19 Jun

A Recession is Coming….Threat or Opportunity?

While no one can accurately predict one, the signs of an impending recession seem to be mounting.

Earlier this month, the Federal Reserve updated its probability of a recession based on the Treasury Spread. The current inverted yield curve, which has been used as one leading indicator, has moved the probability of recession up sharply in the last year towards 30%.[1]

Another indicator: Nearly half, or 48%, of chief financial officers in the U.S. are predicting a recession by mid-2020, according to the Duke University/CFO Global Business Outlook survey, which is conducted quarterly. And more than two-thirds, 69%, are predicting a downturn by the end of next year.[2]

Other signs are looming such as lower GDP growth in China relative to what it was before 2010, the dramatic increase in alternative lenders in the U.S. economy called ‘shadow banking’, [3] and an expected interest rate cut by the Fed today. “The last time it [The Fed] entered a cutting cycle was September 2007. At that juncture, the subprime mortgage crisis had displayed clear signs of accelerating.“  [4]

Regardless of whether a downturn occurs within the next two years, a recession represents CHANGE. And when CHANGE occurs, be it technological, societal or economic in this case, there will be winners and losers. Those with the right outlook and a plan to leverage data and analytics will likely come out on top.  

How will your business respond?

The way in which different business organizations responded during the 2007 – 2009 ‘great recession’ has been studied by several researchers to identify winners and losers, and the strategic decisions that separated them.

In one study published in HBR, McKinsey clustered companies into ‘Resilients’ and ‘Nonresilients’. The Resilients returned between 6% and 8% more in returns to shareholders than industry peers did. Their performance dipped less overall during the downturn, and they were able to significantly widen their leads in their respective industries during economic recovery.  

As might be expected, these companies placed a high emphasis on controlling operating costs. In addition, resilient companies also focused on maintaining loyalty among high-value customers that were central to the company’s post-recession recovery. They were also smart at pricing. Using data and analysis about customers and their competition, the Resilients were forgoing revenues they could have earned through pricing changes. By contrast, industry peers were more likely to try and maintain revenue at any cost, applying price reductions haphazardly to products and services and sending mixed marketing messages. (See our recent post on using external data to excel at pricing)

One of our own clients illustrates the ability to grow, rather than retract, during an economic downturn.

The company is in the commercial printing industry – highly capital intensive and under constant pricing pressure from large corporate customers. In 2008 to 2009, the management team decided to explore growth through potential acquisitions of smaller players that may not be able to withstand the downturn. Rather than investing the time and money to approach companies directly, however, they asked for our assistance to identify potential targets and prioritize them based on certain attributes such as customer base, core assets, technology stack and capabilities. Armed with this insight, their legal and finance teams made formal introductions with confidence and very quickly made several acquisitions. The resulting market share gain (and some new digital capabilities gained in the process) moved our client into a leadership position in the industry.  

How they do it

Downturns bring a conundrum for business leaders. While the short-term demands caution, cutbacks and capital preservation, the long-term presents opportunities for growth. How do the winners excel?

  • Rather than cutting back, a key aspect of their success is continued investment in research, data and analysis to make smart decisions and focus their attention and investments where they have the greatest impact. Research, hypothesis testing and refinement save them from investing in marginal areas while directing investment to the most promising.

As a result, these organizations leap-frog their industry peers into new positions of growth with the eventual recovery. Will yours be one of the winners?


[1] https://www.newyorkfed.org/medialibrary/media/research/capital_markets/Prob_Rec.pdf

[2] https://www.cbsnews.com/news/nearly-half-of-u-s-financial-chiefs-expect-economic-recession-within-a-year/

[3] http://www.startribune.com/risky-borrowing-is-making-a-comeback-but-banks-are-on-the-sideline/511160862/

[4] https://www.cnbc.com/2019/06/19/the-federal-reserve-is-likely-to-say-rate-cuts-are-coming-satisfying-markets.html

10 May

Successful Presentation at SCIP 2019

Our joint presentation with Michelle Volesko Brewer from Wolters Kluwer was a resounding success on Wednesday, based on participant surveys. About 30 participants learned about and shared experiences with Managing Complex CI Projects.

