Why it’s important
Well this is a no-brainer, but at the end of the day, you’re being employed because of your ability to turn data into insight. We’ve all seen that pyramid that shows insight at the top, information in the middle and data on the bottom, right? well everyone wants to be operating at the top. This is a noble goal to aim for as this is where true value is provided. The issue I find is that people want to “skip” the Data and Information stages and rely solely on past experience or gut-feel and pass it off as insight.
Of course, when you’re an industry expert you can make these types of judgement calls, but experts tend to “refresh” their understanding of the data at hand and are usually gathering more and more information to challenge their current thinking.
Relying too long on “industry knowledge” results in bias of analysis and can lead to making erroneous recommendations that are clouded in a world-view – rather than being made on the available information.
This is why analysis – the method of turning data and information into insight is so important.
What tools are commonly misused
- SWOT Analysis: I like SWOT analysis, I just feel that like network news, it is often a reflection of speculation and opinion. Rarely is it used in a strategic manner and if I had a dollar for every time I’ve been asked for a SWOT to bang into a presentation or planning slide – as a representation of a competitive strategy – I’d be a very rich man. Visit Manager Tools and listen to their podcasts on SWOT analysis. It’s a great listen and makes you think again about what a SWOT should be used for and what it is not.
- Gartner Magic Quadrants: From the Technology and IT world, these are some of the most misused pieces of analysis out there. This is more so the way companies misrepresent, or under-represent themselves as a result of one of these quadrants. For those who have not seen one, you can read up on them here. For those who have, the number of times I’ve seen companies state that, because they are further into the “Leaders” quadrant, they are a better company or option to customers. While this is a fair statement, for competitive analysis this can often be incorrect. Just because a company or offering is “niche” (lower ability to execute and lower levels of vision) does not mean they aren’t the best choice for a customer. It might be that they operate in only a small number of countries, or industries. But where they do operate they are the best choice. My advice is that if any IT vendor is on a Gartner MQ – it is because customers derive value from that solution. Always keep that in mind.
What tools do I like
- Gap Analysis: Gap Analysis helps you to understand where you are and where your competitor are on a series of pre-determined business metrics. The great thing about Gap analysis is that it can give you a very clear picture of where your company may be leading or where it may be lagging with respect to the metrics that are important to your business. Such examples may include things outside of market-share or revenue. These include industry related KPI’s, customer satisfaction, size and value of communities, brand awareness, etc. Gap Analysis is a great way to identify the areas you need to focus on or new avenues to attack your competitors on. One such example is the way Virgin America has shifted the focus on competition in the American domestic airline market to customer satisfaction and experience – rather than cost.
- Porter’s Five Forces: This is the tool that is taught in every university and business school, but when was the last time you used this in your day-to-day analysis of competitors? I find Five Forces useful for assessing Competitors ability to enter into new markets as well as looking at the level of business risk, outside of regular substitute competitors, that may need to be addressed. This is particularly the case in Asia Pacific where so much business flows through a value chain – in Enterprise Software that includes the Channel – ISV’s, Resellers and Systems Integrators. I like this tool as it can focus competitive differentiation outside of the product itself and more onto how that product is operated or consumed by a customer.
- Focus Groups: Expensive, but so very useful in identifying latent issues or future trends that can be actioned upon or used to greater effect against the competition. If you sell your product primarily through a 3rd party sales channel, these focus groups are a fantastic way to gather information you may not be receiving through your partners.
- Win-Loss Analysis: I’ve talked about Win-Loss a number of times. I’m a huge fan of measuring the actual reasons why deals are won or lost. In the consumer world this is done through larger primary research tools. In the Enterprise Software, Hardware and Services market this can be done effectively through one-to one or one-to-a-few interviews. For the final word on Win-Loss and how they can be used to add instant value, take some time to visit Primary Intelligence or subscribe to Christopher Dalley’s blog.
How do you stay fresh?
- Test out new analysis techniques and see what results or insight you can drive out of them.
- Use new techniques as brainstorming sessions within your CI group.
- Visit SCIP and look at their publication list. Go out and read some of these books – frankly there is a wealth of knowledge.
- Have a look at some of the financial analysis tools being used by analysts in the Finance and VC space. There are plenty of books available that can help you discover new ways of getting an understanding of your competitors.
- Talk amongst your peers in the CI space. I’d be happy to discuss and share analysis techniques with anyone who has any questions or experiences.