The three perspectives a company needs in order to map the future are competitive analysis, market research, and advanced technology analysis. This week concludes our deep dive on competitive analysis done right, looking at the deliverables that should be created by a competitive analysis team.
There are four basic types of deliverable produced by a competitive analysis team: services, maps, spears, and news.
Services are things the rest of the company asks you to do, to help them with their jobs. For example, the product planning folks will want information to fill the competitive sections of their product plans. Finance may want stats on competitors, so they can do some benchmarking for an earnings release or an internal analysis. An executive may want some competitive tidbits for a speech.
It’s essential to keep these requests under control. Depending on the size of your company, and of your team, you may be overwhelmed by people who want help. You could spend all of your time just responding to these requests, leaving no time available for the proactive work that yields the most value to the company. The proper role of a competitive team is not to be the sole source of all competitive information; it’s to get a unique perspective on the competition by studying it full time. That lets you understand the competition, help predict the future, and produce the most devastating competitive sales tools you can. (That’s one reason why I dislike the term “competitive intelligence” — it sets the wrong expectations.) If you spend all your time helping people do their own jobs, you won’t have time to do yours, your company will suffer, and you may eventually be laid off because the company views you as “very helpful” rather than “essential.”
But you can’t just blow off the requests, if for no other reason than corporate politics. But I try to aggressively sort them into categories. Requests from powerful executives must be fulfilled, for obvious reasons. If you get too many of these, take up the issue with your management. It’s their job to either resolve the problem or get you more resources. If they don’t do either, it’s a good sign that you should start looking for another employer.
Requests from others in the company should be made as self-serve as possible. I’ll run with a request if it relates to information we needed to research anyway, or if it’s on a critical subject for the company as a whole. Otherwise, I refer people to the industry analysis services we subscribe to. Sometimes I’ll help people do the lookup if they’re new to the process. If they know what they’re doing, I just point them at the services and say, “All we know on the subject is going to be there. Let me know if you get stuck.”
I’ll give more information on how to manage industry analysis services in a future chapter.
Maps are long-term marketplace forecasts. They are the most strategic work done by a competitive team, and they take the most effort. Since they require input from the market research and advanced technology functions, I’ll discuss them in a future chapter.
Spears are competitive information that helps your company close sales or score points in marketing (they’re information you can throw at the competition, like a spear). Some companies call these “sales knockoffs.” Making spears is one of the most enjoyable parts of competitive analysis, and if you do it right you’ll be a hero in the company forever. More on spears below.
News is quick-hit information on something that just happened in the marketplace. You don’t want to turn yourself into a headline-clipping service; that’s the sort of non-value-added activity that gets a group laid off. But you should send around information when you can add value to it. If a competitive announcement will raise a lot of questions from customers, you should circulate information on what to say about it. If an announcement has important implications to the company, you should make sure the company knows that, quickly. Basically, you should turn the news you distribute into mini-maps and spears.
The joy of spear-making
Why make spears? If a competitive team operates perfectly, the company will never get in competitive trouble — you’ll steer the company away from potential problems before they happen, and you’ll focus the company on its biggest opportunities. But in the real world, competitive problems will happen. A competitor will come out with a superior product or an unanticipated tactic that puts your company in a bad situation. Or you may benchmark a new product your company has made, and discover that it doesn’t live up to its promises.
That means you’ll sometimes have to deliver bad news to the company. The consequences of that news may be devastating to an executive or even a whole business unit. That executive might be very powerful in the corporation, or you might have friends in the business unit. You will be tempted to try to soften the blow, by moderating your language or listing a lot of caveats to your conclusions.
For example, you might be tempted to say something like, “while the situation appears challenging, it’s possible that more aggressive marketing combined with price actions would be able to stabilize the company’s share position” when what you’re really thinking is, “there’s no hope of saving this business.”
It’s very important that you not soften the news. When people get bad news, they always look for outs that would let them dismiss the consequences and go back to life as usual. If you give your company an opportunity to develop false hope, you’ll prevent it from taking the action it needs to take.
But repeated brutal honesty can give you a very unpleasant lifestyle in the company, not to mention a short one. To balance the bad news, and to give you the political credits you’ll need to survive delivering it, it’s important that you also play a visible and positive role in helping the company win. That’s where spear-making comes in.
