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Episode: 521 |
John Horn:
John Horn, Author of Inside the Competitor's Mindset:
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521

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John Horn

John Horn, Author of Inside the Competitor's Mindset

Show Notes

Will Bachman and John Horn talk about the competition and how they should be taken into account when formulating a strategy. John points out that lowering the price is an easy response to a new product or market entry, which can prevent success. He suggests that understanding the competitor’s mindset is a key element to predicting their next move and positioning oneself for success. He also emphasizes the importance of being aware of the competitors’ strategies, as it can influence the success of any new idea or product.

 

A Framework to Understand the Competitor’s Mindset

John states that companies should pay attention to both their customers and their competitors depending on the type of market they are in. For established markets, such as toilet paper, companies should focus on competitors and their pricing, product innovation, and market entry challenges. For newer markets, like AI, companies should focus on customers since customers may not know what they want and the market is open and wide. John believes that it is important to have different departments that focus on each aspect since customer and competitor focuses require different approaches. However, it is essential for companies to be aware of both their customers and their competitors in order to remain competitive in the market. 

John talks about the importance of competition intelligence in developing an organization’s strategy. He explains the Blue Ocean analogy– the idea of swimming in uncharted waters to find success. He emphasizes that one must understand why the competition is not in the blue ocean before considering it as a viable option. He then outlines his four-step framework for gathering competition intelligence: reviewing public communication and actions; assessing competitor assets and resources; considering the human factor; and predicting, observing, and adjusting. This framework can help organizations build a picture of their competitors’ mindset and ultimately develop a successful strategy.

 

How to Gather Competitive Intelligence

John offers advice to a growing company that wants to build a competitive intelligence function. John recommends gathering information from companies that scrape and gather information from publicly available sources such as SEC filings, the company’s website, and social media. He notes that the most valuable information comes from within the organization, and suggests running WarGames, which are business simulations that involve setting up players, choices, and a timeframe to unlock competitive insight. John gives a few examples of questions that should be asked. Companies can use a CRM system to gain better insight into their competitors. The idea is to start with one question, such as Who do you talk about? and then gradually add more questions to the CRM form to prime sales agents to ask about competitors. This will help the company track which competitors are discussed in different geographies and customer types, and what pricing, product portfolio, partners, etc. are discussed. This data can then be used to identify which sales agents have reported the most about a particular competitor, and to ask them for more information. This will make it easier for the company to collect information that may already be in the heads of their staff.

 

Collecting Data to Understand Competitors

John talks about the value of collecting data to understand competitors. He suggests that data should not be collected by marketing or finance unless they are strategically focused and deliberate, as it may not receive enough focus. He adds that asking questions up and down the supply chain can be a great way to collect information, but there can be challenges in how it is implemented. John explains that competitive insight functions are cost centers, meaning that they don’t directly drive revenue, so it can be difficult to get buy-in from the senior level team.  He explains the best way to ensure competitive intelligence is properly implemented.  When using competitive insight to make strategic decisions within an organization, it is important to start small and focus on one or two competitors at a time. It is also important to identify which teams within the organization need what type of information. John also stresses the value in using anecdotes and using story over data to gain support from senior leaders. 

 

Investing Competitive Intelligence

John highlights the value of focusing on the competitor’s USP to gain valuable insight. 

He explains how to convince senior leaders of the need for a competitive insight function. He suggests using stories to demonstrate the value of CI and its ability to help prevent costly mistakes. He also suggests that if senior leaders are convinced of the importance of CI and can see its value, they will continue to invest in it. He gives an example of a company where the CI function had such strong support from senior leadership that anyone making a strategic presentation to the CEO had to first consult with the CI group or leave the room. His conclusion is that, if senior leaders can be convinced of the value of CI, they will continue to invest in it.

Finally, he provided links to his own firm, Gateway Insights, and the Washington University Olin Business School website for anyone who wanted to contact him and learn more about competitive intelligence.

