Maybe so…

Nice PR piece for Cincinnati’s largest tech incubator, Cintrifuse.

We have a strong entrepreneurial scene here, a ton of talent, and a great looking town to boot. It is a good place to live and work. Check us out whenever your plans require a stop in “flyover” country. It’s like a lot of famous places, only better!

My friend Joe Goldberg has written a novel. You should read it. It is good … VERY GOOD!

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It’s a page turner in the grand tradition of international political intrigue. The subject is the espionage battle behind the “brief” conflict with Libya in 1986.

You will be reminded of other famous authors in this genre’ BUT the difference is that Secret Wars is informed from someone who was on the inside.

Joe was Director of Competitor Intelligence at Motorola when we first met. He has gone on to do consulting in the intelligence and political campaign space. But before all this, he was in the Agency.

When you know that people like Joe are or have served their country … have been willing to operate on the edges of civilized humanity in order to defend it … you sleep better at night.

This is Joe’s first effort. It is self published, so pass it on to your friends. And get on Joe’s radar so you can be in line for the next volume. Trust me, it’s that good!

Day 3 SCIP ATLANTA

Final Takes

SCIP 2015 is in the books. Atlanta and the Marriot Marquis was a great venue. As always it was great see old CI buddies, renew acquaintances, and make new friends. A lot of talented interesting and fun colleagues in this space!

The high points from Atlanta … some good key notes and panels. I especially liked the interview with Clay Mowry, President of Arianspace. Great perspective from a senior executive who lives and dies by intelligence insights … Just goes to show that even rocket scientists need intelligence!

The Great Debate session was indeed great … see below.

The Learning Labs and Marketplace-of-Ideas sessions were excellent additions to the typical mini-seminars that crowd the SCIP agenda. Too often in the past, mini-seminars were mostly thinly veiled vendor or author pitches. Not so with the Learning Labs and Marketplace-of-Ideas. Lots of aha’s going on in these sessions, lots of energy.

Overall, not as much negative vibe on vendors this year. And speaking of vendors, there were some interesting new technology providers that I’m sure we’ll see a lot more of.

Of course, John Thomson on his guitar, the band, and the Rock-n-Roll Dance Party were a blast.

And the low-lights:  Lower attendance and too high a vendor to practitioner ratio. Would have liked to hear from our board and missed the “state-of-SCIP” facts and figures. While Nan Bulger did a nice PR speech at the open, there is still a restlessness and worry among the membership that we are shrinking and not really leading professional growth and expansion. Some good sizzle but it is not at all clear where the bacon is.

The GREAT Debate!

Alysse Nockels emceed the best discussion / debate of the conference. Using a recent academic study as priming, the question is before the house: Has the association with “spying” and “dirty pool” forever tainted and stigmatized the profession? And therefore is doing intelligence in the business environment a bad idea professionally?

Craig Fleisher (SCIP Fellow, Aurora WDC Chief Learning Officer) argued for the affirmative case. Bad practices and high profile mistakes and failures have put CI behind the Eight Ball. Reputational risk, PR fear and a bad taste in mouths of senior managers continue to drag us down … and maybe we can’t break out? (Could say a lot in favor having survived the famous P&G vs. Unilever incident.) That’s the nut of the affirmative case.

Kevin Mann (IBM) took the negative! The reality is that despite the “stigma” the numbers don’t lie. 172 thousand LinkedIn profiles list competitive intelligence skills and experience. And relative to things like Stock Broker or Senator or even Lawyer and Chief Financial Officer, Competitive Intelligence Professional score higher in trust and reputation in surveys (as it should be!)

Kevin makes the excellent point that doing CI actually makes business professionals stronger, better thinkers, and stronger in terms of understanding ethics and principles. Net CI work should and does increase reputation of practitioners … whether they keep on in CI or move to other disciplines.

Bottom line of Kevin’s argument, CI makes stronger professionals, makes great and real impact, and are true guardians of ethics and principles.

I think Kevin’s argument wins … in a landslide.

Day 2 SCIP ATLANTA … afternoon and evening

Lots of good content today.

