they and what are their plans and strategies for competing in our industry? </li></ul></ul><ul><ul><li>Marketshare and Historical Growth Data, including that of our competitors for comparison. </li></ul></ul><ul><ul><li>Management support for regulatory and environmental activities for decision making. </li></ul></ul><ul><ul><li>Industry, financial & customer community views, attitudes and perceptions regarding the Positioning or Value of our brand, products and services. </li></ul></ul><ul><ul><li>Perceptions by Financial & Investment Community of our Business & Industry </li></ul></ul>
    18. 19. KITs – Early Warning <ul><ul><li>Potential Areas for Disruptive Technological Breakthrough that could dramatically affect our current and future competitiveness, positively or negatively. </li></ul></ul><ul><ul><li>Technological Process Developments affecting either production capabilities, costs or product development, and their uses by competitors and others. </li></ul></ul><ul><ul><li>Performance of Key Suppliers - financial health, cost & quality issues, potential acquisition or alliances. </li></ul></ul><ul><ul><li>Potential for Disruption in Supply Chain and Change in Industry Procurement Practices. </li></ul></ul><ul><ul><li>Change in Customer & Competitors Perceptions of our company, products and services. </li></ul></ul><ul><ul><li>Companies and/or Combinations of Companies, considering possible entry into our business or markets. </li></ul></ul><ul><ul><li>Changes in international political, social, economic, environmental or regulatory situations that could effect our competitiveness. </li></ul></ul><ul><ul><li>Regulatory Issues: near-term changes and deviations in long-term trends; legislative changes that could impact current regulatory status quo. </li></ul></ul><ul><ul><li>Intelligence on Alliances, Acquisitions, and Divestitures among our Competitors, Customers and Suppliers: Understanding the forces causing them and purposes of each deal. </li></ul></ul>
    19. 20. Strategic Early Warning <ul><li>Anticipating, or knowing, competitor actions in advance based on “weak signals” and programming “tripwires” for initiating competitive response. But: EW is about more than just competitors </li></ul><ul><ul><li>Systematically identifying the holes in your competitive strategy and that of your competitors </li></ul></ul><ul><ul><li>Master the intelligence gap = create the strategy gap </li></ul></ul><ul><ul><li>Establishing anticipatory capabilities and being prepared to act upon intelligence it provides </li></ul></ul><ul><ul><li>Example: The “Napsterization” of the Music Industry </li></ul></ul><ul><li>Pattern Recognition – Connecting the Dots </li></ul>
    20. 21. Creating the Integrated Watch List <ul><li>Norm-Deviating Behavior & Explanatory Hypotheses </li></ul><ul><li>Three Methods for Developing KIT Indicators (Watch List): </li></ul><ul><ul><li>Inference (Anomaly Scanning, Sensing & Weaving) </li></ul></ul><ul><ul><li>Scenarios (Planning for Alternative Futures & Potential Outcomes) </li></ul></ul><ul><ul><li>Ex Post Facto (Historical Change Indicators) </li></ul></ul><ul><li>Pattern Recognition & Linkage Analysis are Key to Postulating About the Future </li></ul><ul><ul><li>Connecting the Dots </li></ul></ul>
    21. 22. Source Extraction & Pattern Recognition Aggregate content, tag & categorize Hypertext links to similar content Personalization from forms/questionnaires geodemographic profiling Searching for information E-mailing information to relevant recipients Reformatting for multi- channel delivery, e.g. PDF to XML Answering customer inquiries via a help desk Manual Processes Process Automation Aggregation Automatic Categorization Hyperlinking Profiling Personalization Collaboration Delivery Retrieval Routing Alerting Integration Through Understanding Information Theory and Bayesian Inference Notes News Feeds Email Internet Database Files Document Management XML Audio/ Media
    22. 23. Research Collection Sources <ul><li>Where does the information come from? </li></ul><ul><ul><li>Primary Research </li></ul></ul><ul><ul><ul><li>We may share customers, prospects and suppliers who can be interviewed. </li></ul></ul></ul><ul><ul><ul><li>Every company has knowledgeable employees with loose lips. </li></ul></ul></ul><ul><ul><li>Secondary Research </li></ul></ul><ul><ul><ul><li>Companies release information for promotional, image and regulatory purposes. </li></ul></ul></ul>No Company Operates in Isolation Information is exchanged everywhere money is exchanged.