 

Timestamps:

03:10 Balancing Attention Between Customers and Competitors 

08:15 Understanding the Competition for Strategic Planning 

09:05 Investigating the decision makers

13:25 Building a Competitive Intelligence Function for Growing Companies 

15:30 Competitive intelligence type of dashboard function

21:50 Collecting Data and Voice of the Customer Insights 

26:57 Exploring the Role of Competitive Intelligence in Decision Making 

27:46 Competitive insight functions as cost centers

29:18 Defining which team needs what information

31:14 Using anecdotes to inspire action from leaders

 

Links:

Website: www.gatewayinsights.com

 

CONTACT INFO:

Email: johnhorn@wustl.edu

 

One weekly email with bonus materials and summaries of each new episode:

 

John Horn

SPEAKERS

Will Bachman, John Horn

 

Will Bachman  00:01

Hello and welcome to Unleashed. Unleashed is powered by Umbrex. You can find transcripts of every episode of Unleashed at umbrex.com/unleashed. Sign up for the email. I’m excited to be here today with John horhn. He’s a McKinsey alum, and he is the author of inside the competitors mindset, how to predict their next move and position yourself for success. John, welcome to the show.

 

John Horn  00:30

Thanks for having me. Well, I’m looking forward to it.

 

Will Bachman  00:32

John, why should we care about what our competitors mindset and what they’re doing?

 

John Horn  00:39

The number one reason to care about the competitors is because whenever you formulate a strategy, or whenever you do something in the outside world, competitors are going to influence whether that succeeds or not. The competitors can lower their prices, it’s the easiest strategic, I would say it’s easiest strategic lever for someone to pull is if you introduce a great new product, I’ll just lower my price, you went to New Market to compete with me, I’ll just lower my price. It’s, it’s not that hard of a strategic response in order to try to prevent whatever your brilliant new strategic idea is, to double it from being successful and no competitors out there saying, oh, I want will to be successful with that new idea. They’re going to try because it’s in their best interest to stop you from being successful. So we have to pay attention to our competitors. And it’s better to pay attention to our competitors before we make a choice. And before we make a move in the real world to think about how might they respond so that we don’t get a really bad response, a really restrictive response than to wait until after you respond and then say, what do we do now. So we need to pay attention to competitors, even in today’s environment, with platforms and ecosystems and partnerships, and whatnot, because competitors are still out there trying to prevent you from having success, because that’s what competitors do. That’s what you do with your competitors. And so there’s no reason we shouldn’t turn around and think about competitors doing the same with us. And I think it’s also important to really focus on deliberately because what I’ve observed over 20 years of talking to clients and companies about this, is that competitors are because of the fact that we can’t talk to them directly. They’re sort of seen as a mystery. And we don’t understand them. And we can’t talk to them to ask them what they’re going to do. And because of that we either make guesses or we don’t really pay attention to them that much. And when they do something that we don’t like, or do something that we wouldn’t do we chalk it up to, it’s because they’re irrational, and they’re not irrational. They’re doing things which are best for them, it goes back to the first point, they’re trying to be successful. And when you turn around and look at the world from their viewpoint, and try to understand, why would they do this in terms of success for them, it makes a lot of sense why they do what they do in terms of making being successful for them. So it’s important because you’re even a monopolist has companies that are trying to chip away its market share or constrict what it can and cannot do. We all have competitors, and we have to pay attention to them.

 

Will Bachman  03:10

So let’s say that we have a limited amount of attention. And in a very simple model, the world who might say okay, any external tension, we’re going to split it between customers and competitors. So we could do 90% competitors, and 10% will focus on customers or 90% customers 10% or 5050. I wouldn’t, I would assert, and I’m, I’m curious to hear your reaction, that different types of markets, we should think about having a different split of that attention. So in a very established market, it’s been around for a while, I don’t know, toilet paper, let’s say you might want to have a lot of focus on your competitors. Because there moves, you know, maybe established players established markets, established channels, established pricing, established product types, you might really want to focus on your competitors, whereas a much newer market wide open Wild West kind of field like the new world of AI, all these new companies that are sprouting every single day, you might, you might in those cases, might want to have a filter that’s much more on customers, because it’s almost sort of a blue ocean, right? Like, the open space is much bigger than, you know any other competitors out there. So do you agree or disagree?

