Category Archives: Market Intelligence

Five Steps to Long-Term Growth – Huh?

Even though I was browsing the HBR Bogs, I was still a little surprised to see a post titled “Five Steps to Long Term Growth” because, to be honest, thanks to Wall Street, I didn’t think anyone knew what Long-Term Growth meant anymore. And I’m being serious here. The focus on quarterly earnings calls has gotten so intense that it’s almost obscene — the nosedive a stock takes in the market after a bad earnings call is typically so severe that one would think the world is going to end.

Not only did this intense focus on short-term profit cause the end of the famed research labs in the 1990s (like Bell Labs, Xerox Parc, Texas Instruments — and yes, I know that Bell, PARC, and TI still exist, but what we have today is not what we had then), two major market busts in the naughts (as everyone tried to IPO at unsustainable valuations), and the loss of hundreds of thousands of jobs (because people cost money and it’s more profitable to operate at skeleton crew levels and make everyone, in fear for their jobs, work unpaid overtime than actually be responsible and use the obscene amounts of profit the corporation is making to actually hire the headcount the organization should have), but it pretty much spelled the end of any thought to growth plans beyond the next year in the corporate boardroom – at least as far as I can see.

Of course, it is this lack of focus on the long term that captures everything that is wrong with the marketplace today. Once long term growth and sustainability take centre stage, short term profit becomes unimportant, Wall Street is told to go <expletive> themselves, people become as important as product, and the market changes — for the better. If you would like the market to change for the better, and become successful beyond your wildest dreams when it does, you can start by taking Vijay Govindarajan’s advice and take the following “Five Steps to Long Term Growth”.

1. Decide What You Are Playing For

Are you playing for the fat <expletive>s on Wall Street? Or are you playing for yourself and your stakeholders. If the latter, then you have to take a stand and do something about it. No one is going to do it for you.

2. Get Everyone Speaking the Same Language

Once you decide you’re playing for the long term, the next thing you have to do is something different. Growth means fostering transformational or breakthrough innovation. This will require identifying value propositions that will expand your business into new markets with new advantages.

3. Imagine Your Future

If you want sustainable growth, you must have a sense of what the future will be, what it will require, and how you will win. Then you apply your breakthrough or transformational innovation to achieving that vision.

4. Align Your Actions With Your Intentions

As Def Leppard said in a fit of Pyromania, it’s Action, Not Words. You have to remember that your people are used to hearing a lot of big talk about great new initiatives that never come to pass and without some action behind them, they will assume that your words are just another corporate fad that will be forgotten as time passes. If you say you are going to eliminate all traces of phosphate from your products, assemble teams to do it. If you say you are going to create 50 jobs with a new initiative, start hiring!

5. Do It!

Growth is hard work requiring strategy, judgment, and leadership. It involves risk. It involves you. You will have to keep doing it. Day in. Day out. Day over. Day under. Day torn asunder. And back to day in.

Managing Indirect Spend: An In-Depth Review, Part I.1

Late last year, Joe Payne and William (Bill) Dorn of Source One released their first book on Managing Indirect Spend (Amazon) which is a culmination of everything they have learned while doing nothing but Strategic Sourcing since 1992 — before it was cool. Clocking in at 422 pages, this is an incredible resource for anyone who wants to get a handle on indirect spend, which has increased significantly since outsourcing and right-sizing rose to fame in the 1990s.

This book, which should be on the desk of everyone looking to get a handle on indirect spend, is loaded with so much information that there’s no way SI could do it justice in just a post or two — so it’s not going to even try. Just like the book is broken down into four parts, our review, over the next few weeks, will be broken down into four parts — and then into sub-parts where there is just too much to comment in with a single post.

Today we’re going to review the first part of Part One – The Process, and, specifically, the chapters that cover the first three parts of their six part process, namely:

  • Data Collection & Spend Analysis
  • Research
  • The RFx Process

We’re all familiar with the basic process, and if you are a regular reader who has downloaded the free e-book, no registration required, Spend Visibility: An Implementation Guide, then you are very familiar with the data collection and spend analysis process. However, the chapter still makes some good points that need to be reiterated, particularly in regards to building sponsorship and understanding the category. Lack of sponsorship will kill your project faster than a minnow can swim a dipper, and to get it you need the end user’s support as well as senior management. As Joe and Bill state, this will require sitting down with the users and letting them know that they are not being singled out by your spend project, that your project’s success depends on them and is their success as well, and that your project is designed to tie to their objectives (as it should be). In addition, the following is a great checklist of information you will have to review with your users before starting a serious sourcing project on the category:

  • business relationship (with current suppliers)
  • product or service utilization specifics
  • location impact
  • financial implications
  • contractual obligations
  • reports, requirements and actual utilization
  • service requirements and expectations
  • supplier ranking

Joe and Bill also provide some great advice on how to handle the three different types of responses that you will encounter when requesting data from incumbent suppliers — acceptance, avoidance, and pushback — and questions to consider during supplier interviews.