    23. 24. SCIP Code of Ethics <ul><li>To continually strive to increase respect and recognition for the profession. </li></ul><ul><li>To pursue one's duties with zeal and diligence while maintaining the highest degree of professionalism and avoiding all unethical practices. </li></ul><ul><li>To faithfully adhere to and abide by one's company's policies, objectives and guidelines. </li></ul><ul><li>To comply with all applicable laws. </li></ul><ul><li>To accurately disclose all relevant information, including one's identity and organization, prior to all interviews. </li></ul><ul><li>To fully respect all requests for confidentiality of information. </li></ul><ul><li>To promote and encourage full compliance with these ethical standards within one's company, with third party contractors, and within the entire profession. </li></ul>
    24. 25. Analysis is Key The Difference Between Data and Intelligence “ The competitor would make a good acquisition candidate. Its lean & mean structure would fit well with our current operations.” Intelligence: The insight that will allow you to make an informed decision “ After gathering more operational information and running a side-by-side profit & loss analysis, it appears the competitor has become highly efficient. It exceeds industry standards and has become a best-in-class facility.” Analysis: Distilled information “ Based on the D&B and the salesperson’s report, it appears the competitor has lost business.” Information: A pooling of these bits of facts, observations and rumors 2001: “The D&B report told us that the competitors plant had 100 employees.” 2004: “One of our salespeople just passed by the competitor’s plant and spotted only 30 cars in the lot.” Data: Scattered bits and pieces of facts, observations and rumors
    25. 26. Two Fundamental Competitive Analysis Examples SWOT Analysis Core Competence
    26. 27. STEEP (Macro Environmental) Analysis <ul><li>Strategic analysis begins with environmental market scanning and impact assessment. STEEP covers this broadest “high-altitude” point of view of the market environment, covering five aspects impacting competitiveness: </li></ul><ul><ul><li>Social: values, lifestyles, ethical norms, literacy, cultural attitudes, customs, beliefs, education </li></ul></ul><ul><ul><li>Technological: digital communications, biotech, chemicals, energy and medicine </li></ul></ul><ul><ul><li>Economic: balance of payments, inflation, fiscal/monetary policy, spending, income growth </li></ul></ul><ul><ul><li>Ecological: climate change, resource depletion, sustainable development, recycling, pollution </li></ul></ul><ul><ul><li>Political: regulation, legislation, lobbying, political party platforms, local, regional and national </li></ul></ul>
    27. 28. Tactical CI Project Example: Cost Analysis
    28. 29. Level of CI Involvement in M&A Stage ID Evaluate Due Consum- Criteria Targets Analyze Diligence Recommend Negotiation mation Integration Level of CI Involvement High Low Intelligence Research Business Units Finance Technical Assessment Legal Executives M&A Specialists Transition Team Logistics HR
    29. 30. Seven Steps to Effective Competitive Benchmarking <ul><li>Determine functional areas within your operation to be benchmarked . This is likely to be those areas that will benefit most from the benchmarking process, based upon the cost, importance and potential of changes following the study. </li></ul><ul><li>Identify the key factors and variables with which to measure those functions. Two general forms – wherewithal/resources and goals/strategy. </li></ul><ul><li>Select the best-in-class companies for each area to be benchmarked -- those companies that perform each function at the lowest cost, with the highest degree of customer satisfaction, etc. The companies you select will be those that do whatever you’re measuring better than you do and/or are ones you wish to emulate or copy. </li></ul><ul><li>Measure performance of the comparison companies for each benchmark being considered. </li></ul><ul><li>Measure your own performance for each variable and begin comparing the results in an &quot;apples-to-apples&quot; format to determine the gap between your firm and the best-in-class examples. </li></ul><ul><li>Specify programs and actions to meet and surpass the competition based on a plan developed to enhance those areas that show potential for compliment. </li></ul><ul><li>Implement your improvement program by setting specific improvement targets and deadlines, and by developing a monitoring process to review and update the analysis over time. This will also form the basis for ongoing monitoring, revision and recalibration of measurements in future benchmarking studies. </li></ul>