What are spears? Spears are information that can be used directly in your company’s sales and marketing. They help the company close sales, win industry debates, and impress press and analysts. They position you as a partner in winning, not just an ivory-tower analyst.
A good competitive team should be spending at least a third of its time making spears, maybe up to 50%.
Here are some examples of spears:
–Your team compiles a list of the five most important flaws of each of the competition’s products. You print these flaws on reference cards and supply them to the salesforce.
–You create a presentation on why your products are better than the competition’s, and make yourself available to go along on some customer visits with the salesforce. It’s important not to turn yourself into a full-time sales support team, but going along on some sales calls will give you important front-line information on what’s happening in the market, and will win you the gratitude of the sales organization.
–You hire a third party analyst to document how much cheaper it is to own your products as compared to the competition. You give the resulting whitepaper to the marketing team. They can reprint it as collateral, or quote from it in advertisements.
–You create a monthly audio recording summarizing recent competitive developments, explaining what they mean and what to say about them. You distribute the recording to sales, PR, and marketing.
This sort of recording is often beloved by salespeople and others who have a lot of dead time behind the wheel of a car. I’ve had some people tell me that they listen to every recording several times, sometimes re-running an old one that’s relevant to a customer meeting they’re about to attend. The recordings help them appear well-informed and answer questions from customers and other outsiders.
In the past I’ve distributed these recordings on cassette tape. There was usually some sort of mailing going out to the salesforce every month, and we could get the tape slipped into that, which saved us money on postage.
Today some new cars don’t have tape players, so I’d be looking to burn CDs. Or, better yet, you could distribute the recordings as podcasts (electronic files playable on an MP3 music player). The nice thing about the podcast approach is that you could store all the recordings on a company website, enabling people to download whichever ones they need at any time.
Sometimes spear-making work can become very elaborate. When I was at Apple, we were engaged in a long-running battle to show that the Macintosh computer was superior to those based on Microsoft Windows. At one point we paid an analyst firm to conduct a very elaborate customer test based on the old “Pepsi Challenge” marketing campaign.
(The Pepsi Challenge was a famous ad campaign for Pepsi Cola in which people blind-tasted both Coke and Pepsi, and generally preferred Pepsi.)
In our challenge, randomly-selected people were asked to perform a series of tasks on both a Macintosh computer and one based on Windows. The tasks were things like saving a document, or hooking up a printer and printing a page of text. The researchers kept track of how long it took to complete the task, what percent of people finished the task correctly, and how people felt about the task after they completed it.
It was an exhausting process for our team — we had to make sure the instructions for the tasks matched exactly the instructions given by Microsoft and Apple, the computers had to be restored to their starting condition after every test, and the researchers had to do everything very carefully so they didn’t favor one computer over the other. From start to finish, the project took most of an analyst’s time for several months and cost many tens of thousands of dollars.
But in the end, the results were great. For the first time, we could objectively quantify our product’s advantages in terms of speed, quality, and customer satisfaction. The marketing team created a broadly-distributed whitepaper describing the results, and the test became the foundation for an ad campaign.
This sort of project is called a “proof” study because it gives independent proof of something that you already knew was true. You’re not doing the study to find new information, you’re doing it to verify a claim. Corporate lawyers often require independent proof like that before they’ll allow your company to make a claim in an ad, so if you do a good proof study it’ll be loved by the marketing team.
Making spears is fun because it makes the company happy and gives your team a great sense of accomplishment. Some spear projects, such as the challenge study I described above, are also an opportunity to build teamwork between the competitive and market research teams.
Drawbacks of spear-making. Sometimes competitive analysts will object to making spears. Some of them view themselves as academics, and feel that creating marketing fodder sullies their independence. It’s important to help them understand two things. First, you’re not asking them to lie, just to help the company communicate its advantages. The process is like getting ready for a date — you may dress and comb your hair better than you would most days, but you don’t try to flat-out lie about your personality or background (anyway, most of us don’t).
Second, the analysts need to understand that they’re not academics; they’re working in a company that needs to make money, and sometimes they have to get their hands dirty helping to bring the money in. Besides, helping out for a while in the front lines gives an analyst a much better perspective on what’s happening in the market.