2019SCIP_Presentation_Slide1

This session focused more on the ‘Art’ of the role of strategy professionals rather than the ‘science’. Key Best Practice themes that arose through the discussion were things like ‘good planning’, ‘project definition’, “objective setting’, ‘communication, communication, communication’ and leadership.

2019SCIP_Presentation_Description

Below are links to the presentation deck, handout and session notes. Please contact us with any questions.

Thanks to all who participated – Steve and Michelle

SCIP PowerPoint Template_SS_MVB_FINAL Ver 2

SCIP Handout_SS_MVB_FINAL

SCIP Presentation Notes_Complex Projects_20190508

08 Mar

Strategy as Learning – Why Your Strategy Should Be a Hypothesis You Constantly Adjust

womanwithfish

In the HBR article entitled  “Your Strategy Should Be a Hypothesis You Constantly Adjust” (link below) authors Edmondson and Verdin examine two cases of recent business failure: Wells Fargo’s and Volkswagen, and discuss the concept of ‘strategy as learning’.

In both cases, the companies’ strategies were viewed by their top executives as analytically sound, but the performance gaps were blamed on execution. As a result, mid-level managers and employees kept trying harder to execute the plan, effectively digging the hole deeper until there was no other choice but to cover it all up. This, of course, led to scandal and eventual loss for the organizations financially and beyond.

‘Strategy as learning’ contrasts sharply with the view of strategy as a stable, analytically rigorous plan for execution in the market.

Like all hypotheses, strategy as learning’ starts with situation assessment and analysis — strategy’s classic tools. Also like all hypotheses, it must be tested through action. With this lens, encounters with customers provide data that is of ongoing interest to senior executives — vital inputs to dynamic strategy formulation.  Strategy as learning is characterized by ongoing observing and adjusting, fueled by data that can only be obtained through execution.

The ‘strategy as learning’ concept aligns with our idea of ‘strategic thinking’ as posted on our blog 10/5/2018: 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.

The concept of ‘strategic learning’ and ‘strategic thinking’ is what Line of Sight Group is all about – an evidence-based approach using external data to augment our client’s internal perspective to help them 1) make informed strategic decisions and 2) adjust those strategies based on empirical data from customers and the industry. Our Market Intelligence and our Customer Win/Loss analysis offerings are specifically designed to help our clients develop and maintain systematic and unbiased feedback loops that enable confident adjustments to strategy.

Strategy is about placing bets – big and important bets that can make or break the future. Continuing to up the ante with the belief that the problem is in execution instead of using data to gain feedback for necessary adjustments can result in loss of not only the hoped-for jackpot, but also the entire bankroll.

https://hbr.org/2017/11/your-strategy-should-be-a-hypothesis-you-constantly-adjust

28 Jun

Using Analytics to Stay Ahead of the Competition

Using analytics to stay ahead of the competition

“As product strategists aiming to launch a new product or gain market share with a new enhancement, it is critical to be first to the finish line. The risk of losing the race can be in the millions of dollars and devastating to careers.”  – Steve Schulz, Line of Sight Group President and Founder

Our efforts to stay current on trends and keep a pulse on the needs of product managers is addressed by attending and sponsoring key events in the local marketplace. Line of Sight Group sponsored the monthly PDMA meeting and presented “Using Analytics to Stay Ahead of the Competition” at Starkey Hearing Technologies in Eden Prairie, Minnesota.

Line of Sight Group’s Steve Schulz shared some analytical models for using knowledge of the external environment to understand where you are in the race with your competition, and how to think about bets and moves you can make to differentiate and stay ahead. Use cases demonstrated how organizations can apply data and analytics to continuously monitor competitive developments and engage in interactive dialog on how to use that information to respond to threats and opportunities.

One of the ways we help our clients monitor their external environment is through Line of Sight’s SCIP Endorsed Market-i Competitive Intelligence System.

