Business strategy | LINE OF SIGHT GROUP

27 Jul

Competing through Intelligence – The Journey to a More Proactive Strategy

In my observation over the years in leading market research and intelligence efforts within organizations and then supporting them in a consulting role, I’ve observed how organizations tend to migrate along a ‘continuum’, based on their experience and skills in making data-driven strategic decisions.

Phase 1: Surprise! The initial realization that organizations need better knowledge and understanding of their external and competitive environment is when management experiences a significant surprise. This can be the appearance of a new competitor in their space, maybe through a partnership or acquisition. An example is the recent entry of Amazon into the grocery business through the acquisition of Whole Foods. Or it might be the loss of business at a loyal customer to an ‘irrational’ competitor, or simply growing price pressure caused by a value proposition that customers increasingly cannot discern as different from the competition. Whatever the cause, the general response in Phase 1 is to go overboard and ‘boil the ocean’ in an all-out/in-depth analysis to ensure it never happens again. Unfortunately, within months of completing this time consuming and expensive analysis, the external environment has continued to change bringing new potential surprises.

Phase 2. Dedicated Projects. The next phase on the continuum involves the realization that information and knowledge about a firm’s external environment can help manage risk and improve chances of success in its strategic ‘bets’. So instead of relying on gut feel, the organization conducts in-depth research to support and inform a strategic decision, usually related to combating a threat or taking advantage of a specific opportunity. These are one-time efforts designed to support a specific decision. In that way, they are highly valuable and actionable, and many organizations choose to stay in this phase. Again, the primary disadvantage with this approach is that the external environment does not stop evolving and changing. While the ‘snapshot’ analysis is valuable in supporting a specific decision, it gradually becomes obsolete as the environment changes.

Phase 3. Longitudinal Projects. After organizations have been conducting one-off research efforts for a while, they often identify some that they would like to repeat periodically. They may involve ongoing marketing or sales campaigns, for example, or existing products where pricing, features and enhancements change regularly. These periodic updates help managers keep a pulse on the changing external landscape, and make adjustments based on changing customer needs, competitor moves or changes in market or industry-level forces that affect strategic decisions. The primary disadvantage is that these updates generally look backward and decisions are based on what has happened rather than being future-based to include what is likely to happen.

Phase 4: Systematic Intelligence. As organizations see value in periodic updates, some move further to a systematic environment that involves continuous monitoring of threats and opportunities, regular updates, and an ongoing development of a strategic knowledge asset that is leveraged across the organization. Ongoing monitoring of leading indicators and patterns of changes in products and offerings, strategic assumptions, potential opportunities, threats and disruptors, and customer perception of the firm’s value proposition are designed to enable the organization to identify threats and opportunities earlier and to adjust its strategy quickly and effectively.

In order to get to this point, managers in these organizations start to develop a different mindset and an understanding that they cannot control how customers and ‘irrational’ competitors will behave in the future. They acknowledge that strategy is not perfect. They realize that, while their annual strategic plan is valuable for creating initial budgets and a list of important initiatives, they also need to have the capability and discipline to make strategic changes mid-stream and be able to justify them to the board using data. Managers shift their thinking to focus on the risks involved in the strategic choices (i.e.: placing bets) rather than insisting on proof that a given strategy will succeed.

This journey along the sophistication curve from episodic fixes to a data-driven culture of continuous knowledge and insight can be difficult for many organizations, but I’ve observed that those that make it to the systematic program level find a number of benefits:

Faster strategic response and first-mover advantages
Improved efficiency through a continuous process
Better communication and ‘line of sight’ for middle managers and others who support and execute strategic decisions
A knowledge asset that can be built upon and leveraged for innovation across the organization

In general, these organizations become more proactive by developing the capabilities to make hard strategic choices and ‘bets’ even as some things are unknowable and uncontrollable, and to adjust their strategies based on their own continuous learning about their external environment.

25 Jul

All Roads Lead to Services When Competing in Technology

Disruption has always been the norm in the technology industry. As all industries embrace waves upon waves of new technology…initially in the Cloud and with Mobility, then Analytics and Big Data, and now Artificial Intelligence, and Virtual Reality to name a few. Along with all of these advances also comes disruption.

