CEOs, Get to Know Your Rivals

Posted by Leonard Fuld

Jul 25, 2014 12:25:00 PM

Source: Harvard Business Review

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In an interview, Cisco CEO John Chambers once remarked on his intimate knowledge of rival CEOs. He claimed that based on this insight he could anticipate their market moves one or even two steps in advance. I thought he might be exaggerating, making good copy but lacking substance.

I decided to test his claim by interviewing current and former C-suite executives, including Bob Crandall, former CEO of American Airlines; David Norton, former CMO of Harrah’s casinos; Will Ethridge, CEO of Pearson Education; and Pat O’Keefe, former CEO of Watts Water Technologies. From plumbing equipment to casinos, these executives all agreed: what Chambers said was not only true but almost an understatement. In fact, I began to see four different strategies for keeping track of — and out-maneuvering — rivals:

Look for weaknesses that present opportunities. “It’s important to understand your rival’s weak spots and strategy,” says Will Ethridge, Pearson Education’s former CEO. “I knew one rival whose CEO was focused on driving profitability and bringing up margins. I knew that meant he would be relatively focused on short-term results while mostly ignoring product development. I also realized he would go after our top sales people to meet those short-term sales goals. So we worked extra hard to protect our key sales people. At the same time, we continued to invest in long-term product development and overseas markets, knowing it was unlikely he could follow us in the short term.”

Play to your strengths, not your rival’s. David Norton, former CMO and SVP of Harrah’s/Caesars points out that you must appreciate your counterpart’s competencies and weaknesses, as well as your own. Gary Loveman, then CEO of Harrah’s, was an MIT-trained economist. He had recruited other quant experts, such as Norton, formerly of American Express. They saw the casino business as a great numbers experiment. Among their rivals was Sheldon Adelson, CEO of Las Vegas Sands Corporation, who they believed operated from gut feel. He made a killing by opening casinos in Macau and Singapore.

Adelson’s bold move in Asia had outflanked Harrah’s. But Norton says the executive team didn’t conclude that they should abandon their quantitative strengths in favor of big rolls of the dice. Instead, Loveman decided to apply their deep quantitative knowledge of customer behavior in casinos and double down on U.S. expansion, out-maneuvering Adelson in the domestic market.

“We used data to personalize our marketing and become more efficient in attracting and holding onto customers,” says Norton. “And when it came to expanding our presence in the U.S. market we knew no one else would go to the extent we did, investing heavily in analytics, training and so on to build a comprehensive loyalty program.”

Encourage employees to monitor rivals, too. Former American Airlines CEO Bob Crandall, like Chambers, watched his counterparts, but more broadly he encouraged the entire corporation to watch the competition at all levels.

“It’s like running a national intelligence network,” he says. “If you are running it right, everyone is aware that anything and everything is important, and lots of information trickles up to management. For example, if a ticket agent in Chicago hears from an agent at another airline that the rival airline is looking for additional gate space, she should tell the local manager, who calls the division head who feeds it up the line. Senior management could then make some guesses about what the rival is up to, and could either add flights to use existing gates more intensively or take other action to blunt the success of whatever the rival might do.”

Meet the competition in person. You don’t have to watch your rivals from afar – or engage in deception to get close to them. In fact, face to face contact can pay off in unexpected ways. Pat O’Keefe was CEO of Watts Water Technologies, a global plumbing, water safety, and control equipment company. According to O’Keefe, his mandate was to grow Watts, largely through acquisitions. He spent most of his time seeking out and learning about acquisition candidates.

“I was personally obsessed with looking at our competitors,” said O’Keefe. “I wanted to know more about them than other bidders, when and if the time came to make them an offer. But there was no point in deceiving them. Their CEOs all knew who I was and they would very willingly show me their products. I visited them regularly to ask if they might like to join the Watts family of companies.

No matter the industry, John Chambers is right. CEOs not only can, but should, be watching their counterparts closely, assessing their strengths, weaknesses and predilections, and developing counter-measures accordingly.

