25 Jul

All Roads Lead to Services When Competing in Technology

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.

29 Jun

Pulling the Sales Intelligence Advantage Levers

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One of the major trends in B2B selling over the past few years has been for sales teams to employ a strategy similar to management consultants – challenge, provoke and question clients and prospects about the status quo while building a case for a more compelling future. This approach has proven to be effective and requires a steady pipeline of relevant, specific and timely intelligence to back it up. Depending on the situation, there are a number of levers you can pull to arm the sales force with an intelligence advantage as they engage with executive level prospects.

The first lever is to conduct a Competitive Landscape Analysis – an exercise employing several management frameworks to review all forms of direct and indirect competition, relevant trends, opportunities and threats. This provides the sales team with a thorough understanding of their firm’s value proposition vs. the competition and relative to the market trends.

The next is to allow the Competitive Landscape Analysis to inform an ongoing Strategic Monitoring of announcements, updates and changes in the market. This ensures that the sales team is kept abreast of timely information and will not be caught off-guard when engaging with executive prospects.

Competitor Profiles can provide the sales team with a deep knowledge of the value proposition, positioning, differentiators, offers, customers, partners, personnel, and capabilities. Sales teams can use this insight to contrast themselves vs. their competitors when engaging with executive prospects. Battle Cards are a one page version of the Competitor Profile that focus on how to mitigate competitor strengths and exploit weaknesses.

Win/Loss Analysis gets to the heart of why deals are won and lost. Done correctly, they provide a wealth of objective feedback that the sales team can use to build upon strengths and learn from losses. The loss reviews provide some of the most useful feedback for improving the future win rate.

For sales teams heavily involved with services, Customer Experience Benchmarking can provide meaningful insight about the kind of service that their competitors are actually providing. This provides the sales team with the exact intelligence they need to outmaneuver competitors with customer experience issues.

Validating (or debunking) Competitor Claims in the market by interviewing a wide spectrum of people familiar with a competitor is an effective way to gauge the merit of market claims. Experience shows that many claims are false, putting the competitor on their heels and opening the door for a new approach to solving a problem.

The pulling of one or more intelligence levers will give the sales team a leg up by supporting their ability to approach executive prospects with knowledgeable, specific, consistent insight about their offer relative to the competition. This might turn out to be that slight edge when up against a competitor who might be ripe for the plucking.

23 May

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

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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.

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

Cargill

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.

27 Dec

How Stealth Technology Became a Silver Bullet

An F-117 Nighthawk taxis down the runway before its flight during the Holloman Air and Space Expo at Holloman Air Force Base, N.M., Oct. 27, 2007. (U.S. Air Force photo by Staff Sgt. Jason Colbert) (Released)

Stealth technology provides the U.S. military with a dramatic competitive advantage in battle and as a deterrent to potential aggressors. Yet, its development nearly didn’t happen. The mathematical theories upon which stealth technology is based were actually developed by a Soviet scientist whose superiors were absolutely uninterested in his “crazy” theories and confusing equations.  His frustration with his superiors led the scientist to publish a paper in a scientific journal.  Here’s an example of a stealth equation for the strength of the reflected radar signal:

stealth-equation

A Lockheed engineer in the course of keeping current discovered the Soviet Scientist’s article and believed that his Soviet counterpart was on to something.  He approached his management and received a small budget and team to explore the possibilities and was set up in the Skunk Works operation at Lockheed.  He led a team that developed the original stealth fighter.   After building the initial prototype, he and his team invited some senior Lockheed engineers to review their work and provide feedback.  The senior engineers were used to building speedy fighters with smooth, space age contours versus the strange looking, flat paneled surfaces called for in stealth theory.   Many of these senior engineers doubted that the plane would even get off the ground.

Undaunted, the Skunk Works team continued their work and completed the prototype.  By this time, they were nearly out of money and they had no orders yet for stealth fighters.  They realized that they needed a straightforward method to demonstrate their value proposition.   A radar scientist was brought in to perform some testing that involved gluing ball bearings to the nose of the prototype and zapping it with the radar gun. This revealed that the plane’s electronic radar profile was equal to that of a 1/8” ball bearing, about this size:ball-bearing-1-4

Over the next few months, the sales effort constituted rolling these small ball bearings across the desks of USAF generals. These brief and to-the-point sales presentations were accompanied by one simple question, “What if this was your fighter’s profile on enemy radar?” This technique led to billions of dollars and several generations of stealth aircraft sales to the U.S. Military.

There are many lessons to be learned from this story:

  • Research the external environment – the foundations of stealth technology were discovered in an obscure technical paper published by a “competitor”
  • Trust your instincts – “we’ve always done it this way” mentality nearly grounded stealth technology
  • Marketing messaging should be simple – while stealth technology is complex (theories and equations), its value proposition (radar profile of ball bearing) is not
  • Engage and sell the value proposition to those who can buy it – the USAF generals had all read and been influenced by Sun Tzu’s Art of War and sought “silver bullets” like strategic advantage and deterrence, not technical theories

In this case, the go-to-market team collaborated to research, develop, market and sell their new offer. The rest is history.

10 Nov

OUR STRATEGY ISN’T WORKING

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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

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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.