Looking at the current state of the technology industry may reveal what is likely to happen in other increasingly technology-driven industries going forward. The Technology Services Industry Association (TSIA) has been tracking the largest 50 technology firms (IBM, Oracle, Microsoft, Cisco, Amazon, Google, etc) for the last 10 years. In the 2013/2014 timeframe, the aggregate services revenue line of the 50 technology firms crossed and surpassed product revenue and has not looked back ever since. Services now comprise nearly 60 percent of the total revenue mix of this group. But, the air coming out of the product side of the balloon is more than the service side has put back in, so overall revenue is flat or declining for most technology firms.

Where is it all going?

As products have given way to services, services have led to a focus on experiences, and experiences have led to the goal of achieving favorable business outcomes. It is likely that shifts like this will cause organizations to fundamentally examine the actual business that they are really in.

In many cases, this calls for a change in the very business models upon which they have been operating under. Accelerating this change is the arrival of well funded “Tech” firms – start-ups with deep pockets, seasoned management and highly scalable business models. There are lots of FinTech, InsureTech, HealthTech, LegalTech, etc. firms coming onto the scene. You might think of it more broadly as “YourIndustry”Tech with a well-funded group of start-ups going after the most vulnerable and profitable chunks of your industry.

What to do?

The move toward services requires a new set of disciplines, processes, and methodologies as well as new ways of thinking vs. product management. The field of service design is garnering a lot of attention lately within organizations of all sizes. Concepts like Jobs-to-be-Done, Service Blueprinting, Journey Mapping, Human Centered Design, Biomimicry, Virtual Reality, Ethnography, and more are shaping the next wave of new service design. Some of these concepts are well established while others are quite new. How they are combined is the exciting part.

One of the most important things to do is to take a hard look at your external environment (competitors and trends) and thoroughly research the opportunities and threats that you are facing. Once identified, these can inform your strategy formulation – the arenas, vehicles, differentiation, sequencing and economic logic of how you plan to operate. Once the strategy is in place, the specifics of go-to-market initiatives can determine how to move forward. And it is likely that new forms of services will play an increasingly important role on your roadmap as you go forward.

23 May

Creating a Clear Line of Sight Through Inputs, Strategy and Execution

Last week Line of Sight Group delivered a presentation to the local chapter of the Product Development and Management Association (PDMA) entitled, “The Intersection of Strategy and Product Development/Management.” The event was held at Padilla in Minneapolis and attended by 50 product management and strategy practitioners. Line of Sight Group Founder and President, Steve Schulz, opened with the question, “what do these have in common?” The metaphorical slide had pictures of a dinosaur, a telephone booth and a Blockbuster Video storefront. All are now extinct, disrupted out of existence by stronger competitors that were better informed and equipped to survive. Why?

Doug Hedlund, Participating Faculty at the University of St. Thomas Opus School, offered the first part of the answer, a Strategy Formulation and Execution Discipline involving the capture of key factors (an organization’s vision, mission, core values and strategic goals), internal environment factors (strengths and weaknesses) and external environment forces (competition and trends) as inputs. Next, he walked through how the key factors inform the Strategy (Arenas, Vehicles, Differentiation, Staging and Economic Logic). Finally, he covered the execution levers (leadership, talent, organizational structure, systems/processes, and culture) and scorecard (metrics and dashboards) needed to successfully carry out the strategy.

Next, Schulz presented an interactive case study using the Strategy Formulation and Execution Discipline where the attendees helped to fill in the key inputs that shaped the strategy and execution. Schulz employed three useful frameworks to organize the external and internal data – PESTEL (Political, Economic, Societal, Technological, Environmental, & Legal) Analysis, Porter’s Five Forces Analysis and a Table Stakes Analysis in his presentation of the case.

Finally, Brett Norgaard, Line of Sight Group Principal, bookended the presentation with two stories highlighting the use of timely external environment intelligence leading to successful strategies and product launches under very different circumstances. (See Stealth and Telephone Switch blog entries.)