Key insights from the event:

  • How to identify key indicators
  • Where to find the needed data
  • How to create and populate a development map and scorecard
  • Development strategies and response adjustments
  • How to present the data and strategic response

Starkey’s Aaron Schroeder, Au.D, kicked off the event with a welcome and shared their efforts to help people hear throughout the U.S. and around the world. He showed a music video featuring singer-songwriter Matt Nathanson, who joined Starkey in Peru to help raise awareness and funds for people struggling with hearing loss. I encourage you to watch it here. It is sure to warm your heart.

Thanks to Minnesota PDMA and Starkey Hearing Technologies for the opportunity!

Minnesota PDMA is the place for innovators and product people to come together. The organization holds monthly events all around the Twin Cities. All people, perspectives, and ideas are welcome.

Starkey Hearing Technologies is a hearing-aid manufacturer that prides itself on connecting people and changing lives. The company has provided more than 1 million hearing aids to people around the world.

28 Dec

Competing on Customer Experience in Retail

customer experience

Customer Experience is the area many retailers have chosen to compete on over the past few years. When it comes to shopping, it is breaking increasingly into “chore” vs. “cherish” activities. On the “chore” side, firms like Amazon offer commodity pricing, streamlined delivery, and voice recognition to make online ordering an easy experience for obtaining essentials. That leaves “cherish,” the type of shopping based on the discovery of interesting products and socializing them with others. This type of shopping is characterized by a great physical presence, unique items, and creating meaningful experiences. You’ll find artisan crafted products, hand-picked selections, custom built offers, or even built-by-the customer creations. How might a retailer best compete in the Customer Experience realm?

One of the first areas to consider is to understand the external environment.  What are the trends and who are the competitors? Are there competitors offering something similar? How are they unique? What kinds of experiences do they offer? Are they competing on digital or physical experience or both or is it something else?

Next, savvy retailers track and map internal environment elements like customer journeys and voice of the customer as well as metrics like Net Promoter Score and Customer Satisfaction. Asking for feedback after every interaction or transaction is wearing customers down so building insight via analytics into the flow (that is not invasive) will be a key.

With external and internal environment insight in hand, retailers have a number of levers available to pull.  Retailers can swiftly test and prototype various experience design elements using service blueprinting, bio-mimicry and design thinking.  Some are using Virtual Reality to conduct their prototyping digitally as a first step. Capturing insight via primary and secondary research about the external and internal environment goes a long way towards creating a strategy to compete on customer experience as a differentiator in retail. Knowing the type of shopping that your current and future customers engage in can align your strategy and go-to-market initiatives on a path toward delivering meaningful and differentiated customer experiences in the digital and physical worlds.

01 Dec

Competing in Financial Services

finance indusrty

Competing in the financial services industry can be as risky as it is broad. While the services of our clients in the financial services industry range from consumer finance to sophisticated back-office technology in the insurance industry, they all share a common challenge of dealing with quick, continuous and sometimes dramatic changes in the industry. Driven by government regulations, global economics, technology and many other factors, these organizations know that changes in their industry can happen swiftly and can devastate profits for those that misread the tea leaves. They also know that timely and objective knowledge and insight can help offset those risks and challenges.

In one financial services segment, our client deals with competitive offers and pricing that changes on a monthly basis or less. With the help of Line of Sight Group, however, managers know about the changes in near-real-time, and use the information to identify situations where they have a competitive advantage. They quickly funnel the information to their sales force who uses it to contact client prospects, confident that they have a true advantage to gain a new customer. This client conservatively estimates an ROI on the research and insight at over 20 to 1.

Late last year, another client asked Line of Sight Group to conduct a deep analysis on an adjacent market in which they were contemplating entry. In early 2017, they made the decision to go forward with the move and began maneuvering resources for the planned entry late this year. Not only did the analysis provide the support needed to make a confident strategic decision, it also provided guidance in the build-out phase to align products, pricing and positioning. The insight was further extended as education for the business development team about the market and how to out-sell the competition they were getting ready to face.

