Opening presentation to the October 17th competitive intelligence track at the Altamont Group's Business Forecasting 2013 meeting in San Francisco.

1. Identifying Market Opportunities: Applying Innovation
Intelligence for Market Segmentation and Targeting
Competitive Intelligence 2013
San Francisco California USA
Thursday 17 October 2013
Arik Johnson
Founder & Chairman, Aurora WDC
Managing Director, Center for Organizational Reconnaissance

2. Do you see the illusion?
2

3. Intelligence Has Always Been About Removing Illusions To
Improve Decision-Making

Strategic Decisions
 What Business are We in and Where are New Opportunities for
Growth?

Operational Decisions
 How do we structure and align those business units to most
effectively compete for and win Market Share?

Tactical Decisions
 Which customers are available to us and how can we convince
them to select us over any and all functional equivalents?

4. Intelligence has Focused on Decisively Minimizing Threats &
Maximizing Opportunities


Minimizing Competitive Threats
 Understanding Threats to Current Business Status Quo:
Competitors, Legislation, Technology Shifts, Obsolescence,
Substitutes, Customers Backwards Integrating, Vendors
Forwards Integrating, etc.
Maximizing Market Opportunities
 Identifying New Sales, Revenue and Profit Centers
 Develop New, Innovative Products & Services
 Benchmarking Cost Reduction and Efficiencies from Direct Rivals
& Best-of-Breed non-competitors

5. Three Key Business Trends Driving Business Evolution
Human Capital & Enterprise Collaboration
Everyone in the Firm becomes a Virtual Member of the
Intelligence Apparatus, Better Engagement by Rank &
File, Shared Visibility of Issues & Actions
Corporate Governance & Risk Oversight
Board-level Priority Ensuring Reliability of Management’s
Earnings Forecast & Assessing Risks to Status Quo
Business Model Disruption & Value Innovation
Predicting the Outcome of Competitive Battles by
Anticipating Changes in Product/Strategy Dynamics

6. Collaborative Insights Team

7. Key Intelligence Topics (KITs)
Process of Interactive Dialog with Decision-Makers
through KIT Interviews
Consists of 3 Protocols w/Subtle Differences:

Strategic Decisions/Issues

Key Marketplace Players

Early-Warning Topics

8. Why Connect KITs to Methods?
Product Management Process Decisions
Positioning
Marketing
Plan
Sell Against
Business
Model & Case
Sales
Process
Awareness
Bldg. Plan
Presentations
& Demos
Capabilities &
Resources
Distinctive
Competence
Pricing
Market
Requirements
Customer
Acquisition
Sales
Automation
Event
Support
Market
Problems
Strategic
Product
Performance
Operational
Metrics
Buy, Build
or Partner
Product
Roadmap
Customer
Retention
Sales Training
Answer
Desk
Market
Analysis
Quantitative
Analysis
Product
Strategy
Product
Planning
Program
Strategy
Sales
Readiness
Channel
Support
Technology
Assessment
Market
Sizing
Innovation
User
Personas
Buyer
Personas
Collateral &
Sales Tools
Channel
Training
Competitive
Analysis
Win/Loss
Analysis
Life Cycle
Strategy
Product
Contract
Market
Messaging
White
Papers
“Special”
Calls
Channels
Analysis
Market
Segments
Thought
Leaders
Release
Milestones
Launch
Plan
Competitive
Battle Cards
Lead
Generation
Win-Loss
Supplier
Analysis
Tactical
Market
Research

9. Porter’s Five Forces

10. 
Principles of Defensive Warfare






Defensive
The main consideration is the
strength of the leader's position.
Find a weakness in the leader's
strength and attack at that point.
Launch the attack on as narrow a
front as possible.
Offensive
Market Leaders
•
•
Attacking themselves
with new ideas
Blocking competitive
moves
No 2 or No 3
•
•
Avoiding leader’s
strengths
Attacking leader’s
weaknesses
Principles of Flanking Warfare




Marketing Warfare
Principles of Offensive Warfare


Only the market leader should
consider playing defense.
The best defensive strategy is the
courage to attack yourself.
Strong competitive moves should
always be blocked.
A good flanking move must be made
into an uncontested area.
Tactical surprise ought to be an
important
element of the plan.
The pursuit is just as critical as the
attack itself.
Principles of Guerrilla Warfare



Find a segment of the market small
enough to defend.
No matter how successful you
become, never act like the leader.
Be prepared to bug out at a
moment's notice.
-- Jack Trout
Flanking
Guerrilla
New Players
•
•
Moving into
uncontested area
Element of surprise
Small Players
•
•
Finding market small
enough to defend
Prepared to bug out at
moment’s notice

