6 Steps to Beat the Competition: Analysis and Discipline Pay Off

17 01 2017

the-art-of-war-sun-tzu

It is said that if you know your enemies and know yourself, you will not be imperiled in a hundred battles; if you do not know your enemies but do know yourself, you will win one and lose one; if you do not know your enemies nor yourself, you will be imperiled in every single battle.
Sun Tzu- The Art of War

I am a believer in the Art of War, especially applied to business and marketing. When I talk to groups on business and marketing subjects I use this quote and it has guided me in the way I approach building businesses and helping companies grow. I have listened to numerous investment pitches at TechCoastAngels screenings (a real Shark Tank) and have heard too many times that the entrepreneur believes there is NO competition. There is always competition, i.e. another way to solve a problem or provide a service. Even when a company realizes that there is some semblance of competition, many executives believe they have more attributes, a better business model, and a stronger brand than reality leads them to accept.

Sadly, this problem extends way beyond the startup world. In 2008, Jim Keyes, CEO of Blockbuster said: “Neither Redbox nor Netflix are even on the radar screen in terms of competition.” While Redbox had its glory days and has now faded, Netflix continues to soar as they are able to take advantage of streaming media and they have evolved their business model. Blockbuster and its ubiquitous blue and yellow stores have faded into oblivion after ceasing operations in 2013. When I was at RCA (when it existed as a standalone company) one of the execs in the tube division beat his plan but unfortunately failed to recognize competition from semiconductors. He was fired. And let’s not forget other companies such as Digital Equipment Corporation, Wang, Motorola and Nokia in the tech field. Not only did they fail to understand the competition, their business strategies did not evolve. We are now seeing consumer companies such as Macy’s and Kohl’s which failed to recognize the competitive environment fast enough (can you say Amazon and online shopping) and are now closing many of their stores.

There is hope though, for most companies as they consider their competition, the environment and the competencies they need to put in place to execute a new business strategy. To that end, here are the six steps companies must take to gain and/or retain a competitive edge.

1. The first step to beat the competition is to recognize that there is competition! Competition comes from direct competitors, i.e. those offering the same type of product or service; indirect competitors; and even the do-it-yourselfers. Even if a competitor is small today, should technology or macroeconomic trends change, a small new company can become dominant. That is what happened to Blockbuster. Competition doesn’t have to come from the same players in the industry. Who would have thought Google and Apple, both, would be developing an autonomous car or at one time a smart phone. As we celebrate the 10th anniversary of the iPhone, there was a time when dominant companies in the market such as Nokia and Motorola did not consider Apple a threat and frankly, they did not believe companies like LG and Samsung were threats either. Both Nokia and Motorola have lost their luster.

Keep alert and be paranoid. Use user panels talk to “lead users” who are early innovators of new products, set up Google Alerts on companies that are current competitors as well as those which have the right competencies to become competitors. Your product might be better and that message needs to be conveyed to your target audience. You can recognize the competition through the use of user panels, discussions with “lead users’ and even setting up Google Alerts.

2. The second step is to know the competition. A couple of months ago, I was watching a classic war movie called Patton. Patton was reading the works and biography of Rommel, his nemesis, competition and enemy. Rommel in turn was trying to learn through books and other sources, how Patton thinks and how he would fight. It’s classic Sun Tzu! Even without teams of analysts and staff there are a few tips in understanding and knowing your competition.

Executives can become the equivalent of Undercover Boss. When I was the top marketing executive for US Cellular, I personally visited both my stores and those of my competitors. It’s easy to do even in a business to business environment. Other tools that can be used include Customer Advisory Boards, user panels, cross-functional teams that meet regularly to discuss competition and the environment. At ATX Group (now Sirius Connected Car), every other Friday morning I hosted a cross functional group of executives to discuss new technology and competition. Certain execs were tasked with following specific competitors and sharing that information in Microsoft Exchange folders for our sales, marketing and technologists to use. Other tools include Spider diagrams, focus groups and market research including subscribing to the industry analysts that cover your industry. In the tech field those industry analysists include Gartner, Forrester, IDC and Ovum among others. If a public company is a competitor, read their 10-Ks; it’s amazing how much information is available in that document.