Still another client in the financial services technology sector, utilized our Competitive Landscape Program as part of its overall strategy formulation following a major restructuring. By gaining insight into the key growth strategies and buying criteria of buyers in its target segment, and overlaying that data with insight about its primary competition and its own competitive position (it is not the industry leader), management developed a variation of a ‘fast-follower’ strategy. Predicated on management’s understanding that they cannot predict the future and control the uncontrollable, and that the industry leader tends to respond sluggishly, they are building a competency that enables management to adjust its strategies based on a continuous ‘external learning loop’ focused on its industry and markets. This allows them to quickly identify and take advantage of new opportunities.

The stakes can be extremely high in the financial services industry with high capital intensity, powerful regulation and dynamic market and competitive factors. Because they are in the financial services industry, however, risk management is in their DNA. They understand how to manage market and operational risk, and understand that market and industry research is a vital component of their risk strategy. These firms also understand economics. They understand the value of accurate, timely and unbiased research and insight, and that the investment will pay dividends in both the short and long-term.

13 Sep

SCIP Minnesota Presents: A Panel Discussion with Line of Sight Group, PDMA & CXPA Practitioners

2017-09-13_17-47-31

Line of Sight Group is proud to be part of SCIP Minnesota’s panel discussion later this month. President and Founder Steve Schulz will join other top experts in the competitive intelligence, product management, and customer experience arenas.

The discussion will touch on and provide insight on common challenges, including the type of intelligence leadership is looking for, and illustrate how top practitioners gather intelligence for internal use and on their competitors. Panelists will also illustrate some useful tips and tools that are used by top practitioners.

Other panelists include:

  • Lori Laflin, Global Customer Engagement Research Program Manager, Cargill/ Member CXPA , CCXP
  • Paul Santilli, WW OEM Business Intelligence & Customer Insights at Hewlett Packard Enterprise/ Secretary & Treasurer, Board of Directors, SCIP
  • Mark Jensen, Director of Product Management-Distribution, Epicor Software/ Board of Directors, PDMA
  • Tom Mcgoldrick, Strategic Insights Director of UnitedHealth Group

The Panel will be moderated by Brett Norgaard, Principal, Line of Sight Group.

The SCIP MN Panel Discussion will take place September 27 from 5 pm-7 pm Central Time at the Grant Park Conference Room, 500 East Grant Street, Minneapolis, Minnesota.

For more information or to attend the event, please go to the SCIP MN website or reach out to MN Chapter Chair, Julie Johnson.

Line of Sight’s Market-i Competitive Intelligence Program is a SCIP “Endorsed” product. Strategic and Competitive Intelligence Professionals (SCIP) is the nonprofit Association representing the Integrated Intelligence industry internationally for over 32 years.

SCIP

 

 

31 Aug

When Listening to the Market, One Plus One Can Equal Three

OnePlusOnePic

I was talking with someone recently who wanted to accomplish three specific tasks – gather market intelligence, create competitive profiles and send out newsletters. As we talked further, we discovered that the three tasks were closely related. The conversation then shifted to what intelligence was needed and how would it be used?

In this situation, it probably makes sense to take one step back and conduct a Competitive Landscape Analysis using helpful frameworks like PESTEL and Five Forces.  These types of analyses can narrow the focus and yield a specific set of competitors and trends to study and monitor.

Next, a knowledge portal, like Line of Sight Group’s Market-i Competitive Intelligence System, enables a way to organize, relate and contextualize all types of structured and unstructured intelligence. Using this system and the information garnered from the Competitive Landscape Analysis, a team could start gathering competitive intelligence, saving it, and then creating weekly newsletters, demonstrating swift value.

After several weeks or months, competitive profiles could also be created. As soon as these profiles were activated, all of the previously posted articles and artifacts could automatically link and append to the profiles.  Similarly, any new intelligence added to Market-i would have immediate relevance and would add to the collective knowledge.  The newsletter function could also include tips and techniques for using the intelligence as well as information regarding what to look for and how to capture it.

Knowing what you are looking for, why you need it, and how you will use it will allow you to architect a solution that will provide short and long term benefits. It also becomes more valuable with each new piece of intelligence, report or artifact added. Finally, an approach that includes both a push and a pull aspect helps ensure that there will be high levels of engagement. The total value can indeed be greater than that of the parts.

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

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.