 

John Horn  04:34

I agree completely with the concept that every company should be focusing on their competitive insight in a slightly different angle based on their context in their situation. What I would, what I would modify a little bit is to say it’s not an either customers or competitors. i If we take the example of toilet paper, I want to understand my the big major players out there and I want to probably understand them based on pricing, and potentially product innovation. What are you going to innovate, that’s going to make toilet paper more attractive to buy from you than from me. And probably not a lot of market entry challenges, probably not a lot of entrepreneurial startups. So I don’t have to worry about that. But if you look at AI, and you said, Well, I’m just gonna focus on customers and what customers want. I’m focusing on what customers want, customers may not know what they want, because it’s such a new industry, it’s a new innovation, it’s a new sector. And so I talked to some customers and tell them a lot of times, here’s what I can do do that or not. And then I asked them, What do you want? I said, Well, we don’t really know. Because, sure, what I can do is, oh, well, here’s what we could do with AI. Yeah, it sounds good. If I’m not paying attention to my competitors, and what they’re offering, I’m not, I’m not understanding who is offering it what they’re doing, then I’m going to be really in a challenging position, because I don’t know how competitors are talking to customers, and what competitors are offering and therefore if customers like that better, so I should always be paying attention to my competitors. I don’t, I think where the where I would say the challenge comes organizationally, is that I would not have the same group focus on both customers and competitors, and then go back and forth of what share the time they focus on either. I would think about one group that like through the marketing department that focuses on customers. And then in the Strategy Group, or, you know, another area, if it isn’t the marketing department, I talked about this in the book, just make sure it’s separated from the, like the brand development and the customer segmentation, focus groups. And that group should focus on the on the competitors. And then you need to have the interactions and the discussions inside to sort of compare the notes from the two sides. It’s, you know, I talked about the book, it’s about adopting a different viewpoint, the competitors viewpoint to position yourself for success. Well, it’s helpful to have the viewpoints from the people who are looking at a competitor saying, Now, you know, here’s what open AI is doing. Here’s what Google’s doing, here’s what Microsoft is doing. Here’s, you know what all these companies are doing on AI. And then the customer group says, Yeah, but from what we talked to customers, they don’t care about any of that. I come back and say, Well, then why are they all doing that? What what do they know that we don’t know. And that’s where that healthy debate of what is best for us as an organization could arise in that new sort of innovative, you know, I love the blue ocean analogy. And I love that concept. But I talk about this a little a little bit in the book, I touched on it, which the question of why is the ocean blue? Is the ocean blue, because my competitors have already gone into that part of the ocean and realize there’s no food and so they left? Is it because the competitors haven’t looked in that part. But once I swim out there and start eating, they’re gonna follow in mass, is it because it really is something that they’re not capable of doing because they’re not, it’s too deep, it’s off the reef, and therefore they’re recession. I’m a deep ocean fish and I can live out there. Without understanding why the competitors aren’t in that blue ocean, it doesn’t really tell me if it’s a viable ocean to for me to swim in. And that’s where I think the that last sort of gap is in terms of how we think about what our strategy creation is.

 

Will Bachman  08:15

Okay, so let’s talk about how to do it. In your book, you say that there are four steps to understand the competition. Number one, review public communication and actions number two, assess competitor assets and resources. Number three, consider the human factor and number four, predict, observe and adjust. Okay, so put some flesh on that for listeners that haven’t read your book yet. Walk us through, how do you actually gather intelligence on your competitors, so you can build a picture of their mindset?