3. The third step is to know yourself. Some of the same tools used to understand the competition can be used to understand your own company. Spider diagrams, side by side market research matrices that can highlight those attributes that are important to your customers and for which you perform well or poorly can help set your company’s strategic imperatives. I am a huge fan of developing a SWOT analysis which covers strengths, weaknesses, opportunities and threats. To do SWOT well companies should seek out key thought leaders in their company, regardless of level and even use newly recruited employees who have a different perspective because of their recent outside experience. Doing mystery shopping even in a business to business company is also relatively easy. At a telecom company in New Jersey, one of my marketing managers set up a false company called The Fred Racciopi Cement Shoe Company of Central New Jersey (obviously we set this up tongue and cheek) and became a customer of each competitor and well as our own company. It’s amazing what we learned and through those learnings we adjusted our training program, branding, positioning and marketing material.

4. The fourth step is to develop and explain the factors that make you different. Customers buy from companies that provide a unique value for their needs. If the value is significant, relevant to the customer, sustainable and credible, the company will have a differentiable advantage. This enables executives to create a “moat” around their company and its products, protecting the company from competitive incursions. The strength of your differentiation is akin to the size of the moat. Even commodities have moats. Think about salt or rice, two very basic commodities. Do you believe that Morton’s salt is better than other salt and worth a 15% price premium? Or how about Mahatma rice vs Kroger-branded rice? What about chicken? What company said: It takes a tough man to make a tender chicken?” (The answer is Purdue Chicken.)

If you can differentiate these commodities, you can differentiate any company and its products. There are several ways upon which to differentiate. Intellectual property (IP) or Patents is an obvious one. Even IP may not be sustainable or even relevant to your target market. Other ways to differentiate are based on what Adrian Slywotsky, author of Profit Zone, calls strategic control points which are defined as some type of unique advantage for a company based on competency or partner relationship. All companies can find at least one. These could include their brand, their business partners, distribution partners, unique processes, innovation, low cost of manufacture, unique customer knowledge, access to certain resources be they commodities or people and similar items. A company has to find those strategic control points that are relevant to their markets and be consistent and credible in delivering on those elements.

5. The fifth step is to develop plans: Developing and executing a plan is critical to success. A written plan should include specific elements. By target market, a goal needs to be defined, a strategy clearly enunciated, and tactics developed with specific milestones, costs, and a person responsible for delivering the tactics. Our opinion is that a plan should have one specific leader who is accountable for the entire result. Individuals who report to this leader need to be designated for each tactic and milestone. C-Level Partners also believes that these plans need not be long winded and in fact the best plans have focus and clarity and might even be codified on one or two pages at maximum. I personally am in favor of one page plans with specific deliverables. I like using a method called RACI (responsible, accountable, consultative and informed) to ensure that the right people in a company are involved in the development and execution of the plan.

6. The sixth and final step is to monitor, measure, modify. Each plan developed in step 6 should have a complementary set of metrics to track the success of the plan. Metrics vary depending on the plan and some of the metrics can include: average revenue per sale, total sales, return on investment, market share, win/loss ratio of business, aided and unaided awareness, average order quantity, SEO, the timeliness of performing the tactic, and other operational, business or product criteria. Each month these metrics should be added to a scorecard – preferably balanced – and reviewed with the operational or executive team. If a metric is not on target, then the executive responsible for the metric has to provide a corrective action plan. If the metric is very critical to the business strategy or to the overall goals of the plan, then a separate deep dive should be performed where the elements of the plan can be discussed in detail.

As an executive it is sometimes hard to see the competitor when you are mired in the day to day operations. You can always look to outsource part of these six steps or recruit internally some of the best and brightest less tenured people in the company. Successful companies couple strategy with competitive analysis to create and maintain an advantage. When I first converted from an engineer to a marketer, I cut my teeth on competitive analysis. It was the perfect start to figure out how to gain an advantage for the new products I was developing for my customers. I was fortunate to have the opportunity to help drive the strategic vision of my company at the same time. That integration is, in my opinion, critical to a company’s success.

