(4) Establishing a market intelligence practice in your company

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n the previous chapters we demonstrated that building market insights is difficult nor costly. In fact, as we have shown, many insights can be obtained with little effort and with virtually no investment. Nevertheless, chances are that you as a decision maker do not have any time to invest in this activity. You will need to rely on your employees to provide you with the insight, and if your need for market insights crosses a certain threshold you should probably consider putting dedicated resources to the task.

Easier said than done. Fact is: such a function remains in the category of overhead costs, so this naturally gives rise to a number of questions about its exact nature and the soundness of such an investment. In this chapter we will try to provide an answer to the most pressing questions that arise from this decision.

(4.1) Market intelligence... a full time job or not?

I am often asked, by any type of company, whether a strategic market intelligence function requires a full-time employee, or whether it should be part of the responsibilities of an existing function. There is obviously not a clear-cut answer to this question. Much depends on the type of business you are in, the size of your company, the competitiveness of the markets you serve. But, perhaps most of all, much depends on the level of strategic impact you want this function to have. If you want someone who buys reports, read and digest them and present a summary of his findings, you might do with a junior art-time employee. If you want this team to have strategic input, bring ideas for innovation and set the long-term priorities for the company, you will probably need a slightly more sophisticated professional, perhaps even a bigger team.

This chart summarizes the different intelligence practices on their way to strategic relevance:

In fact, any combination of the functions in this chart are possible. In a medium-sized retail business in a company with limited geographic scope you might have one single person incorporating all of these functions (if he manages to perform them all thoroughly is a different matter), while in a global consumer electronics company you might find these functions performed by tens of people, sometimes even spread across different business units.

The true question you need to answer in order to decide how many resources to put on market intelligence, is how many of the activities and intelligence areas here under are genuinely strategic and of vital importance to your business:

This is a –tentative- list of activities that relate to external market views, so it does not take into account Business Intelligence activities, that often fall under the responsibility of the Finance department, although as said my personal conviction is that business intelligence can only fully realize its potential if it is combined with market intelligence. But that is another story.

The point here is that dependent on your specific situation the strategic relevance of the activities in the list will vary. If you are a in the online retail business quite obviously the customer insights activity will be of more vital importance than, say, scenario planning. If you are active in many countries globally it is more important to have someone monitoring the economies of these countries than if you were only active in a specific region. Companies in the energy or health care sector will need to put more emphasis on megatrend analysis and scenario planning in comparison to, for instance, an entertainment business.

Another factor to take into consideration is the amount of market intelligence activities currently performed throughout the organization, but not necessarily under a specific market intelligence denomination. Chances are that your sales and marketing teams already perform some extensive competitive assessments, or that your product managers  are in fact skilled trendwatchers. In some cases, a centralized market intelligence person or team might take a lot of burden away from people who are performing such tasks next to their core responsibility. While it is difficult to measure, the time-savings a central market intelligence person or team will cause with other teams should certainly be part of the equation. After all, you probably prefer your sales teams to work on their relationships with their accounts rather than spend time reading market reports and mess around with spreadsheets.

However difficult it is to put an exact figure on how much market intelligence resources one should have, there is a general rule to be distinguished here: the higher you score on following factors, the more market intelligence resources you would require:

• Number of countries in which you are present;
• Number of competitors (direct or through substitutes);
• Number of products and services you bring to market;
• Diversity of your sales channels;
• The importance of customer loyalty for your business;
• The impact of the economic environment on your turnover;
• Number of clients that generate the majority of you turnover and/or profit;
• The amount of time other teams are spending on market intelligence activities.

(4.2) Who should your market intelligence function report to?

So who should a market intelligence person or team report into? In many companies you will find such a role in the marketing department. This is perhaps due to the confusion with the role of marketing intelligence, which has more to do with managing databases for lead generation purposes. Market intelligence, however, covers many more activities and its impact should be much broader than just marketing. In fact in many ways it should assess the impact and direction of the marketing function, so in that sense it is perhaps better to leave it out of the marketing department all together.