 

John Horn  08:47

Yeah, so that four part framework is work I developed with two other colleagues at McKinsey. It’s it’s the framing for how to understand why the competitor does what they do, how to get inside their mindset. Most companies do the first step just pay attention to what they say and do analyst reports, annual reports, earnings calls you know, reverse engineering, mystery shopping, etc. Most companies if they do competitive intelligence, that’s what they do. The next three steps are where I say in the book I call this competitive insight. So it’s not just information that I gather, the the second step of what what assets and resources and capabilities they have is where you start to think about how competitors are different from you. If you know again, if we step back the number one lesson everyone’s taught as a strategy leader or as a business leader is find something different. Find a way to differentiate yourself different customer segment different geography, different product different whatever. So that customers are focused on you and not your and and because of your your differentiation. Well, if that’s true, then all of your competitors are also trying to focus on their differentiation which means They have different things. They can build out different geographies, different supply chains, different whatever different product portfolios. So that’s number two, just don’t think of them as you think of them as them. If you were running their company, what would you do? The third step is who’s the person making the decision. And this is, you know, this isn’t a black box, making a choice as a competitor, just like your organization isn’t a black box, making a choice. It’s leaders who have backgrounds and histories and patterns. And if you think, you know, the analogy I use is, if a CEO grew up as a marketer, that was their career path, they’re not going to be hired a CEO and suddenly say, Now I want to optimize factory foot floor plans, they are going to look at the world from a marketing point of view, if you have someone who I had a client one and once in basic, basic materials sector, and the customer hired someone, as a buyer, who used to work in CPG, retail, and they said, we’re pretty sure this means they’re going to act differently than we’re used to. But we just want help making sure we’re thinking about this, right? That’s really the principle is think about the person making the decision. How long have they been in the industry? What are the what the functional areas they’ve had sort of what’s their mindset of how they view the world and how they view the problem, because that’s based on their history. And then the fourth thing, which is really important, is make the prediction, and then follow it up, the prediction should be shorter term, you know, no more than a year. Because as human beings, we can’t predict out five years anyway. And it’s just, we’re not capable of it. We’re not no better than chance, but make shorter term predictions, and then go back and see how well you did on the prediction. And if you didn’t get it, right, look back to say, would you miss Oh, I forgot that they just acquired the small company, or oh, they just hired a new executive or? That’s right. They’ve been talking about this, but it was in this industry publication that we weren’t paying attention to whatever. Now I know what to pay attention to have the what do they say and do what assets or resources do they have and who’s making the decision and make a new prediction and see how you did and keep getting better by focusing on the right thing. So that’s sort of the core of how to have the right mindset, and then how to actually operationalize this, that’s about how you integrate it in the organization. And the number one lesson there is, make it fit the organization don’t if you’re centralized, don’t have a decentralized competitive insight function. If you are brand focused, don’t have it based on regions, you know, it however you focus your firm however you structure your firm in the matrix sense, that’s how you should make the size your competitive insight function. And once you once it once it fits within the you thought about that. The second lesson to operationalize it is think like an entrepreneur, start small sort of goes back to the first question we’re talking about is, how do we think about customers versus competitors will pay attention to the competitors, and the decisions that are most surprising or most challenging for you to understand. So start small, like an entrepreneur, start with a minimum viable product, and have that MVP and then go out to the people in the organization say, here’s what we know about competitor x in terms of pricing. Like, great, that’s exactly that’s really helpful. Now, can you tell us about product portfolio? Sure. And now I add that into my competitive insight, that’s great. Can you help us understand competitive competitor, why? Sure. And you just keep building over time, as you you know, enhance that MVP, no different than the advice you give to an entrepreneur about start small start focus, get feedback from customers and iterate to build over time to something that’s big and grand and super useful.

 

Will Bachman  13:25

Okay, so let’s say that we’re advising a growing company that previously has not had a competitive intelligence function, and they want to build one. So let’s go really through just the bare bones, table stakes basics of this. In terms of, you know, in your last answer, you kind of did a little bit of a sort of, and so on, but let’s really get into the specifics of just even on that step one, what sources of information typically should they be tracking? And how to do it? So is there some software packages that firms often use? There’s a whole range of different document types, right? There’s SEC filings, there’s talks, there’s going on LinkedIn and seeing how many employees they have and where there’s, you know, their website, there’s their social media. So how do you recommend gathering all this information together? What should you be gathering? What’s What’s the org structure look like to talk us about how to run one of these functions.