11. STEEP (Macro Environmental) Analysis

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:
1.
Social: values, lifestyles, ethical norms, literacy, cultural attitudes,
customs, beliefs, education
2.
Technological: digital communications, biotech, chemicals, energy and
medicine
3.
Economic: balance of payments, inflation, fiscal/monetary policy,
spending, income growth
4.
Ecological: climate change, resource depletion, sustainable development,
recycling, pollution
5.
Political: regulation, legislation, lobbying, political party platforms, local,
regional and national

12. Tactical CI Project Example: Cost Analysis

13. Stage
Criteria
Integration
Level of CI Involvement in M&A
ID
Targets
Evaluate
Analyze
Due
Diligence
ConsumRecommend Negotiation
mation
Intelligence
Research
Business Units
Finance
Technical Assessment
Legal
Executives
M&A Specialists
Transition Team
Logistics
HR
High
Level of CI
Involvement
Low

14. Seven Steps to Effective Competitive Benchmarking
1.
2.
3.
4.
5.
6.
7.
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.
Identify the key factors and variables with which to measure those functions.
Two general forms – wherewithal/resources and goals/strategy.
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.
Measure performance of the comparison companies for each benchmark
being considered.
Measure your own performance for each variable and begin comparing the
results in an "apples-to-apples" format to determine the gap between your firm
and the best-in-class examples.
Specify programs and actions to meet and surpass the competition based on
a plan developed to enhance those areas that show potential for compliment.
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.

15. Growth Vector Analysis

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:
 Product-Market Scope specifies particular industries to which a firm confines its position.
 Growth Vector indicates the direction a firm is moving relative to current product-market posture
(market penetration, market development, product development and diversification).
 Competitive Advantage defined as particular properties of individual product markets conveying a
strong market position.
 Synergy is the combined effect on the firm’s resources that is greater than the sum of its parts.
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

16. 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.
Chan Kim and Renee Mauborgne

17. Look Beyond the Current Business
Knowing Why They Buy
“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 noncustomer where important
changes always start first.”

18. 10 Types of Innovation
Innovation
Category
Finance
Innovation
Type
Business model
Description of type
How you make money
Networks and Alliances
How you create and add value to your offerings
Product performance
How you design your core offerings
How you link and/or provide a platform for multiple
products.
Service
Delivery
How you support the company's core processes and
workers
Product system
Offerings
Enabling process
Core processes
Process
How you join forces with other companies for mutual
benefit
How you provide value to customers and consumers
beyond and around your products
Channel
How you get your offerings to market
Brand
How you communicate your offerings
Customer experience
How your customers feel when they interact with your
company and its offerings

19. 10 Examples

20. Success Breeds Complacency
“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?”
- Prof. Clayton Christensen, The Innovator's Dilemma

21. Customers “Hire” Products to
Do “Jobs” for Them
Concentrate Less on
What Customers “Want” and
More on What Customers “Need”

22. Disruptive Technology

23. Disruptive Innovation Theory
Performance
Sustaining Innovations
Better Products Brought to
Established Markets
Difference
Performance
Measure
Low-End Disruptions
Target Overshot Customers with a
Lower Cost Business Model
New-Market Disruption
Compete Against Nonconsumption
Nonconsumers or Nonconsuming Contexts
Time

24. Customer Demand & Signals of Change
1.
2.
3.
4.
Non-Market Contexts: External Forces (Government, Economics,
etc.) Increasing or Decreasing Barriers to Innovation
Undershot Consumers: Opportunities for Up-Market Sustaining
Innovations
Overshot Consumers: Opportunities for Low-End Disruption, Shifting
Profits by Specialist Displacements (Modularity) and the Emergence
of Rules
Non-Consumers: Opportunities for New Market Disruptive Growth
Established Companies almost always
Lose to Disruptive Innovators

25. Value Chain Evolution Theory
Disruptive Business Models: Vertically Integrating VC to Improve
What’s “Not Good Enough” in the company’s products and services
judged by customers.
•
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.
•
Specialists will seek to control performance drivers based on
asymmetric differences in Motivation and Skills around a modular
interface in the VC. (Sword & Shield)
•

26. Signals
of
Change
Likely Outcome of
Strategic Choices
Competitive
Influencing
Battles
Success
Performance-Driven Organizational Reconnaissance Engages the
Workforce in Collaborative Intelligence and Analytics to Anticipate and
Act on Industry Change to Ensure Good Governance for Stakeholders

27. RECON
Intelligence Should Concentrate on
Five Domains of Business Problem Solving

RISK

EFFICIENCY

CUSTOMERS

OUTLOOK

NOVELTY

28. What’s Next?
Leadership to Act is
Based on Confidence
Intelligence Combats the Paralysis that
Accompanies Uncertainty
Feel free to ask for help:






Email: Arik.Johnson@AuroraWDC.com
Phone: +1 (608) 630-4242
Twitter: @ArikJohnson
LinkedIn: http://linkedin.com/in/ArikJohnson
Skype: ArikJohnson
Web: http://IntelCollab.com & http://AuroraWDC.com