In other companies the market intelligence role would report in the ‘Operations’ team. This certainly makes sense since the Operations department has a footprint in every activity of a company, so this would ensure that market intelligence stays in touch with every aspect of your business. Furthermore, if ensuring corporate growth  is part of the responsibilities of Operations, market intelligence should certainly offer a valuable contribution to this effort.

Bigger companies will often have a strategy division responsible for detecting untapped market potential. Its responsibility involves assessing markets en improving the strategic positioning of the company, where market intelligence obviously plays a crucial role. Also, by nature almost, this division needs to develop strong working relationships with each other divisions of a company, which helps to realize the full potential of a market intelligence function.

Regardless of where exactly you establish your market intelligence practice, there are some guidelines to keep in mind in order to maximize the effectiveness of this role:

• The function needs to be in a position to establish working relations with each and every division within the company;
• It needs to be perceived as a neutral function, although intricately it needs to challenge the effectiveness of every other division;
• Ideally it should be situated at maximal 2 levels from the CEO.

(4.3) Which frequency of reporting for your market insights?

Many of the market intelligence tasks mentioned previously will have a ‘natural’ frequency of reporting. Market share figures, for instance, are mostly reported on by quarter, so the work based on these figures will have to be organized by quarter as well. Other tasks, like monitoring the business environment, will need daily attention and should hence be communicated through tools that allow the target audience to pro-actively get the insights, like an internal blog for instance. Ultimately the exact frequency of reporting will depend on your exact situation and priorities, but here under is a tentative general overview that worked for me in the past:

As said this overview is far from a ‘one size fits all’. It only aims at showing that different types of insights require different frequencies of communication. But building such an overview up front will also provide a good sense of how much resources your company needs in order to build an efficient market intelligence practice.

(4.4) Which communication means for your MI practice?

To a big extend the success of a market intelligence role in your company will depend on the way it communicates its findings and insights. Should you choose for written documents sent to a limited number of key persons in the company? Or should you have a constant stream of information on a specific page of your intranet, with the possibility for employees to leave comments and stimulate discussions?

Much will in fact depend on your corporate culture, obviously. But it is important to keep in mind that, while some critical information will naturally be communicated with secrecy (and, hence, through confidential reports), other forms of information generated by market intelligence can only maximize their value if shared broadly throughout the organization.

Take competitive information as an example. As discussed in this book, virtually everyone in your company has an opinion on your competitors, often based on loose discussions they might have with friends or relatives. Wouldn't it be worthwhile to collect their opinions and information? Sharing competitive information on an internal, online tool would enable such discussions and information gathering. This can be done through the creation of a ‘blog-like’ forum on which your market intelligence resource can post findings and launch discussions about your competitive situation.

But, as said, not all the information generated by market intelligence is meant to be shared broadly. Some insights therefore need to be communicated through more protected means, in reports or in personal meetings for instance. In general, we could draw following picture of the optimal communication means for each of the market intelligence functions:

(3) Examples of how to build market insights for strategic decision taking... all by yourself!

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n this chapter we will apply the advice from previous chapter on a number of very specific corporate strategy tasks. The aim here is certainly not to cover all aspects of market intelligence, nor is it to discuss every strategic decisions that could be based on these. As said in the introduction to this book, this is not a scientific work. Rather, it is our intention to show concretely how with relatively few efforts and budget, but with a solid dose of creativity, a corporate decision taker can arm himself with a sufficient load of market insights to enrich, and even improve his decision making process. 

(3.1) Monitoring your business environment

A great number of industries –although not all of them- are highly dependent on the economic climate for the growth of their business. A decline of economic activity will make consumer spend less, due to increased joblessness or a wide-spread feeling of uncertainty about the future prospects of people. Since people will consume less, overall trade will decline as well. The decline in trade will then affect transport and logistics, as well as the manufacturing of consumption goods. This will then impact the manufacturers of machines and resources that are designed to manufacture consumption goods, etc. Our global economy –even our local one, this is not necessarily a phenomena that is only due to globalization- is so mingled that virtually any company will experience the impact of a negative evolution on its business.