Lunch was divided into industry tables and I joined the Consumer Goods round. Not a lot of staples guys, but several retail and personal electronics friends. Good discussion and some interesting insights.

For those with a bent toward staples the demographic problem of slower family formation and a relatively poorer millennial generation is only exacerbated for retailers and consumer electronics players. The number of toys people are buying is not growing. And sharing toys is now de rigeuer for younger generations. What this portents for stock price multiples based on 4 to 6% market growth or higher, anybody’s guess! (What cannot go on forever, won’t.)

Day 2 SCIP ATLANTA

Lots of good fellowship and discussion last night at dinner. Many interesting companies, unique challenges, and the wonderful passion of CI people who want to “figure it out and get it right”.

Not so great start today. This morning’s keynote Keith Pigues (North Carolina Central University and Keen Strategy) did a bit of a retread from 2013 on his Differential Value Proposition thesis and book. It’s a good message but it was almost word for word the same speech as 2 years ago. And his style is loud and preachy which I think rolled over the audience. Here’s his message in a nutshell … it’s not enough to talk about putting customers first, you have to discover and measure how you make customers more successful:

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Also, it would have been nice to have some remarks from the Board Chair Alysse Nockels to start off today.

DAY 1 ATLANTA

Greetings from Atlanta … things are just getting underway at SCIP 2015. Attendance a bit down but Marriott Marquis is a great venue. The hotel was the setting for some of the Hunger Games filming. Very modern and funky architecture and on a massive scale. Will post pictures later.

OPENING SESSION…

First up today, a great key note! Intel’s in-house futurist Brian David Johnson. Funny, glib and, for once, not full of trend blather or laser-light nonsense. Rather, as he called himself, a “practical futurist”. Meaning that his method is disciplined, evidence based and hypothetical. Best of all, he rejected, flat out, the dystopian imagery of machines and technology running a dehumanized world … the stock and trade of many so-called futurists. His big thought. Human beings make the future, not history with a capital H. We should be optimistic and understand that we are the agents of tomorrow … not creepy technologies or scary forces beyond reckoning. Amen to that!

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MARRIOTT MARQUIS…

As promised … very cool!

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Update on afternoon… Some very good sessions running most of the afternoon. I didn’t stay for the Frost & Sullivan future stuff which folks reported as being “pretty tired”. Which is too bad after the strong start by Brian David Johnson.

Trade show opened and was packed.  Indeed a lot of critique that of the approximate 500 attendees, nearly half seem to be vendors … or as we call them “solution providers”. Obviously, as a vendor, I have a conflict of interest. But the critique is fair.

I did attend a good learning lab event emceed by Craig Fleisher. Good, diverse group of mostly CI leaders, talking about solving the “one big thing” that is holding them back. Prioritization, focusing on breakthrough work, and establishing organization cred were some of the big issues. Below were solutions, captured from flip charts. I’ll blog on these ideas more at a later date, but the raw material is worth consideration…

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On a sunny Monday morning, what could be a better thing to do than to help our brothers and sisters seized by a sense of hopelessness?  For neighbors of mine, Dave & Christi Eaton, this is exactly the mission:  Hope Bridge.  Let’s join in building that bridge.

 

Truth and trust, the watchwords of leadership. If you didn’t see this on LinkedIn this week, it is worth your time. Welch is spot on! (And a complete revolutionary “quietly” working to upend the education biz.)

 

Charles Murray makes an interesting case on how we might break the back of the regulatory state. His concluding remarks are especially poignant. Grab a coffee and put in the buds. And I say, bring on the Madison Fund!

Cato

 

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I listened to an excellent talk yesterday from my friend Clay Phillips. He was giving a brief overview of Lean Startup methodology and how intelligence can play a critical role in the Lean Startup process. His central point was that intelligence is all about understanding unknowns, and Lean Startup is about converting unknowns to evidence, decisions and market moves.

It also got me thinking about our theme of bad strategic advice.

When I talk to small businesses and budding entrepreneurs I often talk about the two great sources of new business ideas: The really different and the merely different.