 

Read Original Article Here:
http://blogs.hbr.org/2014/07/ceos-get-to-know-your-rivals/

Topics: competitive intelligence, leonard fuld, blog, article, CI, Harvard Business Review, competitive strategy, marketing, customer service, sales, Fuld+Company

The BIG Leap (Part 2 of 2): What's Next for Life Sciences If Big Data Dominates the World?

Posted by Leonard Fuld

Jun 12, 2014 9:00:00 AM

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Imagine a future world in which technology companies would come to the rescue of the traditional life sciences industry. A world dominated by Big Data companies, such as Google, rather than a world of firms that live with lab benches and test tubes. A world like this might produce a highly efficient and cost-effective life sciences industry where virtual talent could easily supplant large supplies of scientists married to one location.

This scenario was previously detailed in a scenario planning discussion and blogpost here. Let’s say Google tries to “own” some part of the life sciences market, what strategic implications would a biotech or pharmaceutical firm need to consider? Below are a few strategic imperatives for this Big Data world.

  • More bets, smaller bets. Pharmaceuticals and biotechs will make smaller bets and more of them.  Private money – not government grants – will fuel these bets. Biotechs will take experiments and pre-market products, and then license them out to Big Pharma companies that still have the marketing organizations they need to become successful. 
  • Foundations could replace government as a funding source. There will be more R&D partnerships between Gates Foundation-type organizations and biotechs, as well as Big Pharma. Private foundations will only supplement, not totally replace, anemic government funding in the future.
  • Crowd sourcing will become a fundamental R&D engine. This will allow same or similar levels of R&D without corporations having to incur the overheads they do today.
  • Google and other Big Data companies will rethink and re-shape how science does R&D altogether, redirecting its labor from the lab bench to solving health challenges using computing power and mathematics.

On this last point, a number of voices around the room questioned a Google’s ability to go beyond the Big Data analytics. That is, could a Google develop the wherewithal to manage clinical trials, submit NDAs and generally learn the competencies needed to fully enter the healthcare, drug-development mainstream?   While a Google may not have these competencies today, most participants agreed at the end of this mini-debate that it is very possible for Google to not only could manage the administrative tasks needed to launch a drug but also likely find a way to rewrite the drug submission and launch rules altogether.

A parting message

You can be sure that no single future story will describe our world in ten years. In fact, our future will likely be a combination or more than one of these stories. That is exactly the point of our scenario planning workshops. If you are doing your job right as a strategist your goal is not to predict the future but rather to outline the boundaries – where our world can take us in five, ten or twenty years from now on a particular issue and understand the implications should they actually happen. If this world came to be in 2020, what are the strategic implications for you and your R&D operations over the coming decade? 

SEE RELATED ARTICLES:

The BIG Leap (Part 1 of 2): Will Tech Companies Replace Traditional Life Sciences Incumbents?

Fortune Magazine: America's tech talent shortage: Is it just myth?

Topics: competitive intelligence, fuld & company, leonard fuld, strategy, CI, competitive analysis, early warning, technology, scenario planning, STEM, life sciences

The BIG Leap (Part 1 of 2): Will Tech Companies Replace Traditional Life Sciences Incumbents?

Posted by Leonard Fuld

May 20, 2014 8:00:00 AM

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In a scenario planning discussion with life sciences experts from MIT, Big Pharma, and biotech entrepreneurs, we facilitated a number of future stories focusing on the availability of STEM (Science, Technology, Engineering, and Math) talent.  Scenario planning helps an organization envision a future very different from the present and develop concrete strategies that anticipate and prepare an organization for a change in future market and competitive conditions.

Considering where the discussion began, the group built a scenario that stood in sharp contrast to its initial assumptions about the future of STEM talent and the implications to the life sciences and biotech industries.  Here is their scenario:

A LIFE SCIENCES REBOOT:  BIG DATA COMPANIES REWRITE THE INDUSTRY

PALO ALTO, JANUARY 2, 2020 - Google has just launched its second blockbuster drug in the past three years, an almost unheard of accomplishment in the modern history of the pharmaceutical industry – except that only five years ago no one had ever thought to classify Google as a pharmaceutical company.   Amazon, Google, IBM and other high-tech behemoths have rapidly rewritten the rules of the life sciences business by collapsing the supposedly sacrosanct Discovery – Clinical Trials – Product Launch timetable by more than half.  As IBM’s Watson 10th generation computing systems have shown, the company’s disciplined and nearly bottomless R&D talent pool can trump the comparatively medieval and bureaucratically cumbersome approaches of Big Pharma that ruled this marketplace for over a century.