Moving on to the research phase, they provide a breakdown of the eight (8) elements that need to be researched during any sourcing initiative (that you want to be lucky) as well as some great tips for collecting market intelligence through the RFI process. While modern tools, including Source One’s own WhyAbe, make the creation of RFIs drop-dead simple, getting responses and, in particular, the responses you want can be challenging for a variety of reasons. Suppliers might not think you’re serious, might not want to expose what they consider to be sensitive data, or might not be comfortable with the tool. A carefully constructed process has to be put in place, followed, and sometimes augmented by other approaches for the research phase to be truly successful. Joe and Bill lay out their advice, garnered from almost twenty years of experience dedicated to sourcing projects, in detail and offer a blueprint for your success.

Then they jump into the full RFX process, which might consist of an RFP and / or an RFQ/RFB and dive into the typical elements of a good RFP and RFQ as well as the evaluation process that should be followed and the response that should be provided if you want your suppliers to participate in the process again. One point that they make that most other resources miss is the need to include disclosure and liability sections in the RFx document. This is critically important when inviting new, unknown, suppliers to an open event. If these suppliers aren’t awarded the business, they may sue you on the premise that the invitation for bid was in fact an invitation to do business and that the RFx constituted an MOU to be replaced by a future PO or contract once the information was provided. Slimy and shady to say the least, but this has happened. They also discuss the reverse auction process and when it is preferable to an RFX. Finally, they end their discussion of the first half of the sourcing process with a discussion around the need for flexibility and creativity in the sourcing process, a discussion that’s often overlooked. Significant savings are never found by doing the same-old, same-old or just applying one or two sourcing technologies. They are found when the parties come to the table, broaden their horizons, and look for new, creative, and innovative ways to meet organizational needs. And, as Bill and Joe state, suppliers are often much more motivated and engaged when buyers take an alternative approach. So be flexible — and stay tuned. Part I.2 is coming!

Peter Smith Nails Why the doctor Does Not Do Predictions

Traditionally, the New Year is a time to think about how we can become better people … and of course, the chance for writers and analysts to sit at their keyboards with a cold beer and make a list of wild guesses, predictions and ill-informed comments, desperately pretending we have some particular insight into the world!
Peter Smith, Ten New Year Resolutions for 2012, BravoSolution.com

the doctor has insight into what you need to do today, but has no more insight into what the Supply Management world of tomorrow will look like for your company beyond what anyone else has. He can predict what is likely, but all it takes is one earthquake, political uprising, or stock market crash to turn everything on its end. Fortuntately, Peter’s paper is filled with advice for today and not tomorrow.

In particular, the doctor likes resolutions:

2. I will make sure we do proper risk assessment on our key supply chains – and that doesn’t just mean our “top ten suppliers”.
How exactly are you keeping track of your key suppliers’ financial situation, their accreditations or quality record? What is your mitigation strategy in case of supplier failure or natural disaster, for each of your critical raw materials / sub-components? Do you have any sense of which firms at second or third tier level in your supply chains could actually cause your organization severe problems? What about corporate social responsibility issues? the doctor would bet that you are not keeping track of key suppliers’ financials, not keeping an eye on the quality metrics, don’t know which 2nd or 3rd tier suppliers could bring your supply chain to a grinding halt, or know about the poor working conditions at the factory in Da Nang.

5. I will put the supplier closer to the heart of our process and technology strategy
As Peter says, if the supplier screws up, you have failed in the eyes of the IT / Marketing / Production VP. So look at your supplier information, risk, development, relationship management strategy — closely. If you don’t help your supplier to succeed, you ultimately won’t succeed.

7. I will move to the next level of Spend Analytics sophistication.
As per SI’s recent white-paper on Spend Visibility: An Implementation Guide, almost any attempt by an organization to analyze spending patterns is likely to be fruitful, especially if there hasn’t been a serious prior attempt. It is easy to find thousands of breathless testimonials about a particular product or method — independent of the quality of the product or method — because almost any product or method will find savings if a spend visibility initiative has never been launched before. “In the land of the blind, the one-eyed man is king“. But, what is not so obvious is that this initial burst of savings is short-lived; and that many of the “quick saves” that result are unsustainable. The key question is what to do next; in other words, how to implement a true strategic spend visibility initiative that will return value and keep returning value over time. There are too many spend visibility products that are lying unused or on the shelf, after the first burst of excitement has passed; and too many organizations who are tired of hearing a spend visibility message that has no further relevance to them. That’s why you have to take spend analytics to the next level and why you should download the FREE, no registraiton required, Spend Visibility: An Implementation Guide today (if you haven’t already).

Find Your Next!

Our last post discussed the need for Next Practices and an innovative approach that will get the organization there so that it can continue to survive, and even thrive, in today’s harsh economic climate. Today’s post is going to review Andrea Kates’ Find Your Next, a new book that describes the “Business Genome” approach — which is a strategic toolkit that an organization can use to identify one or more strategies that could take it to the next level.