The really different, as we discussed earlier in the series, is the cool, new-to-the-world thing that completely alters how customers or consumers solve a particular problem or address a need. The merely different is the better thing … the product or service that substantially improves how customers or consumers currently solve a problem or satisfy a need.

Which causes me to reflect on that often cited but rarely questioned concept of “first mover advantage.” Is there really such a thing? Do first movers really capture the lion’s share of value? Or do they often end up in the mouth of an orca, not unlike the proverbial first diving penguin?

Consider the recent rise and fall of Meerkat, the apparent first mover in “live video syndication” applications, to second comer, Periscope. I won’t pretend to understand the business model or appeal of the product, but it does seem that the second guy got the concept right.

This happens a lot more than “experts” want to admit. A quick look at the top companies in the world shows a bunch of “second movers,” perhaps the most famous being Apple.

Apple was arguably first in creating the standard Personal Computer experience (thanks to a certain fellow named Gates), but not first in the concept of personal computers. They were second to music and phones … and maybe one-millioneth to time pieces. Their success has been to make the products and experiences substantially better within the conceptual confines laid out by the largely forgotten “first movers.”

Google, Facebook, Wal-Mart … fill-in-the-blank … there are a lot of exceptional second movers out there.

This doesn’t mean that “first movers” don’t often rake it in. But the risks of going first can be substantial. And the supposed “advantages” of going first can become an achilles’ heel. All the research, marketing, supply chain, customer development, branding, etc., the “first mover” invests in, “second movers” can easily draft on while they concentrate on showing off how they are better. The first mover builds the house, the second mover lives in it.

Getting back to Clay Phillips’ talk. So much of the Lean Startup methodology is about getting ideas off the drafting table and into test so that “real evidence” of market and customer viability can be ascertained.

So what’s the best evidence out there? Current products and services. Often, the “first movers.” Robust innovation approaches with rapid learning models and rapid-fire prototyping and testing may mean that greater advantage starts to accrue to second movers.

Either way, we should never buy into “first mover advantage” as a fundamental truth. There’s more to it. Go first and build an empire? Or go second and replace an empire? Both may be valid approaches.

What do you think?

Watch this, it is worth every second!

The key point:  Just because you can afford to pay 30-300% more money to support your food philosophy, does that give you the right to condemn those who can’t?

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The news surrounding the merger of storied food companies Kraft and Heinz by buyout firm 3G Capital Partners garnered 3 separate Wall Street Journal articles last Thursday. Much of the flutter involved the supposed Draconian cost cutting associated with 3G’s insistence on “Zero Based Budgeting.”

It might surprise you that I think Zero Based Budgeting is actually a pretty smart thing. It won’t fix what ails these historic brands, but it is a much better approach to cost control than bench-marking or financial target derived restructurings that are the more common practice.

The reason the Zero Based approach makes more sense is that it is internally derived by those accountable to achieve results. Managers make their budgets, justify them, and then have to live by them. That’s called ownership. And it’s much better culturally than being hacked from above.

For up-and-coming managers and executives, the Zero Based internal justification process requires two very important things: 1) That they understand their business at a “cause and effect” level of detail that will make them smarter, more engaged and stronger advocates for their organizations; 2) That they take risks and decide what is really important. They have to put their money where their mouth is.

DifferentionRadar

Last week, we decried that hollow bit of strategic advice, “differentiate.”  So obvious as to be trite, so natural as to be assumed.

But for all its obviousness, differentiation is essential … and difficult.

Unfortunately, too many of us in the strategy world argue stridently about what is meaningful and “strategic” differentiation. It’s a wasteful argument and deters organizations from the hard work of building meaningfully different and hard-to-copy franchises.

As I said last week, differentiation has to happen on at least three different levels: Territorial, Economic and Propositional.

Territorial Differentiation

The territorial level is the highest and most classic differentiation and involves two critical questions. To paraphrase the Monitor or Michael Porter “Choice Structuring” approach: Where are we going to got to market? And how are we going to convince customers to buy our stuff instead of the other guy’s? (See Roger Martin’s and AG Lafley’s book.)  How you answer these questions are termed “positioning” choices. (The “Blue Ocean” types are essentially talking these same choices, suggesting the key is to make territorial choices that “hit ’em where they ain’t.”)