Hence the importance of monitoring this business environment. To be prepared, and eventually act on changing factors in your business environment that might impact your very own business. However, not every corporate decision taker is necessarily an economic expert, neither does he necessarily find the time to go through a vast number opaque economic reports. Nor should he. There are easier ways to assess one’s business environment.

If your business is located in Europe, for instance, you could benefit from checking the official statistics database of the European Commission, Eurostat, on a regular basis. In its database you will find a vast array of data about the economic condition of the European Union member states and, for some metrics, even of other countries, in all possible forms and timeframes.

The example hereafter aims at showing how this information could be relevant for your business. One of the indexes you can find in the Eurostat database is the so-called ‘Economic Sentiment Indicator’. This index is based on a monthly survey conducted with the main economic actors, both companies and consumers, and reflects the confidence these actors have in their short-term economic prospects. Any number above 100 indicates that there are more economic actors that are confident about their prospects in comparison to those that are negative about it.

The importance of this index is that it is published at the end of each month and, as shown in the graphic below, there is a strong correlation between this Economic Sentiment Indicator and the overall European economy (shown here as the % quarter on quarter change of the Gross Domestic Product):

One does not have to be an economic genius to observe a strong similarity between both parameters, they grossly behave the same way. But the importance here is that the Economic Sentiment is a figure that is released at the end of each month, while the official GDP changes are released one or two months after each quarter! In other words: the Economic Sentiment becomes a leading indicator for the overall economy, since its patterns are likely to predict the patterns of the overall economic evolution.

Hence, if your business is closely impacted by economic growth, you might get early signals of how you will fare in the near future by looking at the Economic Sentiment Indicator on a monthly basis, instead of waiting for the official GDP figures to be published.

But how can you know for sure if –and to what extend- your business is dependent on the economic evolution? Here again you don’t have to be a mathematician to uncover this relationship. If in the chart above you would replace the quarterly GDP evolution with, say, the turnover growth of your company or business unit, you would virtually see whether there is a correlation or not.

Admittedly, in many cases you would need some statistical skills to uncover the exact nature of this correlation, but mapping it on a chart is something you can do yourself, and it provides you at least with a first hint of the existence of such a correlation. Furthermore, the overall economic growth and the Economic Sentiment Index might be metrics that are too general to look for correlations with your business. You might have to drill down into the components of the Economic Sentiment (as a reminder: manufacturing; retail; services; construction and consumers), or you might need to look for a completely different metric altogether, like the Baltic Dry Index of you are in the shipping business, the Purchasing Managers’ Index if you are in manufacturing, the Industrial Orders Index if you are in the business-to-business industry or services. If the public sector constitutes an important part of your sales, you might want to monitor public sector spending metrics more closely.

So, you might spend some time finding out which metrics you should use to monitor your business environment. But once you found them, they will prove an invaluable management decision tool.

It is important however to notice that the type of correlations to look for are not necessarily direct, one-to-one correlations (where the patterns of two metrics follow each other in the same time lapse and  to the same extend). For instance, in many cases the impact of a change in index (say, the economy of a specific country, or GDP) will have a delayed impact on one’s business, like in this hypothetical example, where it takes one quarter before the economic shifts impacts our turnover:

Another situation arises when the index is impacting your business only in the direction it takes, and not in the intensity of this impact. In the hypothetical example beneath, the evolution of the economy has an impact on our business only when it changes direction: 

Chances are that there will be no single metric that unambiguously predicts where your business is heading in the near future. Most likely you will have to combine a number of metrics with some impact (of some kind) on your business. But this combination will provide you with a solid early warning signal of times to come. Furthermore, as the example above tries to demonstrate, you could do it with relatively few efforts and at virtually no cost at all.

Did these examples debunk the myths about market intelligence?

(3.2) Prioritizing new market investments

Corporate decision makers often have to deal with making choices based on priorities. In which country or segment will  we invest? Where do we put our sales people and our marketing budget for a maximal return? In which markets will we introduce our new product or service first? These are often tough choices since they need to take into account many parameters, while not all of them are necessarily known or available.