    30. 31. The Product Life Cycle
    31. 32. Strategic & Tactical Realms of Competitive Advantage
    32. 33. “ Competitive Strategy” <ul><li>Principles of Defensive Warfare </li></ul><ul><ul><li>Only the market leader should consider playing defense. </li></ul></ul><ul><ul><li>The best defensive strategy is the courage to attack yourself. </li></ul></ul><ul><ul><li>Strong competitive moves should always be blocked. </li></ul></ul><ul><li>Principles of Offensive Warfare </li></ul><ul><ul><li>The main consideration is the strength of the leader's position. </li></ul></ul><ul><ul><li>Find a weakness in the leader's strength and attack at that point. </li></ul></ul><ul><ul><li>Launch the attack on as narrow a front as possible. </li></ul></ul><ul><li>Principles of Flanking Warfare </li></ul><ul><ul><li>A good flanking move must be made into an uncontested area. </li></ul></ul><ul><ul><li>Tactical surprise ought to be an important element of the plan. </li></ul></ul><ul><ul><li>The pursuit is just as critical as the attack itself. </li></ul></ul><ul><li>Principles of Guerrilla Warfare </li></ul><ul><ul><li>Find a segment of the market small enough to defend. </li></ul></ul><ul><ul><li>No matter how successful you become, never act like the leader. </li></ul></ul><ul><ul><li>Be prepared to bug out at a moment's notice. </li></ul></ul><ul><ul><li>-- Jack Trout </li></ul></ul><ul><li>Guerrilla </li></ul><ul><li>Small Players </li></ul><ul><li>Finding market small enough to defend </li></ul><ul><li>Prepared to bug out at moment’s notice </li></ul><ul><li>Flanking </li></ul><ul><li>New Players </li></ul><ul><li>Moving into uncontested area </li></ul><ul><li>Element of surprise </li></ul><ul><li>Offensive </li></ul><ul><li>No 2 or No 3 </li></ul><ul><li>Avoiding leader’s strengths </li></ul><ul><li>Attacking leader’s weaknesses </li></ul><ul><li>Defensive </li></ul><ul><li>Market Leaders </li></ul><ul><li>Attacking themselves with new ideas </li></ul><ul><li>Blocking competitive moves </li></ul>Marketing Warfare
    33. 34. Growth Vector Analysis <ul><li>Growth Vector Analysis (GVA) reviews the different product alternatives available to the firm in relation to its market options, not already being pursued by competitors. Four complimentary characteristics are used for defining common threads of strategy: </li></ul><ul><ul><li>Product-Market Scope specifies particular industries to which a firm confines its position. </li></ul></ul><ul><ul><li>Growth Vector indicates the direction a firm is moving relative to current product-market posture (market penetration, market development, product development and diversification). </li></ul></ul><ul><ul><li>Competitive Advantage defined as particular properties of individual product markets conveying a strong market position. </li></ul></ul><ul><ul><li>Synergy is the combined effect on the firm’s resources that is greater than the sum of its parts. </li></ul></ul>  Present Products Improved Products New Products Existing Market Market Penetration Product Extension Product Development Expanded Market Market Extension Market Segmentation / Product Differentiation Product Development / Market Extension New Market Market Development Product/Service Extension & Market Development Diversification
