How Good Are Your Marketplace Insight Capabilities?

Since posting Insight is Where the Game is Won and Lost, many have asked "how can we assess our insights capabilities to identify where to focus?" Building on both internal work I did in the early 2000s, and an article published independently by Herring and Leavitt in 2011,* here is a framework you can use to quickly evaluate your organization's insights capabilities. There are five dimensions to rate your organization on (directions at the bottom):

• Insights culture
• Sources used to generate the information base to help create insights
• Marketplace focus
• Personnel
• Early warning of emerging threats and opportunities

The organization's culture sets the tone for insights creation, which can address markets, customers, technology or competition. Initially reactive (Level 1), executives ask for data and task available personnel to gather information for a presentation or meeting, invariably sourced from easy-to-access published data, such as annual reports, existing market research or industry analyses. The initial focus is on traditional markets, customers, technology and competitors.

Soon, a frustrated executive or ambitious analyst determines that standardized profiles, newsletters and databases will improve organization awareness. Dedicated, often part-time individuals (becoming full-time as demand increases) standardize outputs, create delivery schedules and expand the fact base to include subscriptions to specialized industry publications, and start to focus on partnerships and alliances which impact growth and the ability to compete (Level 2).

Success begets more challenging questions, such as what does this data mean? how will the trends play out? and what emerging customers, technologies and competitors should we be concerned about? Improving capability requires teams of skilled analysts under a functional manager (Level 3). Since the answers are rarely contained in published data, analysts must incorporate validated opinion and observations from individuals who don't have the time to write it all down - customers, channel partners, R&D and sales personnel, their own executives, and industry observers and experts.

The expanding organizational knowledge base generates new requirements: what are the implications of these projections? what options do we have? what should we do about them? how might customers or competitors react? how feasible is a new technology? Mature organizations assign or recruit a senior leader to answer these, using increasingly sophisticated research and analysis techniques and a well-nurtured source network. And the organization expands its focus to better understand the interactions within the industry value chain and how these will play out (Level 4).

Finally, a radical shift occurs, from an emphasis on producing reports to facilitating dialog: the organization structures insights-driven strategic decision-making sessions (Level 5). Key executives interact directly with well-prepared internal and external experts, to determine how to best position the enterprise for future success. Topics might include identifying and evaluating the strategic risks of potential new initiatives, untapped sources of customer value, the next generation of customers, emerging competitive threats (frequently through business wargames) and new growth opportunities.

The importance of early warning. 

The organization's ability to avoid surprises - a major executive concern - increases with the sophistication of its insights capabilities. Fledgling operations frequently start by looking at any of a variety of "megatrends" (example here), "boiling the ocean" to try to find a something the organization can act on. They progress to tracking studies, targeted assessments of specific marketplace issues and systematic monitoring of the periphery (emerging customers, competitors and technologies). But real breakthroughs occur when organizations form heavyweight teams, consisting of both internal and external experts, to address critical emerging issues through innovation and new business models.

How good is your organization's insight capability? Identify where it is in each category, sum the associated levels, and divide by five. If it is:

• below 2.0, it is drowning, with little chance of a lifeline in the next round of budget cuts
• between 2.0 - 3.0, it is treading water, with increasing odds of getting a lifeline
• between 3.0 - 4.0, the shore is in sight, but beware of undercurrents
• above 4.0, the beachhead is secured and the insights function is capable of making a real difference

Now ask what will it take to improve? And, importantly, what will be the impact on the business?

* Herring, Jan and Judith Leavitt, "The Roadmap to a World-Class Intelligence Program," Competitive Intelligence, January - March, 2011 

Growth is Hard

Columbia Business School professor Rita Gunther McGrath writes that only 8% of the 5,000 companies with over $1 billion in revenues grew sales by 5% annually over a 5 year period, and only 4% grew net income by at least 5% annually.* Compounding the challenge are the prevailing conditions found in many markets:

• The new product failure rate is repugnantly high: estimates range from a minimum of 40% to as high as 95%; 

• Few completely new categories have emerged in recent years;

• Risk aversion results in few real disruptive market strategies;

• Rivalry is intense and along many dimensions;

• The role of channels is becoming ever more pervasive and powerful; and

• Cost pressures continue to escalate, absorbing significant company resources to address.