Starting with external environment research as the first step to creating a clear line of sight, from the inputs to the strategy formation and on through to the execution and measurement, ensures alignment of the strategic and go-to-market functions, including product development/management. Individuals that can identify and understand what is upstream and downstream from strategy formulation will be best positioned to help their organizations prevail and avoid extinction in increasingly disruptive times.

25 Apr

To Increase CX (and Revenue), This Lender Gave Customers a Blank Check

Line of Sight Group constantly engages in activities to keep abreast of trends in innovation, customer experience, sales methods, service adoption and business model transformation. One trend we have noticed are the parallels in the disciplines of product management, service design and customer experience. Over the past few weeks, we have attended events and sessions in all of these disciplines and would like to share an observation demonstrating this convergence.

Representatives from the Baker Tilly firm shared an interesting Customer Experience (CX) case at the Product Development Management Association (PDMA) local chapter meeting the other day. It was the case of a lender pre-approving customers for vehicle purchases but then realizing that less than a quarter of the pre-approved customers actually returned to the lender to complete the loan. This was very disappointing to the lender as the process to pre-approve customers took time and effort. After performing a journey mapping exercise along with some current and future state analysis, the lender added one crucial step at the beginning of the process that changed everything.

What was the innovation? The lender started sending along a blank check valid for up to the pre-approved loan amount with the customer as they entered the dealership to purchase their new vehicle. This gave the lender’s customers a powerful tool that provided them more control over the buying experience, let them bypass the time in the financial manager’s office where they were subject to every conceivable cross-sell and up-sell tactic, and allowed them to drive away in their new vehicle without returning to the lender in advance.

Thus, a CX initiative impacted the nature of the service/product (a blank check was added), the process (avoidance of a trip back to the lender), a much better customer experience (less effort and avoiding the trip to the financial manager’s office), and a boost in business for the lender (fourfold revenue increase). In this case, the CX started with the sales process, impacted the product and service offer, as well as what the customer experienced on their vehicle buying journey. Understanding the external environment made up of the dealers and competitive lenders along with the customer journey enabled this lender to prevail in several key areas.

20 Apr

Line of Sight’s Competitive Intelligence System Now SCIP Endorsed

Line of Sight Group is proud to announce that our Market-i Competitive Intelligence System has been recognized as a SCIP “Endorsed” product!

Strategic and Competitive Intelligence Professionals (SCIP) is the nonprofit Association representing the Integrated Intelligence industry internationally for over 32 years.

What makes our system unique? Prior to launching Line of Sight Group in 2002, president and founder Steve Schulz conceived the Market-i System when he was running CI programs. According to SCIP, this makes the Market-i system unique and different because it was developed by a CI practitioner, not by a consultant or technology specialist with no background in CI.

The idea behind Line of Sight’s intelligence services offering, including our Market-i System, is that the most effective way for organizations to understand, respond to and anticipate changes in their external environment (not only direct competitors) is to collect and process information that best represents leading indicators in a systematic and ongoing way. It is done in such a way as to identify changes that are significant enough to deserve a more in-depth look. In addition, our intelligence services fit directly with our analysis services – we get to know our clients and their business and are uniquely positioned to help our clients develop deep insight and strategic options.

Line of Sight Group joins other service providers highlighted in SCIP’s (first-ever) 2017 Service Provider Assessment Guidebook – Highlighting SCIP Endorsed and Certified Services in ISCI. The guidebook is aimed at providing its members and potential users of these services some insight into the features and benefits that may be of service to their decision support program.

If you would like more information about our Market-i Competitive Intelligence System, please Reach Out! To learn more about SCIP or to become a member, contact them at www.scip.org.

27 Mar

Cargill Uses Competitive Intelligence to Sharpen its Global Customer Experience Program

One of the ways that Line of Sight Group keeps abreast of key marketplace trends is to attend industry association events. We recently attended an American Marketing Association (AMA) meeting that examined Cargill’s global customer experience model which is deployed to create consistently positive customer experiences despite a wide diversity of customers, products, geographies and markets. This approach is very comprehensive crossing multiple types and channels of customer interactions. One of the most important aspects of the process was to hold up Cargill’s customer experience to that of its competitors across the board. Knowing how you are doing with your customers is one thing, but to also know this relative to the competitive set is one of the elements that makes Cargill a market leader on a global basis. This is another example of a company committing to understanding its external environment and using the gathered insight to make good decisions.