    34. 35. Evolutionary Parallels of Intelligence in Business & in Government <ul><li>Intelligence in Business Originally Evolved from the Transplantation of Government Techniques to the Private Sector </li></ul><ul><li>Accelerated with the Privatization of Gov't Sector Intelligence Professionals after the Cold War ended </li></ul><ul><li>Reaction to the New Threat & Surprising Rise of Low-Cost Asian Competitors Challenging U.S. Post-WWII Industrial Hegemony </li></ul><ul><li>Focused on Decision and Policy Support, Transplanting Process & Nomenclature (KITs/KIQs, the Intelligence Cycle, etc.) </li></ul><ul><li>Like the Bi-Polar “East vs. West” Model of the Cold War Era, Intelligence in Business Focused on Relatively Few, Relatively Powerful Competitors </li></ul><ul><li>But the Parallels Don't End There... </li></ul>
    35. 36. U.S. IC Apparatus Failed to Evolve <ul><li>New Threats (al Qaeda) Emerged on the Geopolitical Stage in the Vacuum of America's Return to International Hegemony After the End of the Cold War </li></ul>
    36. 37. Connecting Emergent Phenomena
    37. 38. Parallel Reforms Create Equilibrium <ul><li>In Business, Corporations which place too much Emphasis on Defensive Competitive Risk Management find themselves Ill-Equipped for Markets Driven by Offensive Opportunities for Innovation-based Growth. </li></ul><ul><li>The Result is a Shift in Emphasis from a Focus on Polar Extremes to Equilibrium & Mode-Switching between Incisive and Decisive Ends of a new kind of model: </li></ul><ul><li>the Reconnaissance Continuum. </li></ul>
    38. 39. Marshall McLuhan <ul><li>“ I don’t know who discovered water, but it wasn’t a fish.” </li></ul>Strategy is concerned with what the corporation wants to do in the world. Intelligence is focused on what the world wants to do to the corporation, whether they know it or not.
    39. 40. The Duality Continuum of Reconnaissance includes Both Decisive & Incisive Sensing Incisive Scanning for Trends, there is no “Decision” to be made Framework for Interpretation Recognize “Pattern Vector” History Implications for the Reader Bottom-Up Exposition Driven by Trends Outcome is Often Observation Itself Emergent & Theoretical Decisive Frame of Reference is the Decision, Less Trend-Dependent Framework for Current Analysis Compares Options & Outcomes Recommendations and Trust Top-Down Imposition Driven by Issues Decision & Action vs. ‘Nariyuki’ Factual & Hypothetical
    40. 41. Three Intelligence Trends <ul><li>Organizational Collaboration – Everyone in the Firm is a Virtual Member of the CI Team Building better Engagement by the Rank & File </li></ul><ul><li>Corporate Governance – Board-level Priority for Ensuring Reliability of the Earnings Forecast (Vioxx/Celebrex Impact, Sarbox 409) </li></ul><ul><li>Sustainable Innovation – Predicting Outcome of Competitive Battles based on Predictable Product Strategy Dynamics </li></ul>
    41. 42. Wisdom of Crowds By James Surowiecki <ul><li>Question </li></ul><ul><ul><li>How many jelly beans in the jar? </li></ul></ul><ul><li>Answer </li></ul><ul><ul><li>Ask a roomful of students </li></ul></ul><ul><li>How accurate is the class? </li></ul><ul><ul><li>Average guess 871 vs. actual 850 </li></ul></ul><ul><ul><li>1 in 56 makes a better guess </li></ul></ul>
    42. 43. Wisdom of Crowds By James Surowiecki <ul><li>When are crowds better than experts? </li></ul><ul><ul><li>Decentralized : No one dictates the answer </li></ul></ul><ul><ul><li>Diverse : Different people bring different info </li></ul></ul><ul><ul><li>Capability of summarizing opinion : Ability to arrive at a verdict </li></ul></ul><ul><ul><li>Independent : Mostly pay attention to own information </li></ul></ul><ul><li>If the crowd and problem doesn’t meet these criteria, get (or be) an expert </li></ul><ul><ul><li>But take these tips to heart </li></ul></ul><ul><ul><li>Inform people and they will inform you </li></ul></ul><ul><ul><li>Build a common operating picture </li></ul></ul><ul><ul><ul><li>So the expert is understood </li></ul></ul></ul><ul><ul><ul><li>And context necessary for organizational action is available </li></ul></ul></ul>
    43. 44. CI’s New Strategic Analysis Priorities <ul><li>Enterprise Risk Management </li></ul><ul><li>Corporate Governance </li></ul><ul><li>Early Warning of Predictable Surprises </li></ul><ul><li>Sarbanes-Oxley Compliance </li></ul><ul><li>Requires a New, Integrated Approach to Real-Time + On-Demand CI </li></ul>