Despite a shortage of technical and scientific talent in the United States and a drop in Federal Government funding, the high-tech industry has taken up the slack in drug R&D – along with the support of private investment groups from around the globe.

As Google cofounder Sergei Brin stated in a keynote speech at a major oncology conference, “Google is never one to leave money on the table.  We saw a great efficiency gap in the pharmaceutical market and decided to take the lead in filling that gap and recognizing both the goodwill and the profits that we would enjoy….”

Do you believe in this story?  Can it happen based on what you know today? 

In part two of this blog post, I will report on some of the implications noted by the group - as they peered through the STEM filter - for the future of life sciences in the coming decade.   My bet is that some you already have considered a few of these future implications but that a few may be counter-intuitive surprises.

SEE RELATED ARTICLES – Fortune Magazine: America's tech talent shortage: Is it just myth?

Topics: competitive intelligence, fuld & company, leonard fuld, strategy, CI, competitive analysis, early warning, technology, scenario planning, STEM

Your Competition Doesn’t Wait To Turn Their Clocks Ahead So Why Should You?

Posted by Leonard Fuld

Mar 18, 2014 10:00:00 AM

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Last year, while monitoring clinical trials for a number of competitors in the oncology field, we spotted a Twitter announcement from a third-party patient advocate who wanted to see this company renew a particular set of trials it had dropped. The advocate was working with this biotech competitor to recruit new patients and announce a special recruiting event. This Twitter feed continued for a couple of weeks then suddenly stopped once the biotech likely filled its patient quota. Social media signals like this one are essentially a small spark of intelligence you have to notice when it occurs. Had we not been monitoring this company’s tweets, we would have missed this early warning signal on the clinical trial restart and in this instance there were no lingering leaflets pinned onto bulletin boards or mass mailings designed to recruit patients.

When I heard newscasters announce a week ago that we all must turn our clocks one-hour ahead, I chuckled, thinking how changing clocks has become largely an anachronism. Just as I don’t need to “change my clocks” anymore (my desktop computer and my phones all change automatically, as does my cable box which serves as our living room clock) your rival can just as easily alter its strategy and execution without most of the market seeing the shift. Today, time and your competition can march on without notifying us of the change. Competitors can do this because they are able to signal the market in a very discrete and targeted manner.

Consider how you and your competitors used to act in the market and how you informed that market. You advertised with new catalogs and product announcements by sending packages to your supply chain. You counted on trade shows to expose much of the customer base to your messaging and changes in market tactics. The process of communicating strategy was all very physical - all these signals started with printed materials, the post office, and eventually sales people knocking on doors.

In a similar fashion, pharmaceutical firms that work hard at crafting messages for their products increasingly rely on altering their websites and sending out daily email blasts. The changes to a company’s website may be subtle and you’re unlikely to see a big press release on the wire services. And yet, the message has simply and quietly changed, and in turn will be reflected in future sales tactics and messages the company offers at scientific congresses, social media, and so on.

With respect to watching for change in competitor strategy, the message for company strategists and the executive suite should be “don’t wait to turn your clocks ahead!” The changes may already have taken place. You need to pay attention to the subtle changes as they occur because they will be quiet and unless you remain alert to all the channels –real and virtual – a competitor’s strategic shift will happen right under your nose and you will wake up too late to do anything about it.

Topics: competitive intelligence, competitive threats, fuld & company, leonard fuld, strategy, CI, competitive strategy, monitoring, insight, market intelligence, competition, pharmaceuticals, dominate, early warning, twitter feeds, market signals, changing clocks, social media monitoring

Can you dominate in 2014?

Posted by Leonard Fuld

Jan 2, 2014 10:00:00 AM

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Now that is a loaded question! Dominate? No corporate counsel in his or her right mind would use that word in any correspondence concerning the company. Dominate is a word that can trigger anti-trust inquiries. Is that really how you want your company to begin 2014 with an anti-trust investigation by the American Department of Justice? I don't think so.   

