Strategy

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Happy New Year!  Welcome to 2017 and the repost of our annual Intelligence New Year’s Resolutions.

The last couple of years I’ve posted the same 4 critical resolutions for your competitive intelligence or “market reconnaissance” capabilities. These original resolutions are summarized below and remain as relevant now as when originally published.

In 2016 I added to the original 4: Don’t Wait to be Blessed!

Don’t Wait to be Blessed came from a discussion with my friend Becky Okamoto about the challenges of organization change. She pointed out the common laziness and lack of personal leadership that are rife in organizations screaming for help, whether with personnel development or growing capability.

Borrowing her phrase, I still see too many nascent (and established) intelligence groups waiting for some voice from on high to “bless the mission” and somehow sweep away obstacles to organizational uptake for intelligence.

Don’t wait!

The blessing and the sweep aren’t coming … or at least not in a form satisfactory enough to ensure success.

First off, many of your bosses and clients won’t understand what you are trying to do until you’ve done it. Second, chances are you won’t get it right the first time or two.

Intelligence is a fluid, trial and error enterprise. Focusing on “paint-by-numbers” action planning and organizational chartering is mostly a waste of time.  And waiting for a clear mandate from above is a sure license to fail.

Instead, go do it! Go make results and then build from your success. You can put wrapping on the intelligence gift after it’s opened … no one will remember that you acted before you got permission.


The original Strategy Shapers’ Intelligence New Year’s Resolutions…

Put Winning First … Our raison d’etre is (or needs to be) to help our firms succeed in the market. Too often we get wrapped around the wheel of process and forget this simple mission. In 2017, let’s put winning front and center. Read more….

Take Responsibility with Passion … Too many intelligence professionals adopt a dispassionate, stand-offish … dare I say, “clinical” … attitude to their work. They want to leave the hard work of “owning” decisions to others, to their bosses. If we want to make a deep and lasting impact on our firms … if we want a healthy profession … we need to stop this and join the team. Read more….

Take it to the Street … If we can’t translate intelligence insights into BOTH tactical and strategic actions that are practical and tuned to current market realities, whatever brilliance contained in our analysis will be lost. If we act like theorists and not like operations, marketing or sales lieutenants, then our impact on business results will be forever limited. Read more….

Think Financially … Good, bad or ugly, the world marks organizational success and failure in financial terms. All the best primary source evidence, analytical sophistication and analyst passion can’t overcome financial market opinion. So let’s not dismiss the Wall Street or Fleet Street point-of-view. Let’s understand it and make it part of our intelligence toolkit. Read more….

What resolutions and goals do you have for your intelligence team? Let’s talk about them. Add your comments or send me a note. Happy New Year!

Just as I was glad Scotland stayed in union with England and Wales, I am for BREXIT! This great nation that has been such a power for good in the world needs to reclaim its destiny.  These two perspectives seem right:

Professor Deirdre McCloskey is at it again. In Saturday’s Wall Street Journal she laid out the reason wealth and progress took off at the end of the 18th Century and hasn’t looked back. (Despite significant and ongoing effort to strangle the baby.) In summary:

The answer, in a word, is “liberty.” Liberated people, it turns out, are ingenious. Slaves, serfs, subordinated women, people frozen in a hierarchy of lords or bureaucrats are not. By certain accidents of European politics, having nothing to do with deep European virtue, more and more Europeans were liberated. From Luther’s reformation through the Dutch revolt against Spain after 1568 and England’s turmoil in the Civil War of the 1640s, down to the American and French revolutions, Europeans came to believe that common people should be liberated to have a go. You might call it: life, liberty and the pursuit of happiness.

To use another big concept, what came—slowly, imperfectly—was equality. It was not an equality of outcome, which might be labeled “French” in honor of Jean-Jacques Rousseau and Thomas Piketty. It was, so to speak, “Scottish,” in honor of David Hume and Adam Smith: equality before the law and equality of social dignity. It made people bold to pursue betterments on their own account. It was, as Smith put it, “allowing every man to pursue his own interest his own way, upon the liberal plan of equality, liberty and justice.”