    44. 45. Sarbanes-Oxley Section 409 <ul><li>Section 13 of the Securities Exchange Act of 1934, as amended by this Act, is amended by adding at the end the following: </li></ul><ul><li>&quot;(l) Real Time Issuer Disclosures. - Each issuer reporting under section 13(a) or 15(d) shall disclose to the public on a rapid and current basis such additional information concerning material changes in the financial condition or operations of the issuer, in plain English, which may include trend and qualitative information and graphic presentations, as the Commission determines, by rule, is necessary or useful for the protection of investors and in the public interest&quot;. </li></ul>
    45. 46. New Triggering Events <ul><li>An unexpected entry into a material definitive agreement </li></ul><ul><li>An unexpected exit from a material definitive agreement </li></ul><ul><li>Creation of a material direct financial obligation, including long- and short-term debt and capital-lease commitments, or an off-balance-sheet arrangement </li></ul><ul><li>The acceleration or increase of a direct financial obligation or a material obligation under an off-balance-sheet arrangement </li></ul><ul><li>Material costs incurred during an exit from a business or disposal of an asset </li></ul><ul><li>Impairment of assets </li></ul><ul><li>Notice of a de-listing or failure to satisfy a continued listing rule or standard, transfer of listing, or completed interim review </li></ul><ul><li>A decision that previously issued financial statements or audit reports can no longer be relied on </li></ul>
    46. 47. Success Breeds Complacency <ul><li>“ It is a classic conundrum for business titans: How much money and attention should be focused on a new, but growing, operation that is far less profitable than the core business?” </li></ul><ul><li>- Prof. Clayton Christensen, The Innovator's Dilemma </li></ul>
    47. 48. <ul><li>Knowing Why They Buy </li></ul><ul><li>“ Companies may know a good deal about their customers. They know nothing, as a rule, about their non-customers -- the people who should be their customers but buy from someone else. Why do they do that? And yet it is the non-customer where important changes always start first.” </li></ul>Overview of CI – Integrated Use Peter Drucker
    48. 49. “ Competing head-to-head can be cutthroat especially when markets are flat or growing slowly. Managers caught in this kind of competition almost universally say they dislike it and wish they could find a better alternative. They often know instinctively that innovation is the only way they can break free from the pack. But they simply don’t know where to begin. Admonitions to develop more creative strategies or to think outside of the box are rarely accompanied by practical advice.” Chan Kim and Renee Mauborgne
    49. 50. Most Attempts at Innovation Fail But by integrating three types of insights - customer needs, competitive patterns, and a company's own capabilities - and combining them with solid protocols, innovation becomes a routine competence and companies can double or triple their success rates. And the really big hits are often the products that innovate in not one but two or three or more &quot;innovation spaces.&quot;
    50. 51. The Ten Types of Innovation
    51. 52. 10 Examples
    52. 53. Process of Predicting Industry Change Signals of Change Strategic Choices Influencing Success Likely Outcome of Competitive Battles
    53. 54. Disruptive Technology
    54. 55. Customers “Hire” Products to Do “Jobs” for Them Concentrate Less on What Customers “Want” and More on What Customers “Need”
    55. 56. RPV Theory: Building Capabilities Processes Ways to Turn Resources into Products/Services Hiring/Training Product Dev. Manufacturing Budgeting Research Values Prioritization Criteria for Decision-Making Cost Structure Income Statement Customer Demand Opp. Size Ethics Resources Assets the Firm can Buy or Sell, Build or Destroy People Technology Products Equipment Cash/Brand/Distr.
