Effectively Understanding Your Competitors
SummaryEffective understanding of competitors is central to competitive advantage. Competitive intelligence collection, rigorous analysis, superior interpretation, actionable recommendation, effective implementation and continuous optimisation help create winning strategies.
Being cognizant of what is happening outside one’s own milieu is one of the vital components of success. From a reductionist perspective, observing the environment, competitors, their intents, strategies and tactics collectively fall under the umbrella of external analysis. Proponents of benchmarking such as strategic decision-makers, equity analysts etc would argue that external analysis is often most useful exercise if conducted judiciously.
Proactively monitoring the external environment and its constituents is routinely performed by multiple functions and at various levels in an organization. For instance, at the corporate end of the spectrum, external analyses are conducted through, inter alia PEST, SWOT, Five forces framework and needless to mention explicit financial benchmarking. At the other end of spectrum i.e. at a single asset level, external analyses are usually conducted through the lens of marketing, often as part of 4Cs analysis. Similar strategic analysis tools are employed for intermediate position occupying aggregated assets such as R&D portfolio, franchise, SBUs etc.
All the external analyses have fundamental goal of helping the organization create and sustain competitive advantage, perform better thereby ultimately create value for its shareholders. Optimizing the external analyses for supporting decision-making, irrespective of them being conducted in-house or though external parties, is one of the key imperatives. Extracting most return from competitor’s analysis, competitive landscaping, context analysis, external benchmarking often requires finessing of several factors and some of the best praxis are summarized below.
1. Get Into Your Competitor's Brain
The benefit of understanding the competitors' game plan equips one with reasonable predictive power. Amalgamated with the intelligence, one can anticipate the future course of actions and events, which helps to reduce unwanted surprises, reveal blind spots, refine strategy and tactics dynamically, future-proof one's own strategy etc.
2. Collect Intelligence and Construct Mosaic
Are you able to fit established strategy frameworks and decode competitor's strategy? This is the key element of deciphering strategy. You need to know the different frameworks of strategic management.
3. Generate Decision-maker's Virtual Reality
Role play decision-making process both from internal and external perspective.
- Think like the decision-makers of your competitor.
- Put yourself in their shoes and understand their intents.
- Ask yourself what you could do to achieve those objectives.
- Factor-in the assumptions that they are aware of external context as much as you are.
- Switch hat from the corporate decision-makers to external consultants.
- Think what advice external consultants would give to meet client's objectives.
- Clearly, this needs to be beyond what you get from the internal perspective else consultants are not likely to be engaged.
- This step helps to stretch your ability beyond obvious solutions.
4. Align Actions and Execution
Select appropriate vendors and align them with your objectives. Addressing the issues mentioned below streamlines intelligence gathering by making them more ready for decision-making.
- Are we along with the vendors 'primarily documenting' competitors’ activities in our intelligence gathering exercises?
- Are the vendors capable of taking intelligence and insights to next level i.e. beyond cataloguing of facts and minutiae to decision-making?
- Do the vendors help us see the wood from the trees?
- Do the vendors have understanding of how the decisions are made?
- Are the vendors aware of strategic frameworks and can they translate clinical and technical data to assist you in your decision-making process?
- Are the vendors capable of reverse engineering, deciphering and explaining you the game plan employed by competitors? Some examples are:
- Player X seem to be employing BCG growth-share matrix style strategy and Player Y seems to be employing Ansoff matrix style strategy
- Growth strategy seems to focus on ‘three horizons of growth’
- The marketing seems more 'push' than 'pull'
Repeat the above mentioned four steps to refine further in order to get most out of your external analyses.
BiopharmaVantage is a specialty strategy consultancy that provides competitive intelligence and decision support services to pharmaceutical companies.