A full read is absolutely worth the time. The essay is a set up for McCloskey’s new book. But it builds on themes she has laid out before.

When the answer is so straightforward you have to wonder why so many politicians, academics, elites, and even “business leaders”, seem so desperate to put the genie back in the bottle?

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ONE:  How will Artificial Intelligence Impact the Future of CI

This was a great point, counter-point discussion between Ed Alison and Terry Thiele. Full coverage here.

Ed made the great point that we need the machine to grind thru (and think thru) the giant pile of data that we confront today and that will only grow more massive as we go forward. Ed wants us to enlist the tools of the digital age to tame the digital age. If we don’t, we’re toast.

Terry countered that this massive deluge actually requires more and better human minds to see thru and make sense of it. Terry bases this view on what he sees as the real impact of the digital age: The democratization of innovation and creativity. (My words.)

Of course, the debate’s conclusion was these points are likely more complementary than conflicting. We probably have to use more tools to grind the data. But we also need to recognize that most of the data is no more than effluent. Insightful, creative minds will be all the more critical to discerning threats, opportunities and to seeing the way forward.

Bottom line: This talk is why Reconverge is the best competitive intelligence forum in industry today!

TWO: Intelligence Impact over the Life of Products and Services

Jason Voiovich kicked off the Conference portion with a great talk about risk and insight as they relate to product lifecycle management. Excellent framework for thinking of how Intelligence needs to position itself and insert itself in the organization. Read here.

THREE: Intelligence for the Future … A C-Executive’s View

The “sleeper talk” from the conference was, in my view, Mike Suchsland’s. I say sleeper because it was not the best organized or most charismatic talk, but Mike’s perspective and insights are among the most important for intelligence practitioners.

Mike laid out the incredible challenge in front of intelligence leaders: reconciling management of the present state (organization, results, stakeholders) with reconnoitering the future … or in Mike’s term, inventing the future.

Mike shared great stories from his various C-officer stints and the challenges of matching strategic choices to business reality, organization character to company position and mission, and recruiting the right kind of people versus the just the kind of people you like.

In my view, any intelligence analyst or leader worth his or her salt needs to examine these questions very carefully BEFORE they commit one minute to their first intelligence project. (This, by the way, proved itself in the great Intelligence Shark Tank session at the end of the conference!)

FOUR: Financial Early Warning Indicators

Ryan Macumber from Best Buy talked about how careful financial analysis is crucial to the intelligence mission.

I couldn’t agree more. Understanding financial performance and capability is simply fundamental … and you don’t need to be a finance MBA to do it.

What you need to do is understand the critical performance metrics relevant to your industry. Then you need to understand how your company and key rivals deliver those metrics … the cash generation process. And then you need to understand how it is changing or how operational factors and industry trends will change it.

Bottom line, if you don’t understand how the math works, it’s hard to be effective with generating impactful intelligence insights.

FIVE: Little Problems in Big China

Tom Tao from James Madison University gave a great talk on where China is headed and also how to gather intelligence in China.

After listening to Tom’s insights, to say that China has big problems might be the understatement of the decade.

He gave us a lot information and data that all point to what we might call a “national restructuring”.  Bottom line, the assumptions on which China has built its economy over the last decade have simply evaporated. They built an infrastructure around an assumed competitive advantage -low cost basic industry- that others are now challenging (e.g., SE Asia, India, etc.) and that required a demand curve that is bent in the wrong direction.

Digging out and becoming a more entrepreneurial, open, high tech based economy is a daunting challenge. Tom thinks there’s no doubt the country has the ability to do it. But it will be a very rocky road.

Again, read about all the talks here: g2.reconverge.net/blog

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Reconverge is underway in beautiful Madison, Wisconsin. Intelligence and Strategy friends can follow the live blogging HERE. A lot of good stuff going on and very talented people. Check in often!