 

John Horn  14:28

So as far as the let me start with the what kind of information the gathering where there are companies which have been developing competitive intelligence, competitive insight dashboards, and they are, for the most part, they’re pretty good at going out and scraping publicly available third party data on market shares and prices and retail outlets and and information, you know, the 10k information from the SEC and all this kind of stuff, you talk about the basic facts and figures, the basic of that step one of what they say and do. And, you know, there are a lot of different, I’m not going to, you know, hear the best of the worst or whatever it’s, you know, most of the dashboards are pretty good at doing that. And just collecting that data

 

Will Bachman  15:21

are there are there any that are, like commonly known that not necessarily saying which is best, but you want to just rattle off some names of some well known good, two big

 

John Horn  15:30

names I’ve heard of, and sort of poked around a little bit are crayon and clue K L. U. E. Crown, they start, both of them started. My understanding is as a market research function, and they’ve expanded into a competitive intelligence type of dashboard function. Because in a lot of ways, that is what market research is, it’s collecting information on what competitors are doing in the space, and how you compare to the competitors. What’s different about competitive intelligence is a lot of those dashboards, say, we’re better than them on market share, we’re better than them on pricing, we’re better than them on net promoter score, etc. Competitive insight is there better than us on and it’s just, again, a different mindset of how you think about analyzing the same data. So you know, again, if you want if you search for, you know, competitive intelligence dashboards, business analytics dashboards, you know, cran, blue, others would come up, it’s sort of that first couple of pages of Google, Google search will find you some names. That’s, that’s sort of step one. And if I were ai, ai and technology or digital tools are really helpful is for gathering that massive amount of data from the outside. What’s what’s most valuable, though, and this is where I don’t think those dashboards are have necessarily done a good job yet. What’s most useful is information that’s inside the organization. What a lot of times what I would do with clients, to help them understand how competitors are going to react, is to run WarGames, war game is just a business simulation, where we set up in the we set up the who are the players, what choices are we going to play over, you know, pricing, product, market entry, whatever, the timeframe, we’re going to simulate these choices over. And then I decide within the client organization, who plays the client who plays each of the different competitors who won the game. So it’s all within the organization, you don’t ask other people from outside in. And then we simulate, say, Okay, go off. And I want you to think about the next six months and tell me what your pricing strategy, your product portfolio strategy is going to be, etc. And then we’d simulate that, where I got most of the information to tell competitor teams how to think about playing their role was by asking people inside the client organization, tell me what you know about competitor X? And Are they aggressive or not aggressive? What Kind Of Products Do They Have? Which other products are good? Do you focus more on market share, profit, etc. Most of the information that I got for the roleplay cards came from inside the organization. And I strongly believe that every organization has so much more competitive insight within it. They just don’t know how to collect it. Because there’s no, there’s no formalized structure, there’s no way to actually extract information. And that’s where, again, I go back to this entrepreneur now, entrepreneurial analogy, take like the CRM system, every time a sales agent goes out of the call, they’ve got to fill out a form that sort of here’s what we talked about, here’s the you know, so that we just keep track of that. Well, it wouldn’t be that hard to add into your Salesforce or whatever your customer tracking system is just one question, which is, which competitors did you talk about today? That’s it. You can even make multiple choice which is like the top four competitors and a fifth one other and I heard from someone on a I think it was a another podcast I’ve done where they said they heard this that some company actually on that type of system. They have you know, competitor X competitor, why competitor z, and then a box which said I didn’t talk about any competitors, which sort of primes in the behavioral way of Prime’s the sales agent to say you probably should have been asking about competitors. I think that was it was like we didn’t I didn’t ask about any competitors. So sort of Prime’s you to say you should be asking about what if you’re thinking about competitors, and then that can be built up over time. So now that this is only one question, it’s literally five more seconds of filling out that form. So if you have a brand new form of saying, Here’s, I want all this competitive insight into what you know about the competitors, hoss, another form, we’re going to fill out I’m going to ignore and hopefully it goes away. If you had one question to the CRM form, which it says Who do you talk about? And then once they get habituated to that, then you can start to see what are the past matters of which competitors in which geographies with which the customer types, etc. And then add another question, what did you talk about pricing product portfolio? Its partnerships, whatever. And then you can add another question as it gets more habitual bitchu ated. With the Salesforce, you can do the same thing with r&d people, when they have an after action report coming back from a conference, you can have the same thing from procurement, when they talk to people in the supply chain, start small start adding more information. And then it becomes Oh, we just give more information. And it’s okay if you don’t have everything from the Salesforce about that competitor. Because now if I need to understand, say, on Nike and understand Under Armour, I can now go back through my CRM system and say which sales agents have reported the most often they hear about Under Armour? Now I know who to go talk to and say, Hey, you keep saying Under Armour comes up in tears in your conversations with customers, when you talk about what are you hearing? What are they saying, it makes so much easier to go and actually collect the information that’s already in the heads of your of your staff. So that’s, that’s sort of how you collect the data. And then where you put it, there’s no right place, the only rule I say is don’t make it part of marketing or finance, unless the CMO or the CFO is very strategically focused and is deliberate about making sure it will get its strategic focus, and not just one more tool to help with advertising, one more tool to help us, you know, fill out the 10 ks at the end of the quarter, or that at the end of the year and the 10 Q’s at the end of the quarter that if if that CFO or the CMO says yes, this is going to be a very important sort of separate part of what we do to understand competitors great. But if it’s just a well, we got to tack this on. Because, you know, that’s also part of my roles, new strategy, it’s generally not going to be given the focus that it needs.