While I was working as a Market and Business Intelligence manager at an American multinational, I received plenty of such type of questions. I remember one of them very clearly, since it posed some very particular challenges. It was on a Friday late afternoon when a colleague called me for an urgent question –I found out most of the urgent questions tend to be asked on a Friday afternoon, strangely enough. My colleague has just been appointed to head a team that would introduce a new product on the European market. Nice challenge, except that he was given only two sales people and a very limited marketing budget. You can probably guess what his question to me was: which countries should he focus on to maximize the success of this introduction.

Oh, I forgot to mention: he needed to take the decision the next Tuesday, and he had no particular budget to spend on getting data to support this decision.  

The technology being too new, we could obviously not rely on any existing market research to help us out. So what could we base our decision on? Actually, there were a couple of things we did know, and could use to build our market insights on. For instance, the new technology was specifically relevant for only a number of industries, and we did have some good insights in the IT budgets of these industries. Based on our previous experience, we also knew in which countries our sales channels were best prepared to introduce new technologies to their clients. Based on the same experience from past introductions of new technologies, we had a good knowledge of which countries were fastest in adopting new technologies.

Very soon we came to the conclusion that the information we did have available could be categorized in three types. The first category, let’s call it ‘Business Context’, contained information about the business environment of the European countries, like economic growth projections, addressable market growth for our existing technologies and  IT budget spending. The second category, let’s call it the ‘Internal Readiness’, contained internal information that provided indications of how successful the introduction of a new technology could be in the European countries, like the pace at which previous technologies were adopted by the countries, or how many sales channels we could leverage to introduce the new technology. The third category, let’s call it the ‘Industry Relevance’ contained information about the potential of the industries for which the new technology was designed for.

We ended up with following list of metrics we could use:

(‘Technology X’ in the list designs the technology we needed to introduce. The technology was already available in the US and, while there was no special emphasis on it, already sold in the European markets. So we had some insights in the early adoption of the technology)

These three categories answered three crucial questions we had to answer to make our prioritization question:

• Which markets have the most favorable business environment in which the introduction of our new technology would be successful?
• Which markets have shown in the past to be the quickest adopters of new technologies?
• In which markets are the industries we focus on the biggest and most promising?

But how could we use all the metrics above in order to answer these three questions? It is important to keep in mind here that our single aim was to prioritize the countries in which to introduce our new technology. In other words: we were trying to measure their relative attractiveness for this technology. Hence, in the initial stage at least, we could rank the countries for each of these metrics.

For the first category for instance, this provided us with following view:

This table compared countries to one another based on how well they scored on the business environment metrics. It is a ranking, so a ‘1’ indicates the best performing country. For instance: Germany is the biggest European economy and hence had the score of 1. The composite Leading Indicator of the OECD (an indication of how well the economies will perform in the near future) indicated that Greece had the best economic growth prospects, hence Greece was given a score of 1. Before you ask: this analysis was performed well before the 2008 financial crisis and its subsequent economic troubles.

By taking the averages of the scores for the three categories, we obtained a solid view of the different countries’ attractiveness for the new technology, and where our investments would have the highest return. At this point, each country had three scores, which we could then map on a single chart, for instance a bubble chart (ideal when working with three dimensions). For instance, we could map the scores for the business environment in the X-axis, the scores related to the internal readiness on the Y axis, and the bubble size could represent the industry relevance metric. This would provide  us with a view in which we can recognize four country segments, each with their specific conclusion for how to go-to-market with our new technology:

“Ideal world”

Countries in this segment are ideally suited to introduce the new technology in. They have a promising economic climate and have proven in the past to be eager adopters of new technologies. To realize their full potential these markets need to be addressed with sufficient focus and, eventually, budget. In our case, this would mean putting our sales resources on these markets.

“Seed”

The countries in the top –left segment need a different approach. These are countries that benefit from a favorable business environment, but have proven to be slow adopters of new technologies (at least ours). Sales activities in these countries are not likely to succeed quickly, at least not in comparison to the countries in the “ideal world” segment. We should rather sell the bigger picture in these markets, trying to evangelize the need for and the benefits of new technologies, and investigate which arguments might make them more favorable to these new technologies. One could argue this is a challenge for the marketing department, so perhaps we should reserve some of the marketing budgets for these countries.