05 Oct

External vs. Internal: The Difference between Strategy and Planning

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As we enter the first days of October here in Minnesota, the leaves are turning, football is back and our clients are diving deep into their strategic planning for 2017.
When the concept of strategic planning arrived in the business world in the mid-1960’s, corporate leaders embraced it as “the one best way’ to devise and implement strategies, according to Henry Mintzberg, the internationally renowned academic and author of ‘The Rise and Fall of Strategic Planning’. By the mid 1990’s amidst the dot.com bust, however, strategic planning had fallen from its pedestal and planning departments were being dismantled.

“Strategic planning is not strategic thinking. One is analysis and the other is synthesis.”
– Henry Mintzberg

Mintzberg explained that strategic planning had become, “strategic programming, the articulation and elaboration of strategies, or visions, that already exist.” On the other hand, he wrote that strategic thinking is about capturing what managers learn from all sources (including both ‘soft’ insights from experiences and observations as well as ‘hard’ data from market research) and then synthesizing it into a vision of the direction that the business should pursue.

In his 2014 HBR article ‘The Big Lie of Strategic Planning’ University of Toronto Professor Roger Martin laments that “strategic plans all tend to look pretty much the same.” They have three major parts: a vision or mission statement, a list of initiatives, and a conversion of the initiatives into budgets. While they may produce better budgets, they are not about strategy.

Strategic Planning Strategy
Internally focused: planning, costs, capabilities Externally focused: customers and competition
Short-term Future-oriented
Controllable Uncontrollable in long-term
Comfortable Uncomfortable
Accurate, predictive Imperfect, directional
Risk elimination Risk management
Objectives, steps, timelines Placing bets

Strategy is about what we choose to do as an organization (and not to do) and why. It is about where to place ‘bets’. Strategy focuses on the revenue side, where customers make decisions about whether to give their money to us, to our competitors or to a substitute. This is the hard work of acquiring and keeping customers. It is uncomfortable because our customers are making the decisions, not our own organization.

How to escape the comfort zone: embrace the angst

Because the problem is rooted in our natural aversion to discomfort and fear, Martin writes, “the only remedy is to adopt a discipline about strategy making that reconciles you to experiencing some angst.”

How can we stay focused on strategy this planning season and not fall into the trap of planning and cost budgeting? Some tips:

    Focus on choices that influence revenue (i.e.: customer decision makers). This boils down to just two basic choices: 1) where-to-play (which buyers to target) and 2) how-to-win (how to create a compelling value proposition for those customers). Customers will decide whether or not our value proposition is valuable and superior to competitors’, and whether or not to reward us with revenue.
    Acknowledge that strategy is not perfect. Managers and boards need to shift their thinking to focus on the risks involved in the strategic choices (i.e.: placing bets) rather than insisting on proof that a strategy will succeed.
    Explicitly document the logic. The assumptions about customers, industry, competition, internal capabilities, and others that drove the decisions should be documented and then later compared to real events. This helps to quickly explain why a particular strategy is not producing the desired outcome.
    Invest in data-driven decision making. Placing bets inherently involves risks. Because strategy is not perfect and risk cannot be eliminated, the objective is to increase the odds of success by understanding and managing risks. This is where knowledge and insight into customer needs and competitive offerings and dynamics provides tangible value.

Alignment

Of course, successful strategic planning occurs when both strategy and planning are aligned. The strategic “sweet spot” is the value proposition that meets customers’ needs in a way that rivals can’t. It must include both the external view of customers and competitors and the internal view of our own capabilities.

When the core elements of strategy are aligned (customers – competition – capabilities – mission/vision), and when decisions are driven by solid external knowledge, organizations can confidently place its strategic bets in a way that both grows revenue and delivers it in a way that is profitable for the company.

27 Sep

Is it Time to Do Some Disrupting of Your Own?

Much has been written about the fear of being disrupted.  Maybe it is actually time to do a little disrupting of your own and strike fear into others. Here’s an example of a company thoroughly understanding their external environment, making a calculated move and capitalizing.

The client was a successful, mid-tier player in a maturing market that caught the attention of some very large players who sought to bolster their own market shares by buying up niche players and migrating these customers to the large player’s own platform. In one case, the large player had bought a niche player and had announced that the niche player’s platform was being phased out in a few months.

This served as a trigger for the client who sensed that there might be a fleeting opportunity to capture a few new customers by virtue of the change. The strategy we embarked on was to swiftly interview a number of decision makers, both wins and losses that the client had experienced against the niche player over the past year.  We discovered that while the niche player’s client base was satisfied with their current application, they were okay with a switch as long as the key functionality was covered, but what they feared the most was having to incur the pain of what they believed would be a lengthy, costly migration.

This was a relatively surprising finding as we were all thinking that it would be about closely matching the core functionality “to a tee,” which would have been costly for the client to implement. With this information, the client’s product managers were able to focus and create a comprehensive migration bundle that addressed and removed the pain identified in the interviews. It was also far less expensive than implementing changes in their offer to match the incumbent’s offer. With the ease of migration message clearly articulated in some pin point marketing, along with an educated and well-motivated sales force, this campaign resulted in millions of dollars of takeaway revenue for the client in a short period of time. It was far more than they had expected to obtain.

A few months later, one of the other large players bought a niche player and the client got very excited, thinking that we could notch another similar success.  In the course of our interviews, we uncovered a much different attitude in this niche player’s base.  Their concerns were being addressed and they were “drinking the Kool-Aid.”  The client did not go after this “false opportunity” and kept their powder dry to disrupt another day.

Keeping an eye on the external market enabled this company to spot trigger events, direct the research effort and act accordingly.  In one case, they scored a big win and in the other avoided unnecessary costs.