My Top 5 from Reconverge…

 

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What do you have when two tenths of the country’s population are able to dictate hundreds of millions of dollars of regulatory compliance cost on that country’s food industry?

Poor strategic leadership.

Articles like this one and this one have been cropping up over the last few weeks as the nation’s consumer food companies face compliance with GMO (Genetically Modified Organism) labeling requirements going into effect in Vermont this summer.

If you’ve stopped by here before, you know what I think of the thoughtless and immoral anti-GMO racket.

But what strikes me as particularly appalling in this case is not the fact that GMO labeling is mindless. Rather it is the ease with which major American corporations are practically laying over and taking it.

Yes, the Grocery Manufacturer’s Association sued, lost, and may get relief on appeal on restraint of trade grounds. And yes, the GMA got behind GOP senators who tried to pass some kind of bill to override Vermont. But that, predictably, failed. Now all the industry spokesperson “talking points” sound like “OK, we’ll do it.”

Who is advising senior managers in these organizations to go-along to get-along? How can they lay down after just one law suit?

The wiser strategy would have been (and still is) to force Vermont to prove its case. It might have taken some pain and treasure. And it would have likely required numerous individual company lawsuits (which would be a lot stronger than an industry association demonstration effort, since the suits would represent the interests of truly damaged parties … shareholders!)

An all-out effort would have more likely produced an injunction on restraint of trade grounds. More importantly, it would have eventually resulted in a finding of fact in court demonstrating that Vermont’s basis for action was unfounded.

The key point stands out in the WSJ article:

Though Vermont’s a tiny market for global powerhouses like Mars, it is having an outsize effect on the industry with the nation’s first GMO labeling mandate. Food makers say it would be too complex and expensive to create a separate distribution network for the 626,000-person state.

EXACTLY!  But in addition to the restraint of trade and interstate commerce issues, you also have a potential “existential” problem for many food producers who now have to “guess” if they are or are not GMO-free.

I say “guess” because there is no rigorous standard to determine GMO status … or at least no standard that can’t be challenged by anti-GMO Jacobins.

While many will say it’s just a costly inconvenience for big food companies, no compliance effort will really mitigate risk … let alone improve or save lives. The problem doesn’t go away, it just gets pushed down the street a block or two.

And then what about the little guy? You know the one that makes the “organic”, “fair-trade”, “non-GMO”, “gluten free” foodstuffs that those same Jacobins love to eat?

Conceivably, if someone determines that their can of organic green beans was fertilized by manure from a cow that ate GMO corn, they could be toast! Their organic green bean brand will be pilloried as Franken-food. They will be called a liar and a cheat. Protesters will show up on their doorstep. Their livelihood will be ruined.

A more courageous, all-out effort to fight Vermont would have sent a clear message to other states eyeing GMO labeling and could have saved everyone from this continuing anti-GMO nonsense.

Who knows, it might even have given Chipotle the cover needed to nurse itself back to health?

Andy Grove RIP!

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There have been numerous appraisals in the last week about the life of Andy Grove, founder and former CEO of Intel. The Wall Street Journal’s piece by Michael Malone is particularly good:  The Lion of Silicon Valley.

Grove truly was a colossus in the tech community and an amazing business leader.

Grove’s famous dictum (and title of his autobiography) -“Only the Paranoid Survive”- has always felt like a lodestar of sorts for those of us in the strategy and competitive analysis game. If only we could get our leaders to look over their shoulder and expect rivals to come after them.

Sadly the construction is freighted with tones of fear and isolation … and certainly Grove meant some of this. But I think his example and that of Intel is actually more liberating. If business leaders -really all leaders- could be more systematically open to the possibilities of disruption and change, engaged intellectually in how things can (and probably will) go awry, then they can more effectively be the agents of change.

It takes guts. In practice, Grove courageously changed the path Intel was headed down more than a few times. He attacked change, wallowed in it, tried to look inside it; and once he figured out where to go, it was full speed ahead.

Operate like Andy Grove and it is unlikely you’ll get beaten!

