"It is impossible for ideas to compete in the marketplace if no forum for
  their presentation is provided or available."   Thomas Mann, 1896

Articles from The Business Forum Journal

BUSINESS INTELLIGENCE
   by Seena Sharp

Do you trust your gut? Play it by ear? Follow your nose? In short, do you make major marketing decisions by relying solely on your personal knowledge of your industry, competitors and customers?

If so, get ready for a slap in the face. Time and time again, expensive, embarrassing mistakes are built on internal thinking, guesstimates and sacred cows. Companies burn substantial resources on bad decisions and often have a difficult time bouncing back.

While large organizations can survive fiascos like the XFL, New Coke and the Yugo, a smaller company may not be able to repair its reputation or regain the confidence of customers, investors and the sales force. Do you have the financial cushion to survive costly mistakes?

Why wait for a major blunder to shake up your management team? Companies of all sizes are using business intelligence to save money and time by making smarter strategic decisions. (At Sharp Market Intelligence, 90% of our clients make significant changes in direction based on our investigations.)

What is business intelligence?

Business intelligence is a future-focused, strategic perspective based on the skilled collection and expert analysis of current, comprehensive information. It’s not spying or simple market research. It is the best available insurance against making the wrong decision or missing opportunities.

For instance, have you ever been blindsided by an unknown or substitute competitor? Has a competitor introduced something that you didn't know had demand? Succeeded with a totally new distribution channel? Or captured a new or niche customer? Or by using an unusual marketing approach?

If you can answer “yes” to any of these questions, your organization is not alone. Even in this, the Information Age, most companies are data rich and information poor. They mine facts and generate reams of raw data, but produce little or no intelligence.

Executives are knowledgeable about the past, and confident about the information they used to attain their present level of success. However, the rate and complexity of change in the marketplace rapidly decreases the value of historical information and conventional wisdom. When was the last time you questioned your company’s or client's “facts?”

Data vs. information vs. intelligence

“Look at the data!” old-school managers have been known to bluster. But data is simply numbers or facts in a vacuum. It's discrete, scattered, and has no larger meaning. Data is the first step in a process.

Consider this: Revenues from XYZ Company were $4.7 billion in 2000. This data is true, but not of much use. Step two, putting data in a larger context, uncovers important information and greater understanding: XYZ Company's revenues increased 45% between 1999 and 2000, compared to the industry average of 20%. Now the facts are a little more revealing.

On to step three. Intelligence results when sufficient information is analyzed to reveal critical insight and implications that lead to actions, strategies, or decisions. For example: XYZ Company's revenues increased primarily due to acquisitions. That intelligence provides a very different understanding than if the increase were due to new products, or alternative uses, or development of a new customer base.

Like reading tomorrow’s headlines, business intelligence delivers an advantage. The process investigates, reveals and explores the entire competitive environment in which your company operates. It’s the strategic use of current, comprehensive, targeted intelligence that will help your company succeed by making better decisions.

Business intelligence is a powerful tool that can be used immediately…or held until additional supporting evidence makes even the most cautious manager more comfortable. Either way, why not know now what your competitors will discover later?

Where is the information?

The information needed to develop business intelligence is usually not online. While the Internet is a great resource, online and traditional sources account for just 25% of available business information.

An enormous amount of valuable business information is available, but not easily located, and not online. This includes non-electronic trade and business publications, newsletters, surveys and studies, reports and association collections. And it goes deeper to include information from companies, suppliers, distributors and major customers.

Knowing more and more about less and less

Once, perusing a traditional printed newspaper exposed readers to everything from world news to sports scores to comic strips. Thanks to technology, people now track only the topics that interest them, and skip information with less appeal.

The irony of the Information Age is that the public now has a narrower, not broader, focus on their world. As a society, we know more and more about less and less, and are more likely to be surprised by developments that slipped under our radar.

What’s it worth?

Nutrasweet's former CEO, Robert Flynn, said that business intelligence is “is worth up to $50 million per year to our company…in actions taken or mistakes avoided." Even for smaller companies, an investment in business intelligence can deliver big returns.

Business intelligence can uncover marketplace knowledge that is unknown or underestimated by the rest of your industry. Subtle changes and shifts in the market is how new competitors “muscle in” on your business.

Think Virgin Group. Richard Branson has started more than 200 companies in industries in which he has no expertise. How? He exploited the fact that the major players in those industries were not serving their customers well. Is Branson, or someone like him, eyeing your field?