You can relax because I am asking this question in a totally different context and that is in the way game theorists use the concept. For anyone who has played in the world of game theory knows a company should always apply its dominant strategy. That is because game theory states that "dominant strategy" means the dominance or strength of one of your firm's strategies over another – and not how you will dominate an opponent. Rather, it emphasizes how you need to play your strongest hand whenever you consider various strategic options.

 

Nearly every company has a dominant strategy. For instance Amazon’s online strategy will always be stronger than its retail strategy. Even though it has decided to plant storage lockers in local shops for direct store access to customers, its online shopping experience will remain its dominant strategy. Dell's customization of its laptops and online ordering system dominates its retail strategy – even though it now has an increasing retail presence via kiosks and displays at Best Buy and the like. Apple, on the other hand, offers a relatively simple online shopping experience with most of its online platform dedicated to selling content, not hardware. Apple's dominant strategy for selling hardware is through its high-concept retail stores. While Dell may not win more share in the market via its online ordering system, that remains its dominant strategy. Dell's battling Apple on the retail front will not be in Dell's best interests. Retail sales are not Dell's dominant strategy.

The list goes on and on. Every company in every industry has a dominant strategy, from financial services to life sciences and more.

You need to use your dominant strategy to at least maintain or eventually win in your market. You may not dominate a market with your dominate strategy but you will have the best chance at winning the most share or greatest margins by doing so.

Topics: competitive intelligence, fuld, competitive threats, survey, fuld & company, leonard fuld, blog, CI, competitive strategy, strategy research, monitoring, strategy game, competitor intelligence, consulting, insight, boiling the frog, management, dominate

Black Friday and Crossing the Risk Threshold

Posted by Leonard Fuld

Nov 27, 2013 4:00:00 PM

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Even as a little kid, I remember my father anxiously looking toward Black Friday (the day after America’s Thanksgiving holiday) and onto the end of the holiday season as the time his store made a large chunk of its profits for the year.  Looking at my father, I saw someone who worried about this make-it-or-break-it time each November and December.  A similar kind of threshold exists for those pursuing competitive knowledge but instead of a profit line it’s a risk line, the point after which you feel you have enough information to feel comfortable with your particular strategic or tactical decision.  Maybe if he had Excel back then and could easily do a year-to-year comparison that exercise might have eased the worry a bit.  But he was the co-owner of a small jewelry store and had all he could do to keep his customers happy and the store operating effectively.

Unlike Black Friday, though, this risk-comfort line is very much relative and not fixed to a particular calendar date.  For some corporate executives this line is very movable but maybe at the very far end of someone else’s comfort zone. In other words, some individuals can work with very little information to arrive at a conclusion, a decision with far less information than their counterparts.

 

 

 

 

All companies and all managements have their Black Friday risk-comfort thresholds. What makes these supposed market risks less threatening is worrying you have too little information when you may not. Indeed, the fear of what you don’t know can push the fear ahead of the reality. Certainly there are competitive threats and rivals that want your market share but very often knowing just enough information will allow you to make decisions far sooner than you otherwise expect. Trying to achieve “information perfection” by a cautious management does very little to allay the fear. Delaying that decision in hopes you will acquire more supporting evidence at times may be warranted but from my experience only exacerbates the fear and exaggerates the risk.

Here’s a final confession: No one in my family could truly lessen my father’s Black Friday anxiety. We could offer some consolation or assurances and that was all. Companies are merely extensions of the people who manage them. The big difference is that modern management does have many tools to mitigate this risk-comfort stress. Today’s management has the Internet, filled with useful insights. Many B2C or B2B firms have data mining technology (now listed under the label of Big Data) from which it can analyze a customer’s likely behavior and buying patterns. In addition, today’s corporation can use instant communication to dispatch its staff to ask questions on the ground, questions whose answers will shed light on those dark rumors. Use these tools to improve your knowledge and reduce Black Friday fears.