The difference between a great idea and a great business result is the ability to integrate insights from lots of different sources and get an entire organization on board quickly.
Mark Vachon, GE Company Officer

No single quote better captures the state of business today and the need for a 360°view of the market in which an organization is competing and an enterprise-wide response to market changes in real-time. That’s why SI agrees with Mark Vachon when he says that Find Your Next is a must-read. Very few books capture the spirit of the approach that an organization must to take in its strategy formulation efforts like this book. As business has progressed beyond the point where a single blueprint can guarantee success, an inquisitive approach that can help an organization identify all of the relevant factors that are influencing the market from a product, process, customer, talent, trend, and innovation perspective is desperately needed as an organization must be continually asking the right questions and identifying the right answers if it is to compete effectively. Getting to the heart of the innovator’s dilemma, this is one of the few books that accurately describes a strategic formulation approach that is both powerful enough to meet organizational needs and easy enough to be adopted.

One of the great things about the book is the author states right off the reality of business strategy generation: there is no science to prediction. You can sit down in a laboratory with rats for a month and track what you see. Even armed with data on how biological change has occurred in the past for each rat, you wouldn’t be able to figure out what changes will happen next. And why not? Because you have not been trained to see the world of rats through the subtle cues and environmental shifts that would allow you to see ahead to the next phase. In other words, there’s no way to know for sure.

In addition, Andrea then goes on to note that forecasting is rarely enough. The traditional tools don’t adequately address the significant trends that shape today’s competitive arena. This is partly because adding up the elements of the past doesn’t get you to the full impact that you can have in the future but mostly because no model is complete — the market is continually shifting — and you have to keep up with it.

Just like Nilofer Merchant provided us with a simple five-step approach for achieving The New How when he noted that we needed a framework for collaboration if we were truly going to collaborate on business strategy, Andrea Kates presents us with a simple four-step process to the business genome approach that anyone can follow. But that’s not what makes this book great. Anyone that has been keeping up with recent thinking on innovation and innovation trends can probably figure out a process. What makes the book great is the advice provided on implementing each step and the detailed lists of important questions that need to be asked, that are not always so obvious. And then there’s the case studies that explain the importance of asking the right strategies and using the business approach to Find Your Next.

Consider the questions posed in relation to your secret sauce:

  1. What is it about you that keeps your customers coming back? Do they see all that you are and all that you have to offer?
  2. Who stands a chance of stealing those devotees or encroaching on your competitive space?
  3. How can you stay wired to the market pulse, even as it vacillates?
  4. What will make your company a market leader in the next year or two?
  5. What’s the secret to differentiating your brand in today’s competitive landscape. Have others in industries outside off yours figured it out?

Each of these goes beyond the traditional set of questions asked by a company employing standard best-practices when trying to determine it’s next product. A typical company

  1. would ask what is keeping customers coming back and not if the customers are seeing everything they have to offer now — this is important as your company might already have it’s next killer product on the market or might be offering products and services the market doesn’t want, and mis-applying resources that should be reapplied
  2. would focus on current competition and not on potential new market entrants that could move into its space and change the game — like Netflix changed video rentals and the iPad changed laptop sales
  3. would be focussed on reading the market now and now how it could ensure it could read, and react, to the market as the product was released and competitors’ products were released
  4. would be focussed on now, and not after-now, and overlook the importance of minitrends to continued success
  5. would focus on its market space, and not other market spaces where a new market entrant might have figured out the key to new customer acquisition in what was thought to be a stagnant or non-existent market (like Starbucks changed the coffee shop)

Find Your Next is a great book and a must read for any executive or strategic planner that wants to understand the foundations for asking the right questions that will be the ultimate key to success in a strategic planning session. As Seth Godin says:

Every great strategic thinker uses the ideas in thsi book … but it took Andrea Kates to write them down for the rest of us.

New Year, New Genome?

A new year is upon us. A new year that will not only be fraught with Risk, as per our recent series on Risk 2011 / Risk 2012, but a new year that will be brimming with opportunity, for those with the insight to identify it and the innovation to capture it.

And when SI says innovation, it means innovation, not renovation. Sergio Zyman may have preached renovation before innovation, but it’s not enough anymore. Any company that has survived the recent downturn relatively intact has more than likely already renovated its brands, products, and core competencies to the max and needs something to get it to the next level. And, more than likely, that something has to go beyond a traditional Blue Ocean innovation strategy (as one never knows if that’s a sea anyone wants to sail) to a Golden Apple strategy that will enable the company to deliver products and services that the majority of customers in its target market segments want (and that will sell out months in advance in pre-orders).

This will require a shift from Best Practices to Next Practices as the organization redefines how it does business. One way an organization can achieve this is to employ the “Business Genome” approach described by Andrea Kates in Find Your Next.

The Business Genome approach is based on a genome mindset [that] sparks new insights for translating the DNA of one business to the growth challenges of another as this allows strategists to see through a new lens — an absolute necessity if an organization is going to identify the Next Practices required to take it to the Next Level required to develop, and deliver, a Golden Apple strategy. [In olden times, everyone wanted the Goose that Laid the Golden Eggs. Today, everyone wants an i-Device — an iPod, an iPhone, and an iPad — these are the golden eggs of modern consumerism and the Apple strategic mindset that created it transformed Apple from has-been to global leader.]

Our next post will discuss the Business Genome approach, described as the Key to Next, and review Andrea Kates’ Find Your Next. Stay tuned!