Once you gain a competitive advantage, you have to stay ahead of the competition. That is a subject for a future blog, yet we at C-Level Partners believe that maintaining a competitive edge means companies have to continue to innovate, with technology, with their people, and through their processes. They must maintain contact with customers and open their ears and even seek out criticism. And they must strive for not only incremental improvements but also stretch for what we call the “art of the possible.”

As a technologist and business executive, I always keep in mind the title from Andy Grove’s book, “Only the Paranoid Survive.” Yet with discipline and a plan as outlined in these six steps we believe that companies will be able to develop a competitive edge and flourish in this hypercompetitive environment.

If you have comments or would like to talk further feel free to contact me at dfriedman@clevelpartners.net or call me on 949 4394503.





Building Differentiation into a Product or Service: Creating a Sustainable Moat.

4 02 2016

product differentiationThis is a particularly interesting subject as we, investors, think about investing in a company.  And while this blog is directed to those potential entrepreneurs, the ideas suggested in this blog are equally applicable to new products and services developed by a business to increase their revenue, replace existing products/services, or compete in the market.

Many entrepreneurs – and investors alike- think that differentiation is based on the Intellectual Property underlying the product.   That may be true if the IP is really unique.  Yet, as one knows patent protection only goes so far.  If a new smaller company has a patent that “infringes” on a larger company’s business, for example, the larger better financed company can sue for infringement and cause the smaller company to lose focus on their end game.

Differentiation can enable a company to create a moat around their business that would make it difficult for a competitor to penetrate.   At best, it protects the company for the long term.  At worse, it enables protection for a period of time so the new company can establish their brand and get first mover advantage.  And, in the best case, the new company has such an advantage with their product that the larger company buys the smaller company for $1 billion or more and the founders feel pleased that they created a unicorn!!!   (We can all dream, right?)

Differentiation can take place on several levels.  The following diagram shows and input/output schematic for product/service differentiation.  In the diagram, there are 11 different areas where differentiation can take place.    The entrepreneur can focus on one or several of these areas keeping in mind that they are competing for a customer’s mind share relative to what either direct competitors can offer or other solutions that the customer may find acceptable.  For example, when I was commercializing Wi-Fi on airplanes we initially thought that the competition was the on-board entertainment system.  In fact, that was only one competitor; the other “competition” that competed for the customers’ attention included eating, sleeping or reading!!  It was evident in the rear view mirror.

Product Service Architecture for Differentiation

Differentiation can take place at one or several of the components of the product or service.  In this diagram there are 11 different areas where the entrepreneur can focus.  Most of the time, the focus is on the main platform or product and its features.  Yet differentiation can take place in the following areas as well:

  1. Accessibility: How a customer finds the product or service.  This includes channels of distribution, online, door to door, word of mouth and is part of the input process.
  2. Interactivity: Does the product or service require input from the customer? Is this input active requiring the customer to input information or is it more passive, with the input process providing the input by reaching out to other databases?
  3. Input process: Is there a unique way that the product or service uses the data to and integrates or converts the data into elements which can be acted upon by the platform?
  4. The platform: this is the core of the product and the essence of the technology. It is the engine to drive applications and features.
  5. Features: the specific features that provide benefits to the customer and are inherent in the platform.
  6. Applications: the specific uses for the product that the customer may or may not realize. These applications can be developed by the company or by partners.
  7. Maintenance and customer support: Is the product self-testing or do customers have to provide some input into testing and maintenance?  Is customer support online only or a combination of online and human interaction?  Maybe I am old-school, but occasionally I would like to speak with a human and the documentation and self-help guides are not necessarily very clear.
  8. Output process: What is the output process necessary to translate and provide an output to the customer? Can the output process be linked to another product or service from one of the company’s partners or another provider?  For example, if the product/service is a new CRM system for the small business, can that system be integrated into a marketing automation or e-commerce system from Salesforce or Marketo?
  9. Reports and Results: This is what the customer actually sees as an output and is usable.  Maybe this is a timeline, a report, a database, a social interaction, a picture or a posting, or even a data (Think of Match.com.)

In each of these elements, the entrepreneur has a few choices.  We use the concept of PPT: people, process (automated), and technology to look at ways the element is enabled, used and managed.  It is up to the entrepreneur how he/she wants to balance each of these three components because they will affect effectiveness and efficiency.