Ignoring a Rival's Product Launch and Baseball's Song We Fail to Hear

Posted by Leonard Fuld

Oct 24, 2013 3:50:00 PM

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Alas, American baseball's season will soon come to an end. The song most recognized as this sport's national anthem is "Take Me Out to the Ball Game," sung in most stadiums midway through the seventh inning. Almost everyone knows this song's chorus but almost no one realizes that it has a back story, found in the opening stanzas of lyricist Jack Norworth's 1927 version. Those stanzas have mysteriously vanished from today's version - stanzas that tell you what motivated the heartfelt words we all know:

Nelly Kelly loved baseball games
Knew the players, knew their names
You could see her there every day
Shout "Hurray" when they'd play

Her boyfriend by the name of Joe
Said, "To Coney Isle, dear, let's go"
Then Nelly started to fret and pout
And to him, I heard her shout

Take me out to the ball game
Take me out to the crowd...

Gauge5 Hot

We don’t know whether Joe took her to the ballgame or not, but it seems unlikely that he could have misunderstood or ignored her – she’s shouting after all. The modern-day sports fan has never heard her voice at all; these stanzas have disappeared as the song has migrated into pop culture. In the business world, however, companies often fail to hear the shouts of competitors, just as Nelly’s shouts have disappeared from the song sheet. However, many of your rivals are as single-minded and as vocal as Nelly about what they want – if only we cared to listen. The competitor sends unambiguous signals about the intention to enter a market, launches a product, takes market share and leaves rivals wondering why they couldn’t see it coming. But as with baseball’s venerable anthem, there’s a back story. And by paying attention to it, those astonished rivals could have anticipated and maybe prevented their lost market share.

For instance, I have seen many a pharmaceutical company’s clinical trial announced on the US government website, clinicaltrials.gov, which declares a firm’s desire to examine and very possibly enter a particular therapeutic area. Market research and other business intelligence managers typically track such trials and their progress, building timelines that anticipate the launch date. They sometimes discover along the way that certain trials show poor results or that drugs have failed to progress to the next stage of development for some time – leading them to believe that the program has been put on hold or canceled. I have also seen some pharma executives in denial about their rival’s intentions. They assume that one trial failure will severely delay the rival’s FDA approval and, thus, push off the launch date by many months or even years. To their surprise, the rival often overcomes these delays by modifying its clinical trial approach. This Nelly had been shouting its intent all along only to be ignored.

Haier, the Chinese manufacturer of relatively low-priced refrigeration and air conditioning equipment, has established a very solid footing in the American market. In recent years it has surpassed Whirlpool to become the world’s largest producer of refrigerators. This did not happen overnight but neither was Haier’s march invisible or undetectable. Beginning in 1992 it began testing foreign markets by exporting and establishing distribution in Indonesia. By 1997 it moved into the Philippines, where it began to train multinational managers for other markets. In those years it learned how to build local manufacturing, design and distribution models to serve overseas markets. By the time it entered the US market in 2000 it had learned how to appeal to the US consumer at the right price point. This Nelly had been declaring its intentions for a decade, though far from Coney Island.

How can you make sure you can hear these Nellys before they pounce? How can you appreciate the signals or declarations that fairly shout to the market before the damage has been done? Mostly, the answer is watch, listen, and read. Have your employees close to a particular market read local newspapers for rumors or scuttlebutt about the rival – in whatever language they are written in. Ensure, as we do when attending scientific and industrial conferences and meetings, to sit in on key talks and  listen to the question and answer sessions for competitive signals that may ride on the coattails of a technical talk. Most important: look for patterns, the direction the various pieces of information may be taking you. It’s a mistake to let any single piece of competitive information dictate your response. Compare and contrast all of the valid news articles, or conference speeches, then examine the signals as you would a large pointillist painting - step back and try to see patterns. Your rivals, the Nellys of this world, do not necessarily shout their declarations all at once but they make them nonetheless – through hiring, through re-launching a clinical trial, by establishing beachheads in new markets.

Come next baseball season, when you are singing Take Me Out to the Ballgame at a stadium near you, think about Nelly and why she – or your rival – so badly wanted to get to the game.