06 Mar

Bob and Jerry on Competing in Healthcare

For the past several weeks, we have been busily reading the myriad articles and forecasts on Healthcare (HC) trends for 2017. There was even an article about all of the other articles. With trends like a dramatically changing regulatory environment, continued momentum in HC consumerism, advances moving big data and analytics into cognitive computing and Artificial Intelligence, value management, medical device and pharma innovation, mobility, cloud, security, privacy and so on, 2017 promises to be an exciting and challenging year. Not only are things moving fast, but there are a lot of them and the very foundations of the industry are shifting at the same time. If you are feeling a bit overwhelmed and seeking enlightenment, we offer the timeless wisdom of Bob Dylan and Jerry Garcia to make some sense out of the state of HC.

“For the times, they are a changin’” pretty well sums up the status quo. Thank you, Bob. For organizations competing in the HC space, it is particularly important to examine the increasingly complex and multi-layered external environment and to ensure that strategic plans are up-to-date, refreshed and aligned with the go-to-market initiatives. Leaders may also find themselves in the circumstance of playing offense and defense simultaneously. Some built-in flexibility goes a long way when there are well funded start-ups seeking to innovate by employing new, simplified business models and established organizations seeking to do some disrupting of their own. No matter where the threats come from or where the opportunities may lie, it has never been more important to listen to what is happening in the market, connect the dots and then convert this into insight that can be acted upon. There are a lot of factors to consider. Jerry rightly observes, “If the thunder don’t get ya then the lightning will.”

While most organizations conduct annual planning and align their go-to-market activities to the current conditions, it may not be enough. When in particularly challenging times, we might feel the need to regroup a bit and as Bob points out, “Come in, she said, I’ll give you shelter from the storm.” Leading organizations monitor their external environments continuously in order to anticipate market changes and make appropriate course changes. There are many methods to accomplish this that involve primary and secondary research, analysis and the pulling of various execution levers.

2017 presents potentially turbulent conditions. With a good and continuous view of the external environment, a sound and flexible strategic plan in place and solid execution, you will be able to navigate and compete successfully in the HC market. As Jerry sang, “May the four winds blow you safely home.” Good luck in 2017!

22 Nov

How do election results change my company’s strategic, business, and product plan assumptions?

Were your strategic, business, and product plan assumptions based on one candidate winning or did you have scenarios for either outcome? Did you have a scenario in which one party would control the Presidency, House of Representatives and the Senate? How dependent were your strategy decisions on U.S. trade policy, corporate and individual tax policy, the Affordable Care Act, immigration policy, the strength of the dollar, student debt forgiveness, a national minimum wage, environmental regulation, etc.? Will policy and regulatory changes under single party control make your industry more attractive or less? How will your competitors react to these changes? Will political, regulatory, supplier, customer, investor, and competitor reactions be positive, disruptive or destructive to your industry and business?

If the questions above left you scratching your head it’s time to pull the strategic, business, and product level plans out and review the assumptions on which your forecasts and decisions were made. Depending on your industry, you may need to simply update or completely redo your external analysis to determine the political, economic, consumer, environmental and regulatory implications for your industry and business. Next, identifying what actions your competitors may take in this updated external analysis and monitoring for leading indicators that may signal competitor actions will position your company to be pro-active vs. reactive.

Doug Hedlund
President, The Hedlund Group, LLC
doughedlund@hedlundgroupllc.com

Doug provides Line of Sight Group clients corporate, business unit, and product level strategy development and execution facilitation and guidance. Doug’s disciplined approach to strategy development and execution helps our clients translate our industry research and competitive intelligence into focused, actionable strategies and execution plans. Doug has evolved the disciplines and tools he utilizes over a twenty-seven year career in corporate development and strategy leadership roles at Deluxe Corporation, CUNA Mutual Group, and Mayo Clinic. In addition, Doug has taught the Strategic Management Capstone course in the MBA programs at the University of St. Thomas and Augsburg College since 2008 and 2009, respectively and has helped numerous organizations formulate successful strategy and strategy execution plans.

