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The Evolution

 Different perspectives for the Energy Industry sprinkled with a little bit of inspiration.

 

A couple of weeks ago, it was announced that the highly-anticipated movie in the James Bond series, ‘No Time to Die’, would be delayed until 2021. Several movie theater chains, such as Regal Entertainment Group and Cineworld (United Kingdom), decided to close or reduce operating hours at many of their theaters because of the delay.  However, their competitor, AMC Theaters, decided to stay open. Each of these companies likely conducted some form of competitor analysis to arrive at their decision.

Competitor analysis is an important and complex task which is often approached incorrectly. A thorough competitor analysis enables a company to make informed decisions related to many of its business functions.  These functions include pricing, product portfolio, R&D, supply chain management, and operational footprint, just to name a few.  A less than thorough competitor analysis will result in blind spots, which can negatively impact the company. The current economic environment, marked by deflated consumer demand, increased governmental authority over business operations, disrupted supply chains, and a clouded macroeconomic outlook only amplifies the complexity and need for a rigorous competitor analysis.

When assisting clients with a competitor analysis, I advocate using a framework of competitor intelligence, as opposed to mere competitor profiling or competitor comparisons. Simply put, competitive intelligence is a data definition, collection, mining and dissemination process that is relevant and actionable for decision making. Many companies often overlook elements of a competitor analysis framework, so here are some key tips on how to strengthen your competitor analysis process.

  1. Assume the competitor is acting irrationally: ashisharticle2A textbook competitor analysis is likely to include some element of game theory which is applied to predict competitor decisions. This approach is particularly useful in periods of predictable economic outlook during which many companies function rationally focused on pursuing medium and long term goals. However, in our current economic environment, many businesses are subject to binary external influences, such as whether a business can remain open or must remain shuttered due to rising public health concerns, economic stimuli or lack thereof, and supply chain disruptions. Given this degree of uncertainty, many businesses are struggling just to survive.  These companies are critically pursuing rapid cost reduction, while shrinking their portfolio to maintain their balance sheet.   In these times, many competitors are not thinking about their 2030 long-term plan.

  2. Get numb:  Very often, following a competitor analysis, the management is tasked with the objective to ‘catch up’ or ‘be better’ than the competitor. Before embarking on this race, the decision-making team should ask themselves whether there is a market need for their product. In some instances, the competitor’s product may be an industry standard, or it may have a lengthy and expensive research and development pipeline.  What if there is an opportunity to leapfrog the competitor’s product? This was done by numerous companies in developing countries when they opted to leapfrog widespread fixed line telecommunications to install 3G and more modern cellular networks. Human tendency is to want to beat the competitor.  However, considering other options like leapfrogging or not worrying about the competitor’s product may be far more effective. 

  3. Utilize your full bandwidth:  Does your competitor analysis team consist of a small group of individuals from a narrow set of functions? Traditionally, competitor analysis only includes the usual groups:  sales, marketing, and maybe business development.   Not including additional functions made sense because of logistical and economic constraints.    However, over the past six months, the shift to virtual meetings has eroded many of these barriers. The cost and administration to expand representation in a virtual meeting is a rounding error compared to the potential benefits. It is also very important to reach deep within your organization by including junior talent, as they bring in views from their generation. Many of them are also likely to be future leaders of the company.  To take it a step further, when appropriate, consider including suppliers in some of the planning and strategy related discussions.

  4. Don’t stand still:  A competitor analysis must be a living document, not just a snapshot. Unfortunately, a competitor analysis rarely gets revisited.   Even if that competitor is not on the radar in the future, revisiting and updating the analysis will provide the company with a rich library of relatively current competitor information.  Competitors don’t stand still, so your analysis shouldn’t either.

  5. Leverage Technology:  Most often a competitor analysis is conducted using data from websites, analyst reports, and search engines.  While these sources are potentially sufficient, they are not always enough.  Social media platforms, with verifiable information, provide a rich database.  Mining through competitor postings, conversations, and tone can provide useful competitive guidance.  Over the past several months, I have attempted to resolve customer service issues with companies who are regarded as leaders in their industry.  Ashisharticle1I opted to resolve issues via social media as opposed to dealing with long hold times and being passed around to multiple representatives on the phone.  For at least three companies, my interactions via social media exposed several gaping shortfalls in their customer service, which led me to wonder whether those companies will continue to remain industry leaders given their subpar customer satisfaction.This information provides a low cost, high return opportunity for their savvy competitors.

I’ve highlighted a few ways to improve competitor analysis, but there is no exhaustive checklist.  Competitor analysis must be curated based on the resources available and objectives of the analysis. We will continue the conversation about competitors in some upcoming articles.  As you prepare for the next ‘Zoom’ call and check your social media accounts, ask yourself, when was the last time you used ‘Skype’ or Webex’ or logged into your ‘Myspace’ account?   Don’t be caught blindsided by your competitors. 

Ashish Khemka

Written by Ashish Khemka

Ashish wants to live in a world where there is less waste of resources such as food, man-made materials, and natural resources. His ideology extends to the corporate sector, where, in over two decades of experience as a manager and as a management consultant he has identified countless opportunities for companies to improve their operations through a more acute utilization of their resources. He has lived and worked in several countries and has a deep expertise in capital intensive industries, cyber security and emerging internet technologies, institutional risk assessment and continuity of operations including the disaster management life cycle. His recent consulting experiences include a multi-year strategy and operations project for a global oilfield equipment provider, manufacturing footprint rationalization for a global commodity producer, private label packaging savings and market entry assessment for a mid-size North American food and beverage company. He also has completed over 20 FEMA certifications and has worked with universities and government institutions to develop risk assessment plans and conduct training. Outside of his work interests he enjoys publishing academic research, thinking about the societies of the future and incubating businesses to cater to next generation needs, practicing chemical free small-scale farming and connecting with family and friends, old and new. He is also actively involved as an alumni board member, recruiter and mentor across his alma maters.

 

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