“Harvest”

 The countries in the bottom-right segment have shown to be smooth adopters of new technologies in the past, but the current unfavorable business environment might hinder them to be early adopters of the new technologies, at least for the time being. Though we need to prepare these markets for when the market conditions turn favorable, we should not seek to invest too much efforts in sales right now, at least not by dedicated sales people. Perhaps we need to single out top potential customers in each of these markets, and have them covered by a business development resource, or by internal sales.

“Wait”

Countries in the top-right segment endure difficult market circumstances and have proven to be slow or lagging new technology adopters. Given the limited resources at hand, we would not put any particular emphasis on these markets.

We now obtained some insights to base our decision on:

In our specific case we might conclude to put the two sales resources on the German and British market, if at all possible in conjunction with the Italian market. We should use our marketing budget to increase the adoption rate of Sweden, France, Netherlands and Switzerland , and invest in informing the Danish, Spanish, Belgian and Greek customers about the introduction of our new technology, perhaps through the existing sales force (which would require some additional training).

Of course you will argue that the lines we have drawn to define the segmentation are completely subjective. And, indeed, if we would have had access to four sales people instead of two, we could have drawn the vertical line somewhat more to the right. The separation line is subjective, and should adapt to the resources at hand. Do not forget this exercise was aiming at comparing countries in terms of the success with which we could introduce a new technology. The chart above provides an unambiguous answer (although the metrics themselves might lead to ambiguity, dependent on which ones you chose to include).

Working with aggregated indexes, like we have done in this example, has the advantage of including a large and varied array of arguments and parameters into our decision equation. We could refine it further by giving different weights to our parameters, favoring those we are sure to have an impact on our decision over ones that are only vaguely related to our subject.

I do realize that many decision takers will not feel too comfortable with these aggregated indexes. Many will rather have the full list of parameters with their scores, eventually put in a ‘heat map’ in which they can quickly judge on the overall attractiveness of a country –and the reasons behind it. Fair enough, both views can coexist since they basically tell the same story, and the overall conclusion will invariably be the same with both views. My preference for the aggregated score originates in the simplicity the ultimate view offers, the fact that so many arguments come together in a limited number of factors.

Also, many decision takers might feel uncomfortable with this exercise since it offers no guarantee of accuracy. However, we need to keep in mind the initial request when building this type of insights. The aim of this exercise was to prioritize countries in which to invest, in other words: to compare countries based on specificities that undoubtedly are relevant to our decision. Putting them together does not alter the accuracy of the picture we are building, and certainly does not diminish the degree of confidence with which we take our decision. Quite on the contrary, if we find a sufficient amount of metrics, and if these are sufficiently related to our decision, we will increase our confidence, since mistakes or misjudgments will be countered by the many other metrics that are accurate. In a way this reduces your error margin.

And, as was the case with this exercise, sometimes it is the only type of insights one can build for a decision.

Did this example debunk the myths about market intelligence?

(3.3) Assessing your competitive position

Needless to say, we live in an era where most markets face an ever increasing competitive threat. Globalization and the liberalization of multiple markets have led to the emergence of new competitors with –for the moment- a significant cost advantage in comparison to companies in the developed world. Furthermore, the digitalization of businesses and the emergence of mobile communication have led to a significant reduction, if not the complete abolition of entry barriers. In many industries the competitive threat does not arise from competitors doing the same thing at a lower price or better quality, but from a completely different business model that simply replaces your value proposition. Newspapers have seen their relevance evaporate with the emergence of blogs and social media, retail companies have seen their business model pressured by the growth of online shopping, the traditional photo shops have lost much of their value to online document sharing tools such as Instagram, Picase and even Facebook. In the future, manufacturers might face the pressure of 3D printing; car manufacturers and transport might see demand for their products and services diminish with the emergence of the ‘sharing economy’; banks might be attacked in their very core business –lending money to people- by the emergence of peer-to-peer lending and crowdfunding.

Competitive pressure will rise, undoubtedly. Luckily, there are now more tools available to monitor and assess this competitive threat. The days where one had to roam through conferences and trade fairs or spend hours analyzing the financial reports of competitors in order to assess his competitive positioning, are long gone.