It’s important not to get carried away by spear-making, though. A competitive team’s most important asset is trust. People must trust that you’ll be honest with them at all times. That means your spears must be completely true, and you must never give anyone in the company an argument that can get them into trouble in a conversation. For example, if you tell a salesperson that the competition’s Product X causes toenail cancer in lab rats, that had darned well better be unimpeachably true. If in fact the toenail cancer study was discredited six months ago, some customer is going to know that and will call your sales rep on it, causing acute embarrassment, maybe losing a sale, and permanently ruining your credibility with that sales rep and anyone else they talk to. And you know how salespeople talk.
How to communicate competitive information
What’s the best way to deliver information? Go back to your fundamental goal — you’re trying to be sure the company wins. Therefore, communicate whichever way will get their attention. If it works best to tap-dance in front of corporate HQ carrying a banner, take dancing lessons. If skywriting works best, get a pilot’s license. Fortunately, in most companies you can use a mix of more traditional media.
E-mail is the quickest and easiest way I’ve found to communicate competitive information. One good approach is to set up a list server (an e-mail program that sends messages to everyone on a mailing list). Every time there’s a significant competitive announcement, or when your team issues a new report, send a message to the list server. Keep the messages short (no more than two pages printed unless something amazing happens), and always include an analysis of the implications of the event and what the company should say about it.
Remember, your role is to be an analyst, not just a news reporter. They can get news feeds off the Internet; your added value is that you say what it means, and you help the company’s spokespeople look informed at all times.
I’ll give tips on how to write for e-mail in a future chapter.
Ideally, this sort of message should go out the same day that the competitive announcement is made. If you send out information three days after the fact, everyone will have already read about it on the Internet and they probably won’t even look at your message.
Sending out messages on the day things happen has an important implication for managing a competitive analysis team — you can’t pre-screen your team’s messages before they’re sent. I know that’ll make a lot of managers uncomfortable, and fifteen years ago it would have given me hives too. But the accelerating pace of communication means that you need to focus on pre-educating people and then trust them to follow the rules, rather than using review cycles to enforce compliance. If you force everyone in your team to go through reviews on all their messages, you won’t be able to comment on events the day they happen, and people will simply tune you out.
This doesn’t mean you should turn an employee loose on the mail list the first day they start. While they’re getting up to speed you should definitely be reviewing everything they write before it’s sent out. This is for their own protection as much as yours — if they give a bad impression of themselves early on, it’ll be very hard to fix that later. But once they’re up to speed and producing reliable work, you should turn them loose.
Receiving messages from the competitive mail list should be voluntary. Don’t sign people up automatically when they’re hired. If a manager asks you to sign up his or her entire team, don’t do it — instead, send each of them an invitation to subscribe. If you’re in an active industry, you could be sending a message to the list almost every day, and some people just don’t want to deal with this. If you force all that e-mail into their mailbox, they won’t read it — but they will start to hate you.
The purpose of the mail list is to get information to the people within the company who want to be deeply informed. Very often these are the opinion-setters anyway, so they’ll take care of spreading the word to everyone else. But some people, especially senior decision-makers, won’t have time to read everything you write. For these people, you should create a weekly e-mail summary of announcements and events. For each new item, create a one-paragraph summary that says what happened and gives the implications. Your goal with this summary is to get across the basics and entice them to read the whole report. So keep your summary very short and include a web link at the end that lets them download your full analysis.
Even if you do a great job on the weekly summaries, some people don’t respond well to written information. So you also need to talk with them face to face.
Presentations are the other main way you’ll be communicating competitive information. Your team should develop a general presentation on the company’s competitive situation and advantages, something that can be delivered in about an hour. You use this whenever you’re asked to give an overview presentation to a department in the company (if you’re in a large company, you may get a lot of these requests as your team’s team’s reputation grows). You and all the senior analysts in the team should be able to deliver this talk. Don’t script the whole thing word for word, but make sure you all have a good understanding of the key points to make.