Topics: competitive intelligence, fuld, competitive threats, survey, fuld & company, leonard fuld, blog, CI, competitive strategy, strategy research, monitoring, strategy game, competitor intelligence, consulting, insight, boiling the frog, management

Take Your Show on the Road

Posted by Leonard Fuld

Oct 22, 2013 3:15:00 PM

Take Your Show on the Road | Harvard Business Review
By Leonard Fuld | October 21, 2013

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Once in a blue moon, a brainstorming session produces an idea that is so blindingly good that people wonder not only “why aren’t we doing that already?” but even: “why isn’t everyone?” As someone who helps businesses conduct “war games” to inform their strategy-making, I suppose I see these moments more than most people; the whole point of these exercises is to devise new marketplace forays and anticipate competitive responses. But still, they are very rare.

So I’ve been especially impressed that one such idea has come up repeatedly in separate games we’ve staged recently.  It has made me think I should consider it more closely, and share it more broadly.

The idea is as simple as this: why not have a mobile demonstration van for products, to take a fully-equipped, immersive selling experience to customers’ own sites? The managers who express this idea in our simulated competitive games aren’t thinking of some simple shelving-units-on-wheels format – the kind of oversized salesman’s bag that’s been hauled out to prospects for decades. They’re envisioning well-designed, self-contained environments, tricked-out with the latest high-tech, high-touch technology.

Take the demonstration vans now being used in the UK by Tyco Security which makes products like security cameras, monitors, and access control systems. The company already had a demo center outside London and a slick tradeshow setup to showcase how these work together in an effective system. Its goal for the vans is to replicate the same kind of experience for the customers who can’t come to them.

The beauty of these vans, and the reason I believe they’ve been dreamt up by managers in very different businesses, is that they perform a wide variety of marketing functions. First, they show the product in the best light, in the hands of an expert user. A food company, for example, outfits vehicles with entire kitchens to demonstrate the most effective and creative ways to use its specialty food ingredients in food service operations.

Just as important, the product is not presented as an isolated thing, but as part of an integrated system that solves a problem. The Tyco vans, for example, also feature building management products from other companies to show how the cameras and so forth connect seamlessly with them. “It’s important for our customers to have hands on access to integrated systems,” the general manager of the business explains, “so they can conveniently evaluate the most appropriate solution for their application.”

The vans are also used to provide education and training. Many products can be complicated to operate or dangerous if used incorrectly, and a van can save a customer from traveling to a training center. Providing education on the broader problem the customer is trying to solve gives the vendor a chance to show why its company’s products are better, safer, and more effective. Thinking even bigger, a vendor can consider what training a customer wants its employees to have in general, and provide it in a convenient environment that also carries reminders of the vendor’s product. A heavy equipment manufacturer, for example, brings trucks to its customers’ plants and provides rigorous safety classes for factory workers. This has helped cement the manufacturer’s brand as the most safety-minded player in the industry. Bringing the skills development that customers should be investing in anyway right to their parking lots is the kind of value-adding service that helps lock in channel partners. 

I should note, by the way, that the word “van” doesn’t do these vehicles justice – some are as large as 18-wheelers. And sometimes the experience they bring isn’t even contained within the trailer. One industrial producer of state-of-the-art equipment packs its big mobile units with collapsible exhibits which it can set up quickly at construction sites.

And let’s not forget that the vehicles are also rolling advertisements. Is that a sufficient reason to invest in one? Probably not for your company. But if you think no company would invest in a truck and driver just to make brand impressions, you’ve never seen the Oscar Mayer Wienermobile roll by. This giant hot dog on wheels was originally built some 75 years ago just for the visual chuckle.  Not surprisingly, 25 years ago, the company discovered the power of putting “ambassadors” on board, and having them criss-cross America taking part in festivals and parades.

As the Wienermobile shows (and also the LL Bean Bootmobile), there can even be a certain amount of excitement generated by the travels of a company’s mobile unit.  Cisco Systems, known for its digital telephone switches and routers, had four 25-foot vans touring the country from 2004 to 2011, to events put on by its channel partners. Its Network on Wheels program showed off new products, emphasizing applications most relevant to a given event (often focused on one vertical industry).  To let people know when a van would be in their area, Cisco created Twitter accounts for the vans, which managed to attract over 2,800 followers.  The social media channel was another source of feedback to help Cisco hone its marketing messages.