Youtube and Slideshare now offer valuable ways to check what your competitors are planning for the future, or even how they position themselves in comparison to your business. On LinkedIn and jobsites you can check what type of experience your competitors are currently recruiting (or which profiles are leaving the company), an invaluable sign of the strategic direction they are likely to take. Say you are in the fashion business, and you see on LinkedIn that your competitor is hiring a professional with a solid experience in developing outlet stores, it would give you a solid clue about their plans in the near future, wouldn’t it?

However, all this information is rather anecdotal. It cannot be put in figures and be aggregated to a point where it would lead to relevant insights and conclusions that would help you design a successful competitive strategy. For that, you need hard facts and figures.

This would be fairly easy of your market was dominated by a small amount of companies that all publish their results in full detail. In most markets, however, this will not be the case. You will have to assess your competitive situation indirectly.

Provided that you have some budget available you will be inclined to pay for services like Nielsen and GfK in the consumer industry, or IDC and Gartner for the ICT industry, that regularly communicate detailed market share figures in their respective markets. However, it is important to keep in mind that these market share figures in many cases contain a vast amount of assumptions and calculations, which sometimes reduces their accuracy.

Just as an example: market research company IDC bases its market share figures mainly on the input of all the vendors within a specific market. However, many of the biggest vendors provide their figures only at worldwide level, and provide some guidance on the split of these figures by region. So IDC has to make a fair number of assumptions in order to report market shares at country level, which they do by modeling the numbers based on –albeit sophisticated- assumptions. I know from experience that the resulting market shares often make sense in bigger countries, but much less so in smaller markets or segments. Furthermore, the definitions these research companies work with, both in terms of market segments and product or services range, do not always match with the ones used within companies, which sometimes makes it difficult, if not impossible, to use them for planning or (competitive) strategy purposes.

Let me be clear here: the observations above are not meant to state that these market research companies are useless in terms of market share reporting. Far from it. If anything, the market shares these companies report do reflect trends and directions that are extremely valuable to understand your competitive position, and hence, even if sometimes inaccurate, they provide a very solid basis for further investigation. What I am saying, however, is that the market share figures from specialized companies should not be taken at face value, and should be discussed and validated internally by the people that are best positioned to assess their accuracy: your sales force.

I know, this statement will make a lot of corporate decision takers quite uncomfortable. Asking the opinion of sales people about such things as market sizes and shares? They certainly are bound to minimize the former and maximize the latter, no? After all, their targets will depend on these figures!

Well, from my own years of experience organizing such validation discussions, I can tell this is not necessarily the case. For one, sales people seeking extra investments in their market will be inclined to over-estimate its size instead of minimizing it. At any rate, just like data from external agencies should not be taken for granted, the view you build based on feedback from sales people should not be neither. Both are nevertheless very complementary in building a more accurate view of the market. Furthermore, there are other advantages linked to such a validation process:

• Such a validation exercise certainly offers a chance to eliminate the aberrations of the market data you use for planning (sometimes, by comparing external market data with internal sales figures, you might find out you have a market share of more than 100%!). By building a market view with a combination of external and internal views, you will end up with a market view that is agreed on by everyone, and hence forms the best basis for planning purposes;
• Dependent on the size of your business and the level of granularity you ask for validation, inaccuracies of the sales view will quickly become visible. If for a specific product or service the sales teams in ten countries tell you the market is growing with, say, 20%, but in just one other country the feedback from sales is that the market is stagnant, you know something is wrong. There might be good reasons for the sales team in this country to think their market is not growing, or they might just miss out on opportunities other sales teams have spotted. In that sense, such a validation exercise forms a very fruitful process to spot and share best practices;
• These discussions are an ideal opportunity to collect and aggregate more anecdotal information, such as specific marketing actions or discount behavior of competitors in specific market segments. If such actions are spotted in a majority of countries, you will have a solid basis to draw general conclusions about your competitor;
• If the reasons and the outcome of this validation process are communicated effectively, sales people will be grateful for the chance of providing input instead of having unrealistic market figures imposed on them. Many of them will therefore be very candid about their feedback on their market, and this will enrich the ultimate outcome of this exercise.