    56. 57. Value Chain Evolution Theory <ul><li>Disruptive Business Models : Vertically Integrating VC to Improve What’s “Not Good Enough” in the company’s products and services judged by customers. </li></ul><ul><li>Performance Defining Subsystems : Companies must control all those activities and combinations of activities in the value chain that drive the product performance characteristics that matter most to customers. </li></ul><ul><li>Specialists will seek to control performance drivers based on asymmetric differences in Motivation and Skills around a modular interface in the VC. (Sword & Shield) </li></ul>
    57. 58. Disruptive Innovation Theory Sustaining Innovations Better Products Brought to Established Markets Low-End Disruptions Target Overshot Customers with a Lower Cost Business Model New-Market Disruption Compete Against Nonconsumption Difference Performance Measure Time Nonconsumers or Nonconsuming Contexts Performance
    58. 59. Customer Demand & Signals of Change <ul><li>Non-Market Contexts: External Forces (Government, Economics, etc.) Increasing or Decreasing Barriers to Innovation </li></ul><ul><li>Undershot Consumers: Opportunities for Up-Market Sustaining Innovations </li></ul><ul><li>Overshot Consumers: Opportunities for Low-End Disruption, Shifting Profits by Specialist Displacements (Modularity) and the Emergence of Rules </li></ul><ul><li>Non-Consumers: Opportunities for New Market Disruptive Growth </li></ul>Established Companies almost always Lose to Disruptive Innovators
    59. 60. Process of Predicting Industry Change Signals of Change Strategic Choices Influencing Success Likely Outcome of Competitive Battles
    60. 61. Different Missions, Different Approaches Specialist Slow Production, Less Output, More Analytical Agenda Driven by Contact Network Lots of Subject Matter Knowledge Seeks Explanation of the Subject Investigative Very Slow, Curious, Historical Little Output, Highly Analytical Questions Official Positions, Listens to Nonspokesmen Operates Outside Publisher Agenda Generalist In a Hurry, Lots of Output, Less Analytical Agenda Driven by the Publisher Little Knowledge of Subject Matter Seeks Volume of Public Interest
    61. 62. The Insight Method <ul><li>Take Nothing at Face Value </li></ul><ul><li>Get to the Facts at the Heart of an Issue </li></ul><ul><li>Explain Difficult Concepts, Don’t Write Around It </li></ul><ul><li>Speak to As Many Relevant People as Possible </li></ul><ul><li>Use Simple, Obvious Questions to Open Subjects </li></ul><ul><li>Don’t Echo Main Source, Find Other Views </li></ul><ul><li>Every Company, Person & Issue Has a History that Drives Behavior Today </li></ul><ul><li>Sunday Times </li></ul>
    62. 63. Ideal Analyst is More Investigative Journalist than Secret Agent <ul><li>e.g. Maria Bartiromo (CNBC) </li></ul><ul><ul><li>Argument/Idea Evangelist </li></ul></ul><ul><ul><li>Entrepreneurial Passion </li></ul></ul><ul><ul><li>Quick Study with Intense Curiosity </li></ul></ul><ul><ul><li>Instinctive but Empirical </li></ul></ul><ul><ul><li>Project/Deadline Manager </li></ul></ul><ul><ul><li>Librarian/Information Manager </li></ul></ul><ul><ul><li>Hard-Core Interviewer </li></ul></ul><ul><ul><li>Pattern Recognizant </li></ul></ul><ul><ul><li>Great Communicator </li></ul></ul><ul><ul><li>Persuasive Position Advocate </li></ul></ul>
    63. 64. The Reconnaissance Think Tank Model TASKING > SENSING > INTERPRETATION
    64. 65. Project Stages & Duration Assessment Development Pilot Test Evaluation Implementation MONTHS 1 2 3 4 5 6 7 8 9 10 11 12 15 18 21
    65. 66. Assessment In-depth interviews with top management <ul><li>define the role of CI in the company </li></ul><ul><li>gauge existing level of CI awareness & acceptance </li></ul><ul><li>match requirements with present capabilities </li></ul><ul><li>identify intelligence gaps </li></ul><ul><li>determine a potential communication structure for efficient flow of actionable CI </li></ul>Assessment Development Pilot Test Evaluation Implementation Threshing out Management’s specific needs for Competitive Intelligence Key Intelligence Topics Evaluating current CI practices, systems, difficulties & expectations CI Capabilities & Uses
