Are You Future Ready?.
By Babette Bensoussan
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A couple of years ago a colleague of mine introduced me to the “Topple Rate”. This is a measure developed by a McKinsey consultant that measures the rate at which companies lose their leadership position or switch ranks. The topple rate varies across industries however no industry is safe from this growing churn rate.
Maintaining a competitive advantage to withstand this churn rate is among the top objectives of leading companies and Competitive Intelligence (CI) is key for achieving this. Interestingly according to a recent survey by the global consulting firm of Frost and Sullivan, CI is not among the top 5 tools used by CEOs or Boards to improve business performance.
Today, competing effectively is not just about understanding existing competitors and the current business environment. It is strategically about having a picture of what the future business environment will look like. It is about addressing questions such as:
How will new technology affect you and your customers?
What are you doing to protect your business performance when new and sometime unusual competitors are now only a click away?
As a valued Board Member involved in the strategic planning process of your organisation, do you know which competitors will be your greatest threat in the future?
What about potential new entrants?
Or how your industry will be disrupted?
Are you aware of the external changes that are going to take place in your industry and how it will affect the business’s performance?
Competitive Intelligence, or CI as it is commonly referred to, has grown since the 1980s, driven by the work of Michael Porter, as a specialist management discipline around the world as companies face tougher and faster competition.
CI is not about internal monitoring issues, paper shuffling, having a database nor the most efficient data distribution. It is an approach which focuses all analytical and planning functions on one outcome, maximising a company’s competitiveness in the open market.
Competitive Intelligence is concerned with the methods used to minimise risks in decision-making and takes into account industry risk, competition, and an organisation’s own competitive position and advantage. It relates to the techniques used to interpret and analyse external information and communicate it to the right people for timely and effective use.
The intelligence process works best within a strategic framework where directors, senior executives and organisations can look ahead with all the means at their disposal, interpret what they find and integrate these understandings into a continuous cycle or process of competitive ability. The keys to the future are not found through extrapolations, predictions or media gurus, but through patient, careful strategic work. The most significant issue that sets this process apart today is that it requires the introduction of both “analysis” and “thinking”.
The purpose of CI is not to predict the future, but to identify what is likely to happen and to assist leaders to make better decisions about an organisation’s future.
A key value of CI is that it underpins foresight and provides early awareness and early warning. This reality check enables board members and senior executives to recognize and monitor the future as it unfolds, thereby reducing risk and minimizing mistakes. Costly mistakes by senior executives, let alone board members, is no longer an option.
The systems for identifying these warning signals are totally different than yesterday’s methodology. For example, business respects and relies on traditional information. Statistics, facts, concrete data. This hard or secondary information is retrospective and most useful for quantifying what has occurred. But it is increasingly unreliable and inaccurate for revealing the future in a rapidly changing environment.
Additionally, intelligence projects fall over because of the poor identification and understanding of the key issues and their relationship to the business. The key is to ensure there is understanding of what decision needs to be made and how the intelligence will be directly related to a course of action.
Competitive Intelligence is an integral part of making business decisions today. The process is very specific in its intent and always outward looking, using both internal and external resources as mentioned above. Using CI can give an organisation an advantage and protect it from a higher topple rate.
Forced change is always second prize. The secret lies in putting together a strategy for the future based on sound intelligence.
Case Study | Scanning strategic environments and market segment prospects
Aardvark had a problem, perhaps many problems. The market for widgets seemed to be changing, revenue and premiums were under pressure in their key market segments. New market entrants and Aardvark’s main competitor were eroding market shares. New business models fueled by information and telco technology and movements in the exchange rate also seemed to be complicating the picture. What was going on, what was driving this turbulence? How would Aardvark respond? How could they improve their competitive advantage?
Working with Aardvark, we defined the key intelligence issues which would drive the insights required for the decisions at hand. Internal sources of information, expertise and networks across the organisation were mined. At the same time a targeted search for publicly available information was carried out. We also spoke to industry commentators and associations, suppliers, competitors and employees in search of information and knowledge.
The strategic drivers were now becoming clear, the market and competitive terrain had fundamentally shifted and Aardvark now appeared to be positioned in the wrong place to take optimal advantage from this powerful set of trends. On the basis of this analysis MindShifts proposed options and strategies that would move Aardvark to take advantage of the emerging opportunities.
Selecting their preferred approach, Aardvark was able to move quickly to modify its capability and move into emerging market segments through a new distribution channel with the right sort of product and service offer. Within 12 months Aardvark had reversed the erosion in market share and was also experiencing strong growth in the new market segments they had entered. Aardvark’s market entry was also before its major traditional competitor which was proving to be a significant advantage as they now tried to play catch up.
About the Author
Babette Bensoussan is an internationally esteemed leader in the field of Competitive Intelligence (CI) and Strategy. Her credentials are built upon a long-standing series of outstanding achievements, both business and academic. She is Australia’s only awarded CI professional and is one of the most published business authors.
She is a Senior Associate of Validity Group and a Director of The MindShifts Group, an Australian globally networked consultancy specialising in strategic planning, competitive intelligence and strategic marketing in the Australasian region.