The territorial choices you make imply equally specific options you will NOT pursue:

“We are going to sell in urban centers through distributors; We are NOT going to sell in rural areas through mass merchants. We are going to sell to Fortune 1000 firms; We are NOT going to sell to mid size manufacturers. We are going to sell on price; We are NOT going to sell on quality.”

The problem, of course, is that the number and value of “positioning choices” diminish as the business grows. The bigger you get, the fewer there are. An entrepreneur can be very precise about customer selection. But a large multi-national that already owns big market share positions, can’t make many “different” choices. Their oceans are red indeed!

To be fair, classical Choice Structuring does try to concentrate on the “customer value” element … how you position yourself to “win”.  But the process tends to simplify the process of designing a competitively meaningful business model, let alone digging down to the work required to ensure the firm’s products and services are distinguishable from others.

Business Model Differentiation

Business model differentiation … what I also term “economic” differentiation … is the one we see so often in high tech but tends to get short shrift in more traditional venues. Many traditionalists will say that “strategy” and “business model” are different things.  But dismissing the strategic elements of business model design, or trying to narrow the work to very specific transactional choices (i.e., your price position, or whether to outsource certain functions, etc.) cuts off some of your best opportunities to create real competitive advantage.

Business model design (or redesign) is really an essential element of a strategy.

The core idea is to put under the microscope the way customers transact with suppliers … of re-engineering how profit develops. Adrian Slywotzky wrote a lot about how business models capture value in the ’90’s. The Profit Zone should be required reading.

High tech has been all about changing the way money moves. Typically, they have used digitization to disaggregate value chains. Amazon removes the bookstore, the inventory, the marketing, and the cost of intermediaries. Uber crashes the licensed taxi monopoly. Ebay creates a virtual but liquid marketplace and, in so doing, eliminates seller’s opportunity costs.

Large, incumbent firms can dance too! I just did a war game where the large multi-national client sold each of its equipment lines as stand alone franchises, marked by a quality and performance story backed up by high reputation selling. The client was starting to have real problems with one specific competitor.

That competitor, also a large multi-national, was beating my client by portfolio selling:  Cracking accounts with “loss leaders” and sample kits and steadily adding more profitable and specialized items. In addition, the competitor was changing contract terms and metrics in ways that changed how customers perceived and measured value.

Purists might argue these are just different selling tactics. But the competitor’s approach is comprehensive, sophisticated and changing customer behavior. The competitor is capturing value is a different way, on a different time-line, and making bank on the bet that my client would find changing its ways too costly to effectively counter them.

The competitor’s choices are the essence of strategic!

Proposition Differentiation

The third level of strategic differentiation is propositional. How is the specific product or service different?

The battle lines on propositional differentiation are sharp. Tech minds and innovation pundits see it as essential and elemental. On the other hand, strategy mavens will often say it is not enough. Too few inventions and technologies have the power to sustain competitive advantage. They can be readily copied or mitigated.

(Funny how the naysayers don’t see the disconnect in their argument. Product and service innovations that force efforts to match or overcome … that drive change … sound entirely strategic to me!)

Product and service differentiation is complex and can be fleeting. But it is how most businesses come into existence. The problem -and a very strategic one- is how to keep it going. This problem drives entrepreneurs while it constantly trips up and diminishes the innovation capability of large firms (see Innovator’s Dilemma).

No amount of high level “fixing” can overcome the dilemma. Firms cannot do “one and done” on their “better than” proposition. They have to work out lines of innovation. Once they establish their “better” product or service, they have to start mapping out the next iterations and improvements. Then they have to marry these innovation lines to their business model and territorial decisions.

Some times the higher level choices are about protecting and extending the value created by propositional elements. Keeping competition out.

Other times they are about enabling and exploiting propositional elements. Taking on competition.

Bottom line, the greatest business strategies happen when firms differentiate on all levels: They differentiate in terms of the territory they stake out. They are different in how they capture value. And then they ensure the nature of their product or service causes customers to say “wow.”

 

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