 

Will Bachman  21:50

Now, a project type that we support relatively often here at Umbrex, is clients asking us to do some kind of Voice of the Customer Insights, where we may, depending on the scenario, or interview customers in that industry, in some cases, it’ll be a warm intro to their own customers. Some cases, it’s a warm intro to customers that, that left them for a competitor, or that join them from a competitor, or that considered them, but ultimately didn’t select them and selected someone else. In some cases, we will go out and source those competitors by reaching out to people in the industry. Talk a little bit about your perspective on the value of those kinds of conversations with customers who are the ones making making the decision, and particularly this is particularly around b2b type type type customers.

 

John Horn  22:45

Yeah, I think anytime you can solicit information from customers, or if you think of the other end of the supply chain from, you know, suppliers. Like how easy is it to work with us relative to our competitors? How easy is it? You know, do what types of products and services are they, you know, are? Obviously, they’re always NDA issues, both with customers and suppliers. But to the extent that your legal team signs off on the questions you want to ask, going out and asking up and down the supply chain is a great way of collecting information. The one challenge I see with it, in terms of how it’s implemented is a lot of times I see those questions asked in terms of its voice of the customer, in terms of what’s good about us. What’s good about us relative to the competitor, where do we have strengths relative to the competitor? Why do you like buying from us relative to competitor? Why didn’t you buy from the competitor relative to us? It’s always the what’s so great and fantastical about us, tell us really tell us things that are gonna make us feel good about us. The if you flip those questions around, and you say, why would you switch to the competitor instead of us? Why do you Why have you preferred? Or what makes you interested about the competitor’s product relative to us? What is so great about the competitor in terms of their products? If you had to pick three attributes of the products or services they offer, which would you be that say they’re broke last on? It’s a deliberate focus on not just how good we are. That’s, that’s, you know, going back to why I’m not always a fan of putting into marketing is because as a marketer, you’re trained to find things that are great about your product or service and to sell the customer consumer on the things that are great about you. It’s an internally focused exercise. Whereas competitors, it’s really an externally focused exercise. I’ve got to understand them. As as a you know, one sort of one sort of example is it wasn’t really about trying to understand competitors. It was a strategy development workshop, I ran with a company it was a b2b company. So similar to what you were started talking about. This was not a customer consumer focused exercise. And as part of The exercise. Near the end of the workshop, I asked the participants and the IRS or like vice president to senior directors and above. And I asked him, I said, Okay, I want you to take 10 minutes and just come up with a list of what are all the qualities that make you distinctive as an organization? And that would make customers like, what are your sales, sales messages to customers that really make you stand out? So you can talk amongst yourselves and work in little groups, etc. So they worked. In the end, I said, Okay, what would you come up with, and they said, we have the best quality, and we have great service. And we have great reliability. And we have, we’re attentive to customers and cetera, et cetera. And it was a, it was a great list and sounded good. But it sounded so I don’t say bland, but it sounded just so like, anyone should be saying this. And I was thinking that as they’re saying all the things, but before I had the chance to sort of push back and say, it sort of sounds like anyone would be saying this, the CEO of a division raise their hands, like, Can I say something, and that’s like, Oh, he’s gonna say, this is great, this is fantastic. We should go execute. He’s like, I’m sure every single one of our competitors is making that exact same list and saying, that’s why they’re great. So if that’s why we’re great, why are we great. And that’s that, that that difference of the client was looking internally of what they want the customer to believe. And so if you go and actually ask the the voice of the customer, but explicitly focus on what makes the competitor better, why do you like to competitor, I think it’s great. If instead, your questions are what makes us great, then you’re, again, you ask someone a question, they’re gonna answer the question, you ask, what makes you great? You know, you’ve got really good service, what makes a competitor, great, they got better service. You know, if you if you don’t ask that question that you’re like, not likely to get that last piece of information. And that’s about priming the interviewee to say, No, I want you to focus on the competitor, what can you tell us about the competitor along those dimensions?