Once you organized this feedback process you are confronted with a small problem: you now have two market views to work with, and they sometimes tell a completely different story. Which one should you use for your planning and competitive strategy purpose? There are different options at hand: you could chose to use the external market view anyhow (which will obviously frustrate your sales teams), or you could calculate the average of both views (after all the truth must be somewhere in the middle, no?), or you could use the sales view only to eliminate the aberrations of the external view, keeping the external view for all other data points. The ultimate decision should be made taking into account internal sensibilities and fair judgment, but what is certain is that you will end up with a market view that makes more sense –and is more broadly accepted- than when you would have used only one set of data.

But how should you organize such a validation process? Or better: how should you make sure you organize this process without putting too much strain on your sales people? The important factor here is to construct a simple and clear overview of the information you need to validate.

Using a spreadsheet program (which is to be preferred since it offers numerous possibilities to consolidate the figures in numerous ways), and assuming your sales managers cover specific segments with one or more products and services, a feedback template could look like this:

These templates should be pre-populated with as much existing information as possible or with automatic calculations. The point obviously is to reduce the amount of datapoints the sales teams need to validate. Some additional fields could serve to collect anecdotal information as well.

We will dig deeper into this subject in the chapter about account planning, which is also a form of field feedback.

Despite the value of such a validation exercise, chances are you will experience some reluctance –from either your sales force to provide you feedback, or from decision takers to take the view of your sales force into account. There is no simple way to deal with this. To increase the level of collaboration with the sales force in obtaining their feedback, you need to communicate extensively on how the results will be used exactly. Also, you will not ensure their buy-in if you just send a template like the one above, for them to fill out. Rather  -if possible at all- you will need to organize one-on-one meetings with them, and eventually fill out the template yourself while discussing the market figures in the meeting.

You will have noticed by now that I am a strong advocate of such a field validation process. However, I do realize that such a process is not fit for all types of corporate cultures. So what do you do when implementing such a process is not feasible in your company? You would still need to validate the market share figures and base your decisions on a market view that makes sense to your employees.

One thing you could do to validate and check market share figures is to put them in a system and integrate it with internal data, basically merging market and business intelligence data into one single dashboard. You could then build a ‘logic’ in the system in order to systematically track if and where market share losses or gains make sense or not. Such a logic could for instance look like this:

The exact logic of this validation process will of course depend on the nature of the business you serve, and the structure of your organization. But what the picture above really tries to show is the power of combining external market data with internal data, in this case to track where exactly we have gained or lost business in ‘unnatural’ ways, and whether this justifies the gain or loss in market share such as reported by external agencies. Admittedly, the exact conclusions from this work still requires some qualitative input from your sales teams, but at least it forms a solid basis to conduct these discussions.

As a decision maker you should obviously not be involved in the gritty details of building such a tool, but it is important to stay involved at a high level, or at least to thoroughly understand the logic behind the dashboard, in order to make sure it answers all the potential questions that might arise when assessing your competitive situation. After all, such a dashboard will also serve to produce early warning signals for weaknesses in your business.

At this point you have some solid  -validated- insights in your competitive situation, to base your planning exercise, your strategic priorities and your competitive actions on. But are there other ways to assess your competitive situation and the potential threats that arise from it? There are plenty of them, and chances are that you already have some form of competitive watch in place.

You probably even benchmark your company to that of your competitors on a regular basis. But what I have often observed is that such benchmarks are limited to comparing product features, price points and financial performance. But what about less obvious, perhaps softer aspects of your business? Can you learn something from benchmarking these?

You probably would, and the exercise does not have to be difficult at all. Just select a number of metrics that are relevant and easy to check. You obviously would need to base yourself on publicly available information, and much of this benchmark would have to be based on ‘judgment’, rather than facts. Also, you will have to choose your benchmarking metrics carefully, since some might not at all be relevant for such a competitive benchmarking. If you are in the sustainable energy industry, choosing a metric like ‘sustainability image of the company’ would most probably not lead to revealing insights, since most of your competitors would score high on this metric.