Retailers complain about showrooming, where customers visit expensive brick-and-mortar stores to educate themselves about offerings, only to leave and order their choices from cheaper sellers online.  At the B2B level, vans have turned this dynamic on its head, investing in assets explicitly to provide showrooms that educate and raise awareness.  The expectation is not that the visit will end with the ka-ching of a cash register. The point is to enrich the customer’s relationship with the brand.

So if you’re in a B2B business – and perhaps even if it’s B2C – spend some time thinking about an idea that keeps coming up in competitive simulation exercises. I see it as a quietly effective strategy that has been rolling along, largely under the radar.  It isn’t the version of “mobile marketing” that is all the rage now in business press – but it might be the best way you’ll find to drive sales.

 

Read Original Article Here:
http://blogs.hbr.org/2013/10/take-your-show-on-the-road/

Topics: competitive intelligence, fuld & company, leonard fuld, blog, article, CI, Harvard Business Review, competitive strategy, marketing, customer service, sales

What Do Mount St. Helens and Industry Disruptions Have in Common?

Posted by Leonard Fuld

Oct 8, 2013 12:00:00 PM

What Do Mount St. Helens and Industry Disruptions Have in Common? | Bloomberg Businessweek
By Leonard Fuld | October 4, 2013

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Photograph by Gary Braasch/Corbis

I recently watched a couple of YouTube time-lapse videos about the eruption of the Mount St. Helens volcano. From space or from ground level, you see a verdant landscape that suddenly fills with ash. When the smoke clears, whoosh, you see devastation.  The time-lapse film renders this change in a mere couple of minutes, but in reality this change occurred over 24 years, from the initial 1980 eruption to the renewed activity in 2004. On the surface, environmental conditions eroded over a few days or weeks—a geologic blink of an eye. Under the surface, shifts in dirt and magma had been going on for two decades; we simply did not see it take place.

Big disruptions of industries mimic their geological cousins. The dawn of consumer digital photography began with Sony’s introduction of the Mavica camera in 1981. By 2005, Eastman Kodak was suffering its first losses and laid off thousands. Elapsed time: 24 years.

Telephone deregulation in the U.S. occurred in 1984. Yet landline phones still dominated with modest but increasingly improving features such as call waiting, call forwarding, and voice mail. But the cell phone began to change the mobile market forever, and the truly versatile iPhone broke it wide open. As of 2009, for the first time the number of U.S. households opting for cellphone-only use exceeded landlines. Elapsed time: 25 years.

When the 1973 Arab oil embargo hit the U.S. and Western Europe, with gasoline prices reaching all-time highs, the talk of electric cars began in earnest.  But it wasn’t until 1997 that the first Toyota hybrids came on the market, followed by a spate of new electric alternatives over the following years. The market had begun to shift for automobiles. Elapsed time: approximately 25 years.

A lot of factors drove those industry shocks, including changing legislation, industry restructuring, and a host of new technologies. But make no mistake: These disruptions were driven by a market need. The companies that were able to spot the evolution early—Toyota in cars, Canon in cameras, and Apple andSamsung Electronics in phones—were winners years later. And in each case it was the incumbent that lost the most: Chrysler, Kodak, and the old former monopoly, AT&T.

What can you do to watch these shifts and anticipate the changes that may bubble to the surface over the coming 25 years?

First, forget about predicting the specific time and date of a disruption. That’s the kind of foresight found only in science fiction.  All these disruptions could have brought many different opportunities to the marketplace—sooner or later or even in another form. The real trick is not to look for a single future story but to watch the indicators—the story elements that could come together to create that disruption. That is exactly what makes a little-known detail of the Kodak digital photography failure so fascinating.

Minoru Ohnishi, appointed president of Fuji Photo Film in 1980, witnessed two events—both early warning indicators of the digital imaging revolution. First, the Hunt brothers attempted to corner the silver market, and because silver is a critical ingredient in film stock, manufacturers faced a temporary shortage. Second, Ohnishi witnessed the introduction in 1981 of the first digital camera by Sony: the Mavica. Those two indicators told him that the photography market would be forced to change very soon. It also opened up an opportunity for Fuji to gain market share on Kodak in the U.S. Subsequently, Fuji spent more than $2 billion over the following decade to develop digital cameras and, even more importantly, digital photo processing equipment that in just a few years replaced Kodak’s equipment at drug and retail stores throughout the U.S.

