Most organizations collect information about their environment in a multitude of places, and usually they are not coordinated. Further, often these research efforts are incomplete. Yet it is obvious that without information about your business environment, you can make no rational development or resource allocation decisions. You are in effect, flying blind…which can only result in a crash. A comprehensive, organized, coordinated information collection (research) effort is thus the very foundation of an ongoing enterprise and of its value acceleration.
To make rational decisions about your business, you need detailed information about your own organization outside of your business unit and information about the external environment.
The internal information you need to collect centers around what other business units are developing, funding and selling. You also need to understand in detail exactly where (channels) and how (terms) they are selling both current products and “futures” (inducing their customer to invest in future directions.) Without this understanding you risk a) competing for sales with other business units in your own company, 2) missing out on complementary sales with other units, or c) losing sales because you could not coordinate with other units to offer a complete customer solution.
The external information you need centers around six areas: the market itself, competitors, solution alternatives, customers, channels and “general” or “other” factors.
Clearly you must understand your market in terms of its size, segmentations, segment characteristics and drivers, segment growth rates, barriers to entry, and so on. You must also obviously have a clear understanding of your competitors. Start with a clear-headed list of just who they are—you may learn that you have more than you think if you define them as firms that satisfy the real need that the customer is satisfying, rather than just firms that make similar products The you must have a detailed knowledge of their strengths and weaknesses along many dimensions: management, channels, financial, manufacturing, technology, human resources, geographic, just to name a few. The point is that you must know everything about them. You also need to identify new competitors on the horizon and have an equally detailed understanding of them. You keen to know how your competitors are viewed by your existing and desired customers from all the angles that are relevant to them. Gathering a complete understanding of your competitors is a big task.
Another area that requires detailed understanding is that of alternatives to your product in your customer’s mind. What other kind of product could they buy to satisfy the same need? Why don’t they now? What would drive them to? What are the factors affecting those drivers and how likely are they to materialize? And you have to do scenario planning for the possibility that they will in fact materialize.
A clear understanding of your customers should go without saying, but few firms truly understand them in-depth. For example, can you clearly define the attributes of your customers and