Companies can beat the odds through a structured approach (chart):

• Marketplace insight – What is the customer need or problem a new growth initiative will resolve? How have recent competitive and supplier initiatives and technological developments impacted customer needs? What is going on in competitors’ minds, what are they planning, and how will they respond to our initiatives?

• Opportunity assessment and selection – How can we extend current capabilities to address new opportunities or change the nature of competition? How do we develop and test new growth opportunities beyond our current strategy? Which customer segments will we choose to serve? Which will we not serve?

• Strategy – How do we resolve a market problem / need in a valuable and differentiated manner? What is the value proposition? How will we capture value, what scope of activities will we perform and how will we protect our profit? 

• Organization alignment – What processes, systems, structures, and incentives need to be changed? What will inhibit successful execution of the growth strategy: culture, mindsets, resources, incentives?

• Execution – What specific actions will deliver the product / offering and profitably capture value? How will we measure success? How will we monitor results?

*McGrath, Rita Gunther, “How the Growth Outliers Did It,” Harvard Business Review, January – February 2012

What Role Does Marketing Play in Your Organization?

Is it

Reactive? Does it focus on promoting new initiatives or products developed elsewhere?

Passive? Does it respond to requests for marketplace information to strategy, sales or new product development teams?

Proactive? Does it actively develop marketplace intelligence as inputs to decision-making processes?

A driver? Is it actively engaged in creating new initiatives and developing the necessary insight required for innovative new factor, operational, organizational and marketplace strategies and plans?

Which role should it play?

Droning On: Strategy Isn't Dead, Not by a Long Shot...

Last week, blogger Mark Wilson, in a post entitled "The End of Strategy as We Know It," noted that strategy has become "too slow; too inflexible, too cautious; too protectionist." He bemoans "old-school strategy" and asserts that "businesses need to think strategically, on a daily basis...the solution is that "business leaders should focus on their organisation's innovation behaviour and how to build a culture that supports it."*

At least he got it partly right, unlike Saatchi & Saatchi's CEO Kevin Roberts, who said last year that "strategy is dead, the big idea is dead, management is dead and marketing, as we know it, is also dead." Then he really stepped into it: "Who really knows what is going to happen anymore in this super VUCA [volatile, uncertain, complex and ambiguous] world. The more time and money you spend devising strategies the more time you are giving your rivals to start eating your lunch."**

No one, of course, KNOWS what's going to happen in the future. But throwing up your hands is dangerous.

Take Jeff Bezos' revelation on 60 Minutes last night that amazon.com is testing drones for package delivery. If successful, small packages could be delivered within 30 minutes. Attention getting sound bite? Without a doubt.

But listen closely to Bezos: "I would define Amazon by our big ideas, which are customer centricity, putting the customer at the center of everything we do, invention." Looking deeper, Amazon Fresh, which started delivering groceries in Seattle several years, has now expanded to Los Angeles. Grocery customers typically want same-day delivery and, says Bezos, "if we can make this model work, it would be great because it extends the range of products that we can sell."***

Now this is "old school strategy." What Bezos recognizes that Wilson and Roberts miss is that effective strategies start with insight that defines a marketplace opportunity. Only then can you innovate around customer needs and then drive the necessary changes in systems, structure, skills and culture through the entire organization to meet those needs. Focusing on innovation unlinked to a defined opportunity and you become Xerox PARC, whose radical innovations (Ethernet, laser printers, the GUI and even the modern PC among others) were successfully commercialized by others, not Xerox.

No, "old school strategy" is not dead.

But those who dismiss it soon will be. Their rivals will eat their lunch.

*Wilson, Mark, "Is This the End of Strategy as We Know It?", One Last Thing (blog), http://thehumanlayer.com/issues/issue-7/22-one-last-thing/index.html#!

**"Strategy is dead says Saatchi & Saatchi CEO," The Drum, April 25, 2012, http://www.thedrum.com/news/2012/04/25/marketing-dead-says-saatchi-saatchi-ceo

***"Jeff Bezos Looks to the Future," 60 Minutes, December 1, 2013, http://www.cbsnews.com/news/amazons-jeff-bezos-looks-to-the-future/