    66. 67. Development Designing a customized CI system <ul><li>Some key considerations: </li></ul><ul><li>team leadership </li></ul><ul><li>number of CI professionals in the team </li></ul><ul><li>required skill or qualification </li></ul><ul><li>location of the CI unit (regional, local or both) </li></ul><ul><li>reporting lines (CEO, Marketing, Strategic Planning, etc) </li></ul><ul><li>communication facilities & protocol </li></ul><ul><li>links & access to internal resources </li></ul><ul><li>level of external resources required to fill CI gap </li></ul><ul><li>CI process flow </li></ul><ul><li>roles in the CI effort (regional, local, business unit) </li></ul><ul><li>standards & procedures (collection, analysis, reporting) </li></ul><ul><li>use of technology </li></ul>Assessment Development Pilot Test Evaluation Implementation
    67. 68. Pilot Experimenting with a tailored CI prototype Acceptance Authority Education Designation Project Execution Monitoring Assessment Development Pilot Test Evaluation Implementation <ul><li>by top management of the prototype </li></ul><ul><li>ensure cooperation of pilot unit </li></ul><ul><li>conduct CI information campaign </li></ul><ul><li>assign & discuss roles </li></ul><ul><li>integrating CI within the system </li></ul><ul><li>launching specific tasks & projects </li></ul><ul><li>provide guidance & trouble-shooting </li></ul>
    68. 69. Evaluation Measuring value & fine-tuning Assessment Development Pilot Test Evaluation Implementation Process Outcome Costs Effort Acceptance Usability Setting output standards Gauging goal attainment Through observation, survey & in-depth discussion with key users & executives from both regional & local offices Making required adjustment <ul><li>Re-align </li></ul><ul><li>Re-set </li></ul><ul><li>Re-focus </li></ul><ul><li>Re-define </li></ul><ul><li>Re-examine </li></ul><ul><li>Remove </li></ul><ul><li>Review </li></ul><ul><li>Re-test </li></ul>
    69. 70. Implementation System roll-out to other business units Assessment Development Pilot Test Evaluation Implementation ADJUST <ul><li>to enhance performance feature </li></ul><ul><li>to adapt to changing needs & skills </li></ul>PLAN <ul><li>final system design </li></ul><ul><li>implementation design </li></ul>EXECUTE <ul><li>by business / geographic unit </li></ul><ul><li>conduct system-wide project </li></ul>EVALUATE <ul><li>as a stand-alone unit </li></ul><ul><li>as part of the regional structure </li></ul>
    70. 71. Deliverables <ul><li>CI needs vs. capabilities landscape </li></ul><ul><li>Improvements on coordination, project management, KM inputs </li></ul><ul><li>Prototype CI structure & system </li></ul><ul><li>Pilot implementation plan, training manuals </li></ul><ul><li>Result of test project </li></ul><ul><li>Effectiveness of pilot program </li></ul><ul><li>Recommended system adjustments </li></ul><ul><li>Final structure, roll-out plans, resource requirement </li></ul><ul><li>Result of system-wide test project </li></ul><ul><li>System evaluation & recommendation for improvement </li></ul><ul><li>Periodic review & consultation </li></ul>Assessment Development Pilot Test Evaluation Implementation
    71. 72. CI System Overview External Competitive Environment Key Executive Users of Intelligence 3rd Party CI support Central CI Unit <ul><li>geographic coordination </li></ul><ul><li>network of in-house experts & analysts </li></ul><ul><li>collection workforce </li></ul><ul><li>internal databases </li></ul>Internal CI Initiatives <ul><li>CI research support </li></ul><ul><li>on-going process consultation </li></ul><ul><li>online databases </li></ul>External CI Sources
    72. 83. Questions or Comments? <ul><li> </li></ul>Arik R. Johnson Consulting & Training Institute [email_address] +01-715-720-1616 Derek L. Johnson Research & Analysis Bureau [email_address] +01-608-268-3470