10 Nov

OUR STRATEGY ISN’T WORKING

Our strategy doesn’t seem to be working. What’s wrong? When company and business unit leaders or product and market managers share this question with me I answer with the following question: Is it your strategy, strategy execution or both? In most cases, they don’t know, so I take them down a path of a few more questions that include:

First, are your strategy decisions aligned and compatible with your company’s vision, mission and core values? If not, execution can be very difficult because your company’s mission and core values are foundational elements of your company’s culture. If not aligned and compatible, Peter Drucker’s statement “culture eats strategy for breakfast” can cause a strategy which looked great on paper to fail.

Second, are your strategy decisions based on a comprehensive identification and assessment of your companies opportunities, threats, strengths and weaknesses? Successful strategies exploit company’s opportunities and strengths and mitigate company’s threats and weaknesses. The absence of comprehensive industry, market and competitive research lead to strategies that can fail miserably. Absent outside objective research and analysis companies tend to overstate their strengths and underestimate their weaknesses. When viewed through internal lenses strengths may look like competitive advantages when in reality they are simply table stakes and offer no competitive advantage in the marketplace.

Third, are the required execution levers in place for your strategy to be successful? The execution lever checklist begins with the right leadership, people, organization structure, systems and processes, and culture. Keep in mind that current execution levers don’t necessarily work with strategy decisions that include new products, markets, channels, geographies, strategic partnerships and/or acquisitions.

Finally, superior strategy and strategy execution requires focus, discipline and alignment.

Doug Hedlund
President, The Hedlund Group, LLC

Doug provides Line of Sight Group clients corporate, business unit, and product level strategy development and execution facilitation and guidance. Doug’s disciplined approach to strategy development and execution helps our clients translate our industry research and competitive intelligence into focused, actionable strategies and execution plans. Doug has evolved the disciplines and tools he utilizes over a twenty-seven year career in corporate development and strategy leadership roles at Deluxe Corporation, CUNA Mutual Group, and Mayo Clinic. In addition, Doug has taught the Strategic Management Capstone course in the MBA programs at the University of St. Thomas and Augsburg College since 2008 and 2009, respectively and has helped numerous organizations formulate successful strategy and strategy execution plans.

27 Oct

Disruption and Innovation – Two Sides of the Same Coin

Last week, Line of Sight Group attended the Product Development Management Association (PDMA) Annual Conference in Atlanta. Line of Sight Group was also an event sponsor. This is one of the ways that we keep a pulse on the opportunities and threats faced by the industries, companies and roles that we serve. We did a little “informal” research project with the attendees who visited our booth that you can see here: http://lineofsightgroup.com/pdma-attendees-well-represented-on-the-product-lifecycle-curve/

Amongst the three days of breakout sessions, workshops and networking, there were three keynote presentations that really explored disruption and innovation at the business model level. Calling it innovation or disruption is really a matter of where you sit.

The first was Terry Jones, founder of Travelocity, chairman founder of Kayak.com and now, Wayblazer. He spoke about the trials and tribulations of the travel industry, making million dollar mistakes, but finally getting it right by bundling air, hotel and cars into a single trip over a single end-user site. Here is his website where you can get his slides: http://www.tbjones.com/

The second was Alan Amling, VP Corp Strategy at UPS. Here is his actual TED talk on the future of distribution that will not only include boxes on trucks, but drones, high speed cross country tubes and sending part specs to 3-D printers for manufacturing closer to the requester. It is UPS vision called, the My Way Highway: https://www.youtube.com/watch?v=pRaivgVBCB4

The third was Hania Jarrah Poole, VP Turner Sports, who talked about creating the March Madness, multi-platform, streaming offer, in a matter of weeks, to show alongside Turner’s subscription-based cable offer. Here’s an abstract of her talk: http://www.pim.pdma.org/p/cm/ld/fid=2034

All of these presentations revealed how business model innovation and disruption are different sides of the same coin. There were great examples regarding the pace of technology, the readiness of customers and the subsequent impact on new business models. It struck me that the most innovative/disruptive business models were the simplest, too. These presentations provided a lot of fodder for discussion and were great for linking product management techniques to business model innovation, as well as go-to-market initiatives to strategy.