 

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All the state loving dandies are gathering in Paris to solve the “climate crisis”. Luckily, little will come of this. Gaia hasn’t cooperated with their grand schemes. The 20 year warming hiatus continues and may, in fact, be gaining strength.

Further, the Indians and the Chinese aren’t going to let overfed Western technocrats deny them their prosperity.

But what I find so ironic is the incredible strategic mistake made by climate fanatics. While screaming “denier” at us skeptics, they themselves denied the most fundamental science by picking the wrong bogeyman:  carbon dioxide.

Carbon dioxide is simply NOT a real pollutant or meaningful greenhouse agent. Instead, it is essential to life, especially the development and sustaining of biomass. Here is the proper perspective on carbon dioxide…

While dogmatic fanatics aren’t known for seeking knowledge and practicing introspection, the continuing vogueishness for educated people to believe in human caused climate change is starting to be unseemly. The consensus that never was is foundering on facts and evidence.

So, while it might have been fun to be a cool kid when the crisis was new and hip, now the whole thing is a foolish non sequitur:  Illogical and unscientific thinking, misplaced and misguided sympathies, all serving to put only the thinnest veil on the tyrannical intent to concentrate political power and stifle human freedom.

It is way past time to throw it off and concentrate on real problems.

American breweries

OK, so the other day I lampooned the strategy of consolidation by the mega-brewers. Here is a great series of videos discussing the craft-beer revolution that has caused such angst for ACME MEGA-BREW INC! They are quick and fun. ENJOY!

1) The first installment talks about the revolution brought on by deregulation -really, decriminalization- of home brewing:

2) The second installment shows the impact of the MEGA-BREW distribution network and the need to circumvent it in order for craft beer to thrive:

3) The last installment shows who benefits the most from you thumping down so much money to enjoy good beer. Any guesses? Yes, the government! Finishes with a good nod to how much more good beer might be available to you if we could cut consumption and excise taxes:

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When you propose marriage you aren’t supposed to look desperate. But that seems to be the stance at Anheuser-Busch InBev, which just got jilted after its 3rd offer to buy SABMiller in less than a month.

The numbers are ridiculous:  $104 Billion to “buy” (a.k.a., merge) a structural basket case that is “big brewing”. Huge dollar mergers & acquisitions, followed by massive cost cutting, and then gi-normous fees for the consultants, bankers and executive parachute artists. This is what passes for “fixing” businesses that are being out-competed, fair and square.

The healthier the beer business gets, the worse the big brewers do. Why is this?

Simple answer:  Craft beers taste better and you’re willing to pay for them.

Instead of riding the value curve, the big brewers tried to capitalize on craft beer pricing to harvest margin as their consumption and market shares drifted downward. What used to be relatively cheap (24 pack cases of canned lagers), doesn’t look that way anymore. A few more bucks for a couple 6’s of the good stuff and who wants 24 cans of plain vanilla suds?

So all the big guys seem able to do is fight a massive rear guard action of merge and cut. They refuse to lower prices and force consumer choice or spur consumption. They can’t seem to stick with and grow new offerings. Their craft-like efforts tend to fall flat because of a lack of meaningful differentiation and local flavor.

What to do?

Rather than waste cash on mergers and ruin balance sheets with restructuring games, do the hard work! Cut prices and own the value message on core offerings. Pick credible innovations (e.g., fruit infused) and support them consistently. Do craft offerings but win on value … understand that you can’t “out local” the local guys.

As for competition, don’t simply try to beat out craft beers. Instead, look for ways to co-opt them. Share brewing capacities and distribution channels. Co-market, especially at major events and sports venues. Let the craft guys shine in the “great but expensive” department while you own the “good and inexpensive” territory.

The choices are not hard. The execution, however, is mighty difficult!

It requires “Big Brew” to accept the changed environment in which they find themselves. It also requires that they adjust their ambitions in ways that depart starkly from how they have traditionally conceived of themselves and their brands. In other words, they have to redefine what it means to be a leader.

 

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