The case(s) for business intelligence

IT&T CEO Harold Geneen noted, "Ninety-nine percent of all surprises in business are negative.” In these brief case studies, each of our clients was surprised at what they learned, but was able to improve or change their decision before taking action.

Case 1: Business-to-business

Situation: A client's new division was preparing its marketing plan and deciding which industries to target. They selected three industries they believed would be most interested in their services, but sought verification before investing in expensive marketing materials.

Findings: Industry #1 was a good candidate, but the client had underestimated the size of the total market. Not only was the prospect pool larger, but many of these businesses would need continuing services, and could prove quite important in PR value. This finding helped the client to realize that they would have to hire and train far more staff and, with the demands of this industry, they might not have the resources to service the other two industries.

Companies in Industry #2 were not interested at first, but stated that they would be interested at a later date in the development of the service, once their staff had experimented on their own. Industry #3 was very promising, but the client had focused on the wrong segment of the industry. The correct target group was both larger and more interested than the client assumed.

Action: After additional study and confirmation, our client rewrote their marketing plan, saving time, money, and pre-empting the competition.

Case 2: Financial services

Situation: A successful Fortune 500 company had already invested millions of dollars in anticipation of attracting new, young consumers who would be their customers for life. However, they were unable to attract customers in the supposedly "hot" arena. The company needed to find out what they didn’t know about the marketplace.

Findings:

Six different industries each had several firms competing for the same new business segment. Plus, certain players had longstanding alliances. The client base was vastly different from what the company usually served, and successfully influencing its vastly different culture would be nearly impossible.

Action: Based on our extensive fact-finding and interviews, our client recognized that the road to profitability for this new market would be high risk, and they chose to cut their losses early. We didn’t need to point out that had some of the early funds been invested in business intelligence, later funds might not have been wasted.

Case 3: Biomedical

Situation: Client manufactured an ophthalmic product and wanted to compare their market position with their competitors as part of their new strategy plan.

Findings: We investigated the top eight competitors as well as investigating their suppliers and customers. In addition to the specific data that the client requested, we captured and organized other valuable information into reports on how each of the competitors and customers perceived themselves and each other. Our client was shocked to find - industry perspective notwithstanding - that customers viewed the product as a commodity and had little interest in what the client thought was important (and using in their advertising campaign.)

Action: The client became more objective about their strengths and weaknesses and realized their perspective was too insular. As a result, they undertook more extensive research and successfully changed their marketing strategy to reflect the realities of the market.

A kick in the pants

No matter now many publications you read, how many conferences you attend, how much networking you do, your understanding of the marketplace is outdated. Think you're the exception to the rule?

At Sharp Market Intelligence, the vast majority of our otherwise savvy clients had an incomplete, incorrect or obsolete view of the competition, distribution channels, customer demographics, uses, substitutes, materials or other facets of their business.

More than 20 years of experience has shown us that companies in search of business intelligence are knowledgeable about their industry—but want to be more so. Simply put, they want to avoid surprises, make the best decisions, and be first to profit from changes in the marketplace. Don’t you?

Developing a business intelligence mindset means leaving your comfort zone and navigating the volatility of the marketplace. It means being alert to constant market shifts and adjusting your plans accordingly.

For example, the Experience Economy, “blurring,” and second-mover advantage came into focus more than a decade ago. If you understand these concepts, how have you incorporated them into your strategy? If you are unfamiliar with these terms, how can you apply them to your business?

• The Experience Economy has been a marketing reality for more than 20 years and continues to succeed by actively engaging consumers. Las Vegas, Southwest Airlines, Niketown and other marketers craft unique experiences to elevate their offerings from commodities to preferred brands.

• The blurring phenomenon has touched almost every aspect of our professional and personal lives, and therefore affects almost every business. This includes the blurring between work and home (“casual corporate” dress codes), business and personal products (commercial appliances bought for home use), and upscale and cheap (Gap t-shirt worn with Armani jacket), mass-produced and customized (Dell Computers).

• Second-mover advantage offers a clear opportunity for success when an innovative first-to-market product (the Betamax or Newton PDA) paves the way for a later, better product that the public will understand and embrace.

New trends, triggered by aging Baby Boomers, the last presidential election, heightened social responsibility, and other catalysts, are emerging and growing in significance.

If you’ve never been blindsided by unexpected change (the aforementioned slap in the face), it’s just a matter of time. Consider this article a kick in the pants.