Not all disruption stories are as dramatic as Kodak’s, but disruptions themselves keep coming. The more current tales of Elon Musk’s entrepreneurial ventures in launching relatively low-cost but large-scale rockets through SpaceX, or his selling sleek Tesla electric cars may not become the future story for either the military industrial complex or the auto industry, but they do represent indicators that rivals need to watch.

No industry is immune from disruptions. The trick is in finding the key indicators (not just the stories), tracking them, then acting on them when the time is right. Just don’t wait too long. A Mount St. Helens will not remain dormant forever.

 

Read Original Article Here:
http://www.businessweek.com/articles/2013-10-04/what-do-mt-dot-saint-helens-and-industry-disruptions-have-in-common

Topics: competitive intelligence, fuld & company, leonard fuld, strategy, CI, competitive strategy, insight, market intelligence, bloomberg businessweek, Industry Disruptions

What a great end to 2013! Welcome 2014...wait, something is wrong here

Posted by Leonard Fuld

Aug 30, 2013 12:00:00 PM

TEPID!

You are scratching your head thinking that our year has not ended and that we have an entire 4 months remaining. You are correct. But in terms of long-term planning this is exactly the kind of shock or surprise that can creep up on company management. In recent discussions with executives I have discovered that they are extremely concerned with regulatory surprises. What if I rewrote the above headline to read: “What a great end to a decade?! Welcome 2020…” Regulations worldwide seem to move ever so slowly – almost glacially – until the very moment that they do indeed change; at that point any management response is a fire drill and any actions the company takes may have little effect.   

According to our Boiling the Frog™ survey, regulatory change remains the number one issue among life sciences company executives and it is the same one they feel they are most unprepared for year and after year.

Below are a handful of regulations from a variety of industries and regions that are about to change in the coming years. To one degree or another, regulations affect all our markets. Consider the following short list and think about the domino effect the passage of such rulings or standards changes will have on these industries.

Gauge3 Tepid

Web Business - New data privacy law may pass in the EU which could up-end the entire online Web model:  The EU is reviewing a law that would prohibit certain data to be collected that could all but eliminate targeted advertising on sites such as Facebook, Google, Amazon and others.  Other countries are also planning data protection laws that could equally hobble this online marketplace.

Life Sciences - Current manufacturing processes may be re-regulated – headaches for pharma:  The US Department of Justice has announced that it will be reviewing Current Good Manufacturing Processes (CGMP) and may open up more manufacturers – particularly pharmaceutical manufacturers – to more litigation or government oversight.  The Department of Justice’s sudden interest in this area was spurred on by several instances of misbranding and production failures in the pharmaceutical industry in recent years.

Banking - Germany may be the start of a new way of thinking about currency which can threaten the current banking system:  Bitcoin is a digital currency, a peer-to-peer electronic cash system that is independent of any current central banking authority.  It is currently relatively small but has caught the attention of the financial system worldwide, particulary as “Expats in Cyrpus turned to Bitcoins during the [Cyrpiot] financial crisis to move money and beat the banks” [full article here].  In August, the German parliament stopped short of granting bitcoin full currency status on August 19, but recognized bitcoins as "units of account" when it formally issued regulations for the popular virtual currency.  As one blogger recently concluded,The growth of alternative currencies, such as Bitcoin, has dramatic implications for banking.  Bitcoin can exist alongside competitors, but the commercial banking system and its national fiat currencies cannot.  These systems are incompatible to the point where the rise of one may destroy the other.” (Julia Dixon)

The question I leave you with is how have you prepared for changes in your regulatory environment? Are you taking the temperature of governments – local, regional, national and foreign – who can very quickly limit or eliminate your market with the stroke of a pen?

Topics: competitive intelligence, fuld, competitive threats, survey, fuld & company, leonard fuld, blog, CI, competitive strategy, strategy research, monitoring, strategy game, competitor intelligence, consulting, insight, boiling the frog, management

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