Finding and selecting such benchmarking metrics is obviously not an exact science, and I am sure you can define the most relevant ones for your business by yourself. But let me just highlight the categories of metrics I most often use myself, and that are resulting from doing this type of work for customers in very different industries:

Attractiveness as employer: in this category you might include metrics that indicate how well prepared you and your competitors are to attract and retain talented employees. You could refine these metrics based on whether your company is highly dependent on certain types of profiles, like Generation Y employees or scientific profiles. Typical metrics would include:

o   Focus on diversity on the workplace;

o   Focus on work-life balance;

o   Fun working environment.

Brand image attractiveness: this category includes metrics that show your attractiveness to the external world, your stakeholders. For instance:

o   How do you compare with your competitors in terms of use of social media?

o   Is the mission and vision statement of the companies future oriented and appealing to stakeholders?

o   Are you –or your competitors- using gamification to raise your brand awareness?

Sustainability: if you find yourself in an industry that is sensible to sustainability issues (either through regulatory pressure or because of high expectations on this issue from customers, for instance), you could include metrics like these:

o   Availability and level of detail of publicly available corporate sustainability report;

o   Publicized hard targets to improve corporate sustainability;

o   Communication of sustainability efforts on the homepage of the company.

Go-to-market strategy:  the metrics in this category could compare your company to competitors in terms of how you go to market, for instance:

o   The diversity of sales channels for your products or services;

o   Complexity/ simplicity of the product or services offering;

o   Whether the sales channels add value on top of the core products sold through them.

Adaptability: in an increasing number of industries companies need to constantly adapt to the changing environment in order to survive. In this category you could include metrics that indicate the propensity of organizations to change, albeit because they have proven to be able to do so in the past:

o   Have organizations shift business focus radically and successfully in the past?

o    Did you or your competitors address a totally new market segment in recent years?

o   How many (successful) merger and acquisitions did the companies conduct in the recent past?

Strategy: this category contains indications on whether companies have a clear vision and a solid strategy to realize this vision:

o   Do the companies have a clear and consistently communicated global (and local) strategy?

o   How much do these companies spend on R&D?

o   How many different areas do they spend their R&D budget on?

Much of the information you will have to base your judgment on can be found through publicly available sources. For instance, for the metrics contained in the ‘Attractiveness as an employer’ category we can easily check the emphasis we or our competitors put on these items on their internal or external jobsite. The strategic metrics can be checked on websites or financial reports.

Once you determined the metrics you can start comparing how well you score compared to your competitors. This is easier said than done, however, since in most cases (not all of them) there are no objective measures to compare performance on. This will have to be based on judgment, but one way to make this activity easier to perform, is to select the undisputable ‘best in class’ for each metric, which by the way might be your own company, and to compare other companies with how well they perform compared to it. By using the heatmap functionality in a spreadsheet, you can start to build a very revealing competitive comparison, for instance:

In this example you would see that for the category of ‘attractiveness as employer’ you score average, especially compared to the best-in-class, Competitor 2. This is mainly due to the lack of specific programs for the integration of disabled and elderly people, so the question might arise whether designing such programs would generate a competitive advantage (at least compared to your other competitors).

If you do this for over twenty metrics across multiple categories, you will end up with quite an interesting view of where your strengths and weaknesses are. Sure, the point is not necessarily to copy the ‘best-in-class’ competitor on each metric, but nevertheless it will provide a good view about the areas in which you absolutely need to improve in order to maintain or enhance your competitive position.

Sure, I do realize that many decision makers, again, will be uncomfortable about conducting such an exercise. After all, the  scores are merely based on personal judgment (although you could ask different people in your organization to make the judgment, which will level out eccentric judgments). Furthermore, the judgment is solely made based on publicly available information, so how can we be sure not to miss out on important strategic information that is not communicated publicly?

These are fair points, but they miss the whole point of this exercise, which is to make a comparison of how stakeholders (who have only publicly available information to base their own judgment about a company on) might view your company and your competitors, and based on this make choice that are important to you, such as where to apply for a job, or which brand to stay loyal to. Of course this is not exact science, and neither is it designed to be. It is an exercise to generate new ideas and inspire fruitful internal discussions.