I want to point out one other way to differentiate and develop a moat for your company and product.  In a book called Profit Zone, authors Adrian Slywotsky and David Morrison point out ways that a company can protect its profit and revenue stream.  In developing and commercializing a new product the entrepreneur can think about the following elements as well.  Strategic control points are normally industry specific yet we can general from most protective to least protective:

  1. Owning the standard through technology and IP
  2. Managing the value chain- including channels of distribution, input materials, shelf space etc.
  3. Developing a super dominant position by dint of their market share in specific markets, through specific channels, or with specific products. This is probably less likely for a start-up.  Yet, perhaps the technology originated in a university and by dint of that they are super dominant in that market and want to expand beyond the university.
  4. Process including a unique way to provide information to a customer. Think Amazon
  5. People including the relationship of their customer support team to addressing issues. Think Nordstrom or Zappos.
  6. Own the customer relationship by focusing and understanding the unique preferences of a well-defined niche.
  7. Brand and trademarks. Think McDonalds, IBM, Google, Snapchat.
  8. Development lead time enabling the company to be first to market and build up first mover advantage.
  9. Cost advantage or cost parity enabling the company to compete should there be a price reaction from a competitor.

I trust this blog- perhaps a little lengthy- can provide some useful information for the budding entrepreneur and even those in corporate America engaged in developing and commercializing new products, services, or businesses.  There is no easy answer; yet having a framework or two and breaking a complex problem into smaller manageable components can perhaps lead to success………. and the next unicorn.

You can hear and see entrepreneurs pitch their products at the TechCoastAngels Celebration of Entrepreneurship at the Segerstrom in Costa Mesa on March 10.  Check out http://www.techcoastanagelscelebration.com to get tickets.  Also, feel free to continue the dialog or contact David Friedman at dfriedman@clevelpartners.net or via phone at 949 4394503.  Or retweet this to people who would like a good read.





Celebrating Entrepreneurship

10 01 2016

EntrepreneurshipI was sitting at lunch with a few of my friends and thinking about the start of the New Year.  Of course, we all made resolutions to eat better, exercise more, and to enjoy life by having more balance and more fun. As we start this New Year, we wish people success and prosperity.

Wishing and hoping are not strategies for success.   A clear purpose and course of action properly executed is essential.  I mentioned TechCoastAngels’ upcoming conference on Celebration of Entrepreneurship (www.techcoastangelscelebration.com)  in March, 2016 at the Segerstrom in Orange County.   As a member of TechCoastAngels, entrepreneurship and start-ups are part of my daily life.  But why should this be important to everyone, particularly entrepreneurs and others in the entrepreneurial eco-system?   And is it entrepreneurship only that is critical or should corporate venture, i.e. internally generated new products and business funded by larger corporations, be considered critical as well?

First, entrepreneurship in the OC is happening.  While not at the scale of Silicon Valley, the OC/LA area and the San Diego area are pretty high on the list of both VC and angel funded companies.    Here are some examples.  In the OC, we have accelerators/incubators (for example KF, FastStart Studios, EvoNexus, Octane); University supported entrepreneur programs (Chapman’s Leatherby Center and UCI), angel groups (TechCoastAngels, Kieretsu), and a newly formed Institute for Innovation aka The Cove at the tech campus of the University of California at Irvine.   Clearly,  the infrastructure is in place for the entrepreneurial companies to flourish.

While invention and innovation are sometimes accorded to startups and venture investment, there is another area which cannot be shortchanged.   Corporate Venture, those companies funded by corporations who have accepted a strategy of growing by new products and services, is also rampant in the OC.  Witness the growth of Broadcom which focused on internal investments in wireless and mobility technologies.  Or Vizio, which has migrated from a big screen TV company to a broader consumer platform.    Or Edwards Life Sciences which continues to innovate in the medical device field.   And there are countless others.

