Business and Competitive Analysis: Effective Application of New and Classic Methods (2nd Edition)

Book Preface

Preface

This is a book about how individuals in organizations can turn data and information into insights that decision makers cannot, and will not, ignore. This book uniquely provides its readers with 24 demonstrated and commonly applied methods for helping generate actionable recommendations for decision makers, as well as a handful of detailed chapters that address the process of business and competitive analysis itself.

Given the priority of competitiveness in firms today, business managers need to have a benchmark defining what business and competitive analysis is and how it works. More importantly, they need to be able to convert the wealth of available data and information into a valuable form for decision-making and subsequent actions. What is collected must be converted into intelligence. This is accomplished through analysis.

Business and Competitive Analysis is a book about analysis. Analysis is one of the more difficult and critical roles a manager, consultant, functional specialist, strategist, or intelligence provider is called upon to perform. Although great strides have been made in recent years in terms of planning strategy and intelligence projects and executing or managing the collection of data, the same cannot be said for analysis.

Most of the background research we performed in developing this book was derived from practice and research in the larger field of business, competitive and market intelligence (hereafter, CI). This field is not one most of our readers will have encountered during their formal education, and their current employers may not have anybody with that discipline in their job titles. Nevertheless, nearly every firm performs some of the CI functions, and most of them perform it on a regular basis in advance of making key decisions. Analysis is one of the key roles performed by individuals in the CI field, and it is the one that arguably generates the highest value for executives. In our view, business and competitive analysis can and should be a key weapon in the firm’s arsenal for achieving competitive advantage.

Despite many advances and steady growth in the CI field, some areas of this growing field have received more or less attention than others. The growth of digital communication and information technology, and especially social media and the Internet, has led to much attention being given to processes and techniques of data collection, as well as information and knowledge management. Planning competitive intelligence projects has also received a boost from the ever-present attention given more broadly to strategic planning and strategy development. Despite these areas of popular interest, two areas that have received disproportionately less attention are analysis and its communication. In fact, our own observations, experiences, and several studies support our contention that many practitioners have limited understanding of the breadth and depth of the challenge underlying these areas.

We seek to remedy this situation by offering this needed book, which is devoted entirely to the process and methods for conducting business and competitive analysis. Our first book in this subject matter area was Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition, published by Pearson/Prentice Hall in 2003 and subsequently translated into numerous languages. We received a lot of constructive feedback on that effort, particularly from managers and analysts who were using the techniques described in that book. Based on the feedback and reviews, readers typically found it to be an excellent, one-stop source for reminding and guiding them on the key steps of a particular tool to address a particular problem they were facing, as well as providing them with an enhanced idea of what was supposed to be accomplished by applying the tool. That book was used in many well-known enterprises to help train newly hired analysts and consultants. Finally, the book was used in business school courses in scores of countries to help students learn and apply these techniques to decision-oriented case studies and “real-world” projects.

We incorporated more than 10 years of rich feedback on all our prior books into this edition in the form of a wider range of proven techniques and a better background on the process and context of business and competitive analysis. This book is absolutely not merely a second edition—it contains a rich amount of completely new content. Combined with our other books Strategic and Competitive Analysis (2003, Pearson/Prentice Hall) and two editions of Analysis without Paralysis (2008, Second Edition in 2013), we provide lengthy coverage of over 50 different techniques, which is surely the most detailed coverage of business and competitive analysis methods ever produced.

We recognize that there are literally hundreds of business and competitive analysis techniques that we could have included in this book. It was not our intention to offer an exhaustive list and detailed description of all these techniques. Instead, we have extensively reviewed the literature in the field, considered survey research, and used our own experiences in determining those techniques we view as potentially being the most applicable across a broad range of decision-making contexts supported by the business and competitive analysis process.

Although we have tried to include both “classic” and evolving techniques, we recognize that some techniques being used in consulting and industry might not be included here. One reason for this is that some of these tools are—and remain—proprietary to the consultancies employing them. Another part of the reason we may not have included a useful tool here is that analysis is a process that requires both technical knowledge and creativity. We recognize and hope that managers and analysts will creatively develop techniques not included in this book that provide for better outcomes in their specific contexts. We find we are frequently having to creatively develop and apply unique analysis methods for clients in our own consultancy work.

The reader should also be alert to the fact that any listing of techniques is bound to run into a variety of problems of semantics and definitional confusion. Some of the techniques included in this book are known by multiple names. This may have occurred because the technique came to be associated with a particular originating organization or particular company’s use (such as McKinsey 7S), a particular author (Porter’s Five Forces Model), or has retained a generic name (for example, benchmarking analysis). We recognize that some of the techniques included in this book have seen modifications in use over the years or are derivatives of other closely related techniques. In all cases, we have tried to include and describe the most popularly utilized versions of the techniques, as opposed to all of a technique’s possible derivatives. Throughout our methods chapters, we have tried to alert the reader to where there is overlap between techniques by suggesting that the reader refer to the overlapping constructs elsewhere in the text.

Many of the techniques included in this book were created by leading economists, financial and cost accountants, futurists, sociologists, anthropologists, intelligence agencies, business professors, consultants, and other insightful practitioners or theoreticians. They often developed their ideas in an effort to solve pressing analytical problems that they faced. We are grateful to these individuals for enlightening our understanding of business and competitive analysis. We make a sincere attempt to acknowledge the originators of these techniques in the book.

We must also note to our readers that it was not our primary intention to “invent a new wheel” when it comes to analytical techniques. The techniques we have included all have a history, with some having been applied in various contexts for several decades or longer. This book’s techniques have been and are in use in real organizations and do not exist just in concept or theory. However, we have included several methods that are likely to be unfamiliar or novel to many readers—even those who have gone through graduate business, management, or marketing courses—as well as individuals who have been performing analysis in their enterprises for many years. We believe strongly that unfamiliarity is a particularly bad indicator of a method’s value. We believe our readers will find that even some of the new techniques (to them at least) will be of high potential value in helping them make sense of their firm’s business and competitive contexts.