Fly Swatting and Competitive Strategy

Recent findings from a Cal Tech research study, published in the journal Current Biology, and reported today by the BBC, reveals interesting parallels between the neurological make-up of houseflies and effective competitive strategy.

According to the BBC report, researchers think that the fly's ability to avoid being hit by a flyswatter is due to its fast acting brain and an ability to plan ahead. High speed, high resolution video recordings showed that the insects quickly work out where a threat is coming from and prepare an escape route.

"Most people will have experienced the frustrating experience of carefully attempting to swat a fly, only to swing and miss while the intrepid insect buzzes off to safety. The research suggests that the best way of swatting a fly is to creep up slowly and aim ahead of its location," the BBC reports.

The article goes on to note that over the years there have been different theories put forward to explain the fly's uncanny ability to outwit human attempts to swat them, but the research says it is about quick-fire intelligence and good planning. Specifically, the researchers discovered that, long before the fly leaps, it calculates the location of the threat and comes up with an escape plan.

Any strategic planner frustrated at his or her company's inability to best a nimble competitor can empathize with unsuccessful human efforts to swat flies. What sets leading companies apart? A fast-acting, nimble nature, sound planning, and an uncanny ability to spot threats before they impact their interests. As with the fly, quick-fire intelligence and good planning are required if any company is to develop keen instincts and an uncanny ability to avoid threats and leap to a new, safe position.

Leaping Over the Intelligence – Decision Gap

We all know, intuitively, that competitive
intelligence isn’t really intelligence unless it is actionable.
If a piece of intelligence doesn’t compel a decision-
maker to take action, we are told, it is just another piece
of information. But what constitutes action? And,
what is the process by which competitive intelligence
prompts a decision or strategy that is implemented and
subsequently managed? Frequently, even companies
that possess world-class competitive intelligence
functions struggle with turning credible, insightful,
actionable intelligence into a clear strategy, decision, or
course of action.

Why is good intelligence often not incorporated into
strategic plans or operational decisions? The problem, I
believe, rests with reluctance among management to
clearly define the role it expects intelligence to play in
company decision-making, to define key decision
components that are influenced by intelligence, and to
track progress against them.

Too often, strategic planning is an exercise in
reaffirming what is known or comfortable, or what has
worked in the past. Similarly, decision implementation
is often an exercise in executing what has worked
before. Companies are hard-pressed to take new, bold,
and decisive action even when all the intelligence
“signals” point to the wisdom of pursuing a new course
of action.

The identification of an issue champion can help. This is an
individual in a decision-making or leadership role whose corporate
function is most impacted by the intelligence. For the
issue champion to successfully act on new intelligence,
the CI manager must brief him or her on the content of
the intelligence, and discuss the implications for the
company and for his or her function directly.

What other solutions can help to mitigate the gap between intelligence and action?

Why Now Is the Time To Take a Closer Look at Scenario Planning

September is a common strategic planning time for many companies. With fall just around the corner, this is a good time to begin thinking about maximizing your strategic planning process. If your planning process is not fostering collaboration among corporate and business-unit managers, nor making best use of best practices -- two conditions that improve planning process outputs, according to a recent McKinsey & Company survey -- scenario planning may offer a solution.

Scenario planning helps organizations envision a future very different from the present and develop concrete strategies that ensure success in a number of different possible futures. Companies also develop specific, measurable indicators that provide an early warning of what the future may bring, and the opportunity to start preparing today. In doing so, scenario planning encourages that managers from different parts of the company collaborate to offer their unique insights about the external environment. It also facilitates the consideration of prevailing environmental trends, likely competitor behavior, and external threats -- planning best practices executives say they wish they could follow more judiciously.

Let us know if your firm incorporates scenario planning into the annual planning process.

Conferences and Trade Shows: Are Your Employees Saying Too Much?

Conference and trade show intelligence is hot. Awareness of the opportunities for focused intelligence gathering at industry meetings, conferences, and exhibitions has perhaps never been higher. And rightfully so. Conferences bring together many people with valuable knowledge in one place to network and talk. With proper organization and advanced planning, companies can collect substantial amounts of competitive intelligence at such events.

However, for the same reasons that conferences and exhibitions represent such valuable intelligence gathering opportunities, they also pose intelligence risks. Just like other attendees, your company's employees attend such shows to meet new people, network, and talk. Natural human tendencies make it more likely that participants at a trade show or conference are disclosing more than they should about their companies.

People usually underestimate the value of the information they disclose, and want to demonstrate their knowledge and expertise, especially when surrounded by industry peers. These tendencies often lead to the improper disclosure of sensitive information, whether or not the employee was the specific target of an intelligence gathering effort by a competitor.

What, then, are ways to avoid the improper disclosure of information at conferences and trade shows?

• First, know what not to say. Make sure that all conference attendees from your company know what questions not to answer, and what information your company considers confidential.
• If you find that your employees are being asked the same question several times over, instruct them to direct all questioners to a single point of contact. Doing so helps coordinate a consistent, safe response. Your company can then also spot trends in the questions and identify who they are coming from, providing valuable insights into what your competitors want to know about your company.
• Stifle your natural human tendencies. Watch out for attempts to use flattery, challenging statements, and misinformation as a means to prompt your employees to disclose proprietary information.
  

Can an Organization's Relentless Quest for Market Share Drive Employees to Break the Law?

According to articles in The Wall Street Journal, a former Hewlett-Packard Co. vice president pled guilty earlier this month to stealing trade secrets after passing a confidential email from his previous employer, International Business Machines Corp., to senior H-P executives. According to an indictment filed June 27 in U.S. District Court in San Jose, Calif., Atul Malhotra was a director of sales and business development in IBM's printing-services division in March 2006 when he requested confidential pricing information about IBM services. In May 2006, the indictment says, Mr. Malhotra became a vice president of H-P's printing division. That July, the indictment alleges, he "sent an e-mail to an H-P senior vice president with the subject 'for your eyes only'" with an attachment including the confidential information. He allegedly followed it up with a similar email to a second senior vice president. Malhotra, 42 years old, faces a maximum of 10 years in prison, a $250,000 fine and three years of supervised release. A spokesman for the U.S. Attorney's office in San Francisco declined to say what penalties prosecutors would seek. A sentencing hearing is set for Oct. 29.

My first take on this incident was that it was the latest in a string of senior executives acting unethically in the false belief that doing so would afford competitive advantage. However, deeper inspection illustrates another more interesting explanation -- that ethical foul-ups are a symptom of companies’ misguided efforts to increase market share.

It has long been argued by strategists and economists alike that prudent corporations would be wise to compete on dimensions other than price. Because it is possible to segment out individuals, groups, and clusters of groups that share similar beliefs, goals, aspirations, needs, and desires, it is desirable for competing companies to target slightly different customer clusters and position their respective products accordingly, allowing multiple competitors to exist peaceably with each other. Look at Apple Inc., whose products are designed and positioned, not as commodities, but more as genuine appeals to a lifestyle. Apple’s reward? The company remains one of the only PC manufacturers able to sell every computer it produces at a profit.

If this is the case, why then, do so many companies destroy industry value by engaging in direct, head-to-head competition? One answer is likely found in the antiquated notion that market share is a legitimate measure of organizational success. In reality,  market share is such a malleable, perspectivist metric (it is entirely dependent upon how one defines their market) that it is practically useless as a gauge of organizational performance, despite the emphasis organizations put on as a metric of their performance.  Regrettably, to gain market share, firms often do what comes natural: they slash prices, a nasty side-effect of which is often the commoditization of their products, which, remember, the theorists argue is unnecessary.

The problem, of course, is systemic in many industries (particularly IT), which brings us back to our friend at HP. It could be argued that the pressure to gain market share is so indelibly entrenched in the consciousness of some organizations, that their employees are compelled to take the low road in an effort to gain incremental share.  Was the desire to help his organization achieve a stated goal what compelled Malhotra? Was it simply poor judgment or the prospect of personal advancement? Perhaps. But what if it was something more insidious. What if blind adherence to an antiquated metric created an environment so unrestrained in its single-mindedness that it prompted individuals to act without regard to creed, convention, or code of ethics. What if Malhotra is guilty of nothing more than toeing the party line? And if you can entertain this thought, then think of this: is your organization doing the same thing?

CI Practitioners Moving Beyond Five Forces...

Most of us have used Porter's Five Forces model when analyzing their industry. But how many of us apply the rigor of Porter’s other analytical technique, the Four Corners model to scrutinize specific competitors?

Here’s our take: while less widely used, Porter's Four Corners is an extremely valuable tool that integrates an understanding of a competitor’s drivers, strategies, capabilities and assumptions to determine what players are likely to do and recognize the "why" behind their actions. It is an essential tool for CI practitioners to master.

The Four Corners model, developed by Michel Porter, a professor at Harvard Business School, is a model used to look at the behavior of an individual organization to predict competitor behavior. The model can also very useful in uncovering blind spots, assumptions that were valid at one time but no longer hold to be to true.

Examining all four "corners" of competitor activity enables a competitive intelligence professional to better understand what drives a firm to behave in a certain fashion and anticipate future actions. This insight then equips one to conduct the last step of Four Corners analysis, answering the Competitor Response Profile questions in the center of the four corners. The key questions include:

Is the competitor satisfied with its current position?
What likely moves or strategy shifts will the competitor make?
Where is the competitor vulnerable?
What will provoke the greatest retaliation by the competitor?

Hug a Librarian

Anyone who has been practicing competitive intelligence for the past several years cannot have helped but notice the increasing role information professionals are playing in the CI discipline. Consider:

• Membership in the Special Libraries Association CI division stands at over 700, up more than 25 percent in just two years. The Association reports that the CI division has been among the fastest growing divisions for the past several years.

• Information professionals are becoming more experienced in CI. More than a quarter of SLA CI Division members have been involved with CI for over 10 years.

• And, nearly half of the CI Division's members report dedicating more than half of their time to CI.

It's hard to imagine a successful CI function that is not accompanied by a solid information services function, either as an embedded part of the CI program or as an internal service provider to the CI function within the larger organization. Whereas information professionals were once limited to providing background research to more experienced CI human-source researchers and analysts, today's information professionals increasingly are involved in conducting intelligence analysis and preparing intelligence assessments for their organizations.

Why? Just as the lines between market research and competitive intelligence are becoming increasingly blurred, so to are the boundaries between what was once "the corporate library" and any organization's need for a unified and integrated view of its external environment. To be sure, a successful CI function must rely on more than just published-source information, and requires a solid human-source information network. Still, information professionals today have the expertise to tap a wealth of information sources to collect information that not long ago was the sole purview of primary source researchers, or that was not available quickly and inexpensively on the Internet. As a result, information professionals are now able to identify trends, define future outcomes, and determine competitive implications -- the very lifeblood of top-notch intelligence analysis.