The analysts on the team should also create presentations on key competitive issues that matter to the company. This could be something like an analysis of a competitor, or an examination of an important competitive issue (for example, if you were working at a mobile phone company you might create an analysis of the various competitive products for accessing e-mail on a phone). Again, an hour is the ideal length for a presentation like this, although you can go to 90 minutes if you have to. Anything longer than that is a special occasion, and you’ll need to schedule a comfortable room and a bathroom break for the people you inflict it on.
It’s possible to just schedule a presentation time and invite people from the company to attend, but I usually try to get a regularly scheduled presentation slot at the staff meetings of the key groups in the company. In a high tech company, those would be marketing, product management (the people who create product plans), sales, engineering, and the executive staff. At least once a month, you should be giving them a presentation of the most important recent competitive developments and findings, and you can also slot in presentations from your staffers. All of this helps you reach the people who don’t read e-mail. Remember that the presentations, like the e-mails, should include implications, not just news reporting. And put the implications up front, not at the back.
Staff meetings can also be a good time to do quick demos of new competitive products, and let people know of important upcoming events (for example, if the rumor mill says a new competitive product is about to launch).
In addition to presenting, you and members of your team should have regular one-on-one meetings with key people around the company, so you’ll know what they are up to and what problems they have. You’ll be able to pretty quickly identify which people have the most influence and the best ideas, and they’re the ones you should focus on. Talking with them regularly will help you identify what important decisions the company is about to make (so you can influence them), and will help you figure out which pieces of information would be most useful to the company.
The latter is very important because a lot of competitive information will be coming across your desk, and most of it you’ll just ignore because you don’t want to overload the company. If you know what issues people are working on, you’ll be able to pick out tidbits that are relevant to them and route them over. This helps the company, and also wins you a friend. If you don’t do that outreach, you’ll only know the needs of the people who are pushy enough to come to you, and they may not represent the most important needs of the company. In fact, they usually don’t.
You should adapt your methods of communication to the culture of your company. I don’t do paper memos any more because people at my last several employers didn’t read them. I’m sure there are still a lot of other companies where people do. I have worked with some companies that use voice mail more than e-mail. This sounds strange if you haven’t seen it in action, but these companies usually have a founder or CEO who’s more comfortable communicating verbally rather than in writing, so the company culture comes to depend heavily on voice mails, forwarded extensively from person to person. In those companies, presentations can be a lot more effective than e-mails, although they’re a lot more time-consuming to deliver.
Other ideas for communicating:
Open up the competitive e-mail list server so that all employees can post information to it (or, if you’re in a large company, select designated participants from other groups). Basically, you’re turning other employees into the eyes and ears for your team. If they see an interesting competitive tidbit, they post it to the list.
To some executives, this is going to sound frightening — if you give the employees a forum like this, malcontents might dominate the conversation, or secret information might be leaked broadly in the company. I’ve found that you can prevent almost all of these problems by communicating clear ground rules for what people should post, and by stepping in to give people private counseling if they start to disrupt the list. If an extreme situation, you could always remove someone from the list if they caused trouble, but I’ve never had to do this.
In general, an open list will give you a lot more benefit than trouble; you’re basically co-opting a bunch of employees to help you do your job. If your ultimate goal is to make the company hyper-effective at competing, what better way than turning all of them into part-time competitive analysts?
Create an online archive of everything you publish. It’s pretty easy to create a searchable web archive of all the messages your group has sent out, and of all the messages posted by anyone to the competitive mail list. Once this archive is built up, it’s a great place for people to do their own competitive research, reducing the burden of inquiries on you and your team.
Sit in on staffs. If you can, it’s great to become a dotted-line member of a couple of the key staffs around the company. For example, at Palm I was at various times a member of the sales, product marketing, and COO staffs. I attended their weekly meetings, which gave me an easy opportunity to update them on any competitive events that happened in the week before, and kept me informed about what they were working on. This was especially helpful with sales, because I knew exactly which prospects we were talking to, and I could route useful information to the appropriate sales reps before they even asked for it.
Present at orientation. If you want to shape someone’s thinking, the best time to do it is on the day they’re hired. Most companies have an orientation day for new employees. Get a slot in the orientation program, and use it to educate the newbies on your competitors, competitive advantages, and what to say when their friends ask them competitive questions about their new company. This is also a great opportunity to publicize the competitive mail list and encourage people to sign up for it.
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Next week we’ll start on market research.