Between innovation through start-ups and innovation from existing companies, Orange County has the pieces in place to become a hub of innovation.    From what we have seen, medical device, social media, software, and consumer services are being developed by many young entrepreneurs still in college and supported by the college community, yet there is a new group of “older generation” entrepreneurs that are also getting into the act by developing products and services.    Many of these new entrepreneurs are driven by the economy to strike out on their own after leaving corporate life.   Grandpad, a hardware and software platform funded in part by TechCoastAngels, is led by Scott Lien who left the corporate world to focus on helping seniors use technology in a more personal manner.   Parcel Pending, founded by Lori Torres, is focusing on automating the package delivery system and has traction in several geographic markets.  It’s another company funded by angel money in the OC.

Innovation and the ability to grow business are critical for the long term success of our national and local economy.   At our upcoming event you will be able to hear about how ideas were generated, ways companies have been able to grow, and hear from entrepreneurs and investors alike in how to build their companies or portfolios.  If you are an investor, it will be an eye opening venue for networking and hearing the investment pitches from more than X outstanding new companies. If you are an entrepreneur, perhaps the conference and discussions during the conference will spark some new ideas or help gel some of your thoughts on your existing business.

For others who might attend, consider this.   Entrepreneurship and intrapreneurship  are exciting.  You are never too old to feel the urge to create something new.   Innovation is infectious and fun.  Sure, it is very challenging and sometimes gut wrenching but as they say, the glory goes to those that try.  In that vein, I want to leave you with this inspirational poem called “if you think you can” by Walter Wintle, which epitomizes the ethos of the entrepreneur or intrapreneur.

If you think you are beaten, you are,
If you think you dare not, you don’t.
If you like to win, but you think you can’t,
It is almost certain you won’t.

If you think you’ll lose, you’re lost,
For out in the world we find,
Success begins with a fellow’s will.
It’s all in the state of mind.

If you think you are outclassed, you are,
You’ve got to think high to rise,
You’ve got to be sure of yourself before
You can ever win a prize.

Life’s battles don’t always go
To the stronger or faster man.
But soon or late the man who wins,
Is the man who thinks he can.

And maybe you, too will be the founder of a Unicorn or be an investor in a unicorn company and have a private island next door to Larry Ellison.   Hope to see you at the Segerstrom in March.





StreetSavvy Marketing Predictions for 2016

21 12 2015

prediction-forecast-crystal-ball-future-ss-1920-800x450It’s that time again when just about everyone has predictions for the New Year. In November, Forbes contributor Kimberly Whitler posted predictions from the C-suite.   Adam Davidi, from the Guardian, posted predictions on branding based on conversations with “experts.”   I am sure we will see predictions from Forrester, Gartner and others as well.

As a Managing Director at C-Level Partners, I don’t want us to be left out.  My colleague, Vince Ferraro, and I have been C-level executives in marketing and general management for many years. We now consult with companies on marketing and their go-to-market strategies.   We decided to look at “Big M” marketing, relating to predictions for how companies and brands go to market and how they interact with customers.  So without fanfare and any biased perspective, we share these predictions for Marketing for 2016.

Let me be candid.  While most of these are predictions based on our work with clients, with start-ups and in talking with our marketing colleagues, there are also some “aspirational trends” that we hope come true for the profession as well as we believe they are important for marketing professionals and the businesses they manage.  Some of these trends overlap and leverage each other.   To us, that will represent the power of good marketing.  In no particular order, our top sweet 16 are:

  1. Cognitive Commerce has begun. Marketers will use information on customers from their databases, the internet, and other sources to build stronger relationships, build predictive algorithms, personalize content, and deliver products and services to meet their specific needs.
  2. The distinction between offline and online will disappear as real time analytics will unite both camps. Marketers will consider all (omni) marketing channels to optimize their marketing programs based on cost, effectiveness, ROI and the satisfaction quotient from building relationships with customers.
  3. Branding will be from the inside out. Companies will not push the brand but the brand will be built on trust, engagement, referrals, authentic dialog, and transparency.
  4. Digital Marketing will cease to exist as a standalone part of marketing. There isn’t a need for separation anymore. World class marketers will know how to market in a digital world. Traditional and online marketing not only will coexist, but one will leverage the other and work better together.
  5. Advances in video broadcasting and continued growth in mobile devices will change TV marketing forever. Marketers will use new technologies to enable a more immersive experience and TV and other broadcast video usage will expand on all screens – laptops, desktops, tablets, smartphones, HDTVs and even screens in cars,( i.e. telematics).
  6. Content will be created specifically with video channels in mind. Further, there will continue to be a migration to mobile video which will become de rigor on a company’s website, in blogs, in training, and on Youtube.  Youtube channels for marketers will continue to expand.  In addition, the use of video podcasting and live streaming are also in a growth mode.  The world is clearly digital and going video and marketers will take advantage of that.
  7. Personalization will grow as its ROI is measured and as customers come to expect to be treated as individuals. We, at C-Level Partners, have written that there are now 7Ps of marketing and personalization is one of them.  Technology and marketing automation will enable this to happen.  This personalization will improve company branding and the ability to build stronger relationships with customers.
  8. Marketers will get back to basics. Solid, well planned marketing will trump the sexy marketing in the past.  The CMO and business leaders will focus on marketing as a strategic investment to generate profitable revenue.
  9. The human touch will return to marketing. How many of you love to listen to an automated customer service system saying that “your call is important to us…”  That’s bull!  Companies will realize that you are important and will show it by having more touch than tech or at least do a better job of integrating the two.  Being human will also apply to helping customers understand the value of the company’s products and determining what motivates buying behavior.  This is like getting back to the future… and I love it.
  10. Employee experience (EX) will be as important as customer experience (CX). Engaged employees are critical because at the front line – in retail, sales and customer service- they ARE the brand, or at least a fair representation of it.   Engaged employees also feel part of the company, behave like owners, and will be promoters of the company’s products and services.  According to our anecdotal evidence, only about 30% are engaged today.  Think Zappos, Starbucks, 1and1, and Jet for companies who provide both good EX and CX.
  11. Marketing and Data Science will be the new dynamic duo. This will be key to understanding the customer persona from many angles – demographics, psychographics, sentiments, and buying behavior.  Vince and I, both being engineers, can relate and understand this dynamic.  We expect to see the CIO and CMO becoming BFF’s.
  12. As a corollary to #11, data will be the new currency for the younger generation. Data will enable the ability to personalize the marketing message and make that message more meaningful and differentiated for a particular customer. But it doesn’t only apply to the younger generation; big data will be used to help understand buying behavior of all customers and couple that information with the dynamics of profitable revenue growth for the corporation.   The new marketer will be, must be, a datahead or recruit the right people in his/her organization who have the skills to analyze the myriad of data available from business and marketing systems.
  13. Marketers will provide more original insights into business. Marketers will not be mere curators of data and content.  The key word is  By having more insight into business, the CMO will be able to justify his/her seat at the executive table.  (This is a belief and expectation!)
  14. Customer success will be determined by a combination of satisfaction, retention, and referral. We have always believed that the combination of the three components will yield the most loyal customers.   In conjunction with this, customers themselves, through social media, will become the company’s best sales people. Technology to help build customer engagement will continue to evolve and become more sophisticated.
  15. Marketing and selling will be in an omni-channel world. Marketing execs will understand the buying persona of their customers and will use math and analytics to optimize the sales and distribution channels.  But the key here is that it will not be one channel vs. the other.  The marketer will blend online and offline, retail and wholesale, third party distribution and direct to ensure the buying experience matches the customer and to improve the profitability of the company.
  16. Chief Marketing Officers will evolve to become strategic businesspeople first and “marketing” executives second. This is our wish and expectation; therefore, we took the liberty to include it as one of our predictions.  The CMO will be the linking pin from the outside world of the customer to the inside world of production, manufacturing and operations.  He/she will have a unique view on building and capturing valued.  In the past, we have not seen this from most of our traditional marketing colleagues as many have been focused on one area e.g. advertising, digital, brand, and product.  The new marketing executive will be a generalist, a businessperson with a focus on top and bottom line growth, steeped in data analytics, change management, and growth levers, coupled with creative and innovative bent.  We may be wrong about this one for 2016, but we believe it will eventually take root over time.

We would be interested in hearing your thoughts on your sweet 16 predictions for 2016.  Let’s keep the dialog going at www.clevelpartners.net.   And feel free to contact me at dfriedman@clevelpartners.net or Vince at vferraro@clevelpartners.net for a complimentary discussion on how we can help you achieve value creation and profitable revenue growth.