 

Will Bachman  26:57

Talk to us, you mentioned that you kind of alluded to it, tell us a bit about how to put competitive intelligence, where to put it in the organization so that it’s going to have, you know, sufficient stroke to get attention from the senior level team? And, like, how, how should it be incorporated into company decision making? So, you know, how often should it be reporting to people who should check with competitive intelligence? How to get product people to be, you know, incorporating their insight? How do you give them sufficient kind of power and an authority? Or at least not, if not authority, at least sort of prestige? That, that their opinions matter?

 

John Horn  27:46

The Great question, the, unfortunately, there’s no sort of, you know, take it off the shelf, you know, follow this checklist, and you’re done. The, the biggest challenge with competitive insight functions is that their cost centers, they, they don’t really drive revenue directly. And so whenever there’s a challenge inside the organization, it’s on the chopping block of that’s how we save costs, unfortunately, how you make if you have senior leadership support, C suite, you know, division heads, etc, if you have senior leadership support, that’s the best way to protect and drive the we have to use this inside of our organization to make strategic decisions. I would there sort of two things to do that. Number one is that goes back to what I said before, start small, don’t try to do everything for everyone. It’s an impossible task. It’s not it’s boiling, the blue and the red oceans at the same time, you just can’t understand every competitor on every decision all at once and have that information accessible. So again, go around and interview people inside the organization, which are the competitors that most surprises which of the competitors we think are irrational, which are the competitors that we really want to understand best. And then based on that narrowed the list down to one, maybe two to start with. And then you can go back and say, okay, you’ve talked about, you know, this competitor, you want to understand what types of decisions is it pricing? Is market entry? Is it product portfolios, m&a? Is it supply chain? Is it talent development? I mean, in the book, there’s a I did a survey of 500 plus directors and above and ask them about how often competitors act irrationally along 13 different types of strategic choices that I would say, you know, borrow those 13 and say which these types of strategic choices matter and again, focus on one or two. So you’re starting small and focused, which means you don’t need a really large team and you don’t need a really big ask from the IT group to integrate that into the existing dashboards and reporting systems etc. So start small, earn the right to expand It also means that it’s easier to figure out who needs this information. So if it’s pricing information I get to get the sales team don’t necessarily need the r&d and the supply chain other folks to me that if they want it, they can have it. But really, it’s about the Salesforce need that pricing data. If it’s about product design and product portfolio, then I do want the r&d folks to really understand that because that’s sort of what their job is, is focused on. So that’s how I collect the information and what extracting and then sharing it is, again, start small, this doesn’t mean it’s not important. But if you have some big wins with the, with the competitive insight group, then it’s I don’t, I don’t like you. A lot of people understand the analogy where I’m going, but if you start small, and they gave you a taste, and you like you want to come back for more. And that’s really what you want to drive is make it an organic growth inside the organization, as opposed to we have this big function, you gotta go use it. As far as how you get senior leadership support, if you’re lucky enough to have senior leaders that believe in this, then great, you’re sort of already halfway there. If you don’t, the best way to convince senior leaders that they need to focus on this is by anecdote and not by data. And I know that anecdote is not proof. I know that we’re always taught with big data to have regression analysis, and lots and lots and lots of data to validate what the ideas, but you want anecdotes. And this is where you can now go around and ask and survey people, you know, I would say maybe you could probably do director level above or even maybe general manager level and above and ask them, Hey, can you remember a time where we made a choice in the market introducing new product introduced new market changed our pricing structure, whatever it was, and it was just a disaster was it just didn’t work out? Right. And primarily because a competitor did something that sort of halted what we were hoping to achieve. And I’m not going to bet my life. But I’m pretty sure that every single organization has little stories inside its walls of oh my gosh, remember that time we tried to enjoy Latin America and the local company just dropped their price and prevented us from getting shared? How much do that cost us? It was a $250 million investment. And it just never really panned out those stories, you can then go back and say, Okay, what did we know, at the time, we made our choice? What did we know about the competitor in Latin America? What could we have figured out? Well, we could have figured out they’ve done this five times before they we could have figured out that they work. You know, a long time ago, they had made statements about no one’s going to invade our turf, whatever it is, could we have shown that there was likely enough information, we could have put together a picture to say they’re likely to respond aggressively. That’s the story. You okay, Kate? Remember the time we tried to enter Latin American, we believe that $250 million investment because the local player attacked us back. And we just didn’t have a response. Yeah, well, at the time, we could have known that they made these five statements. And they’d already done this three times before with other multinationals, et cetera, et cetera, et cetera. If we had a CI function, we could have seen that coming most likely, and we could have probably prevented it from being as bad as it was. We need to start doing this. Stories are more important than how often does this happen, right? And to give me a regression analysis of the impact of blah, blah, it’s like getting the mindset of the executive of Do you want to be the one making the decision of a $250 million investment and it goes bad? Because a senior executive looking at that says, I don’t want to be the one who’s ever looking at saying, why’d you make that decision, if I could invest a little bit in a CI function to try to prevent that from happening. That’s how you can can try to convince senior leaders that this is something we need to do. And again, once you convince them, and you start showing it’s valuable, they’re fine to keep investing in it, because everyone comes back says, No, we need this. We use this. I mean, the last thing I would say is that there’s one company I talked to, and their competitive insight function had such good senior leadership support that whenever anyone went to the CEO to make a strategic presentation, the first question before they even started was, did you talk to the competitive insight group? And if the answer was no, the person had to leave the room? presentation. So again, if you get that strongest, senior leadership support, you’re like golden, or have to be at that level? Yeah, it just has to be to, you know, get them to understand that this is a valuable part of the organization. And again, anecdotes, in my opinion, are better than trying to have some like, you know, it’s had a point zero 2% impact on the earnings per share over time, blah, blah, blah, don’t don’t try to do that. Just tell horror stories that make the exact same. I don’t want to be the one that story, you know, I don’t want people telling that story about me in 10 years.

 

Will Bachman  34:31

So listeners once again, title is inside the competitors mindset. We’ll include a link in the show notes, John beyond a link to your book. Where out what are the links would you like to provide for listeners to find out what you’re working on?

 

John Horn  34:50

I have a I have a link on the Washington University Olin Business School website, but I also have my own firm, and I share information there The URL is gateway insights.com ga t e w a y insights plural.com. It’s a, you know, I talked about how I can help with war games and competitive insight functions and the types of stuff we talked about today. As always, just you know, if someone wants to reach out and say, Hey, I’d love to talk about this more, you can contact me through that. Or you can contact me through the, you know, the email at WashU either, either one.

 

Will Bachman  35:35

Fantastic, we’ll include those links. John, it was great having you on the show today. Thanks for raising our awareness level of competitive intelligence and how important it is to track what your competitors are doing. It’s great having you on the show.

 

John Horn  35:49

Well, thanks for having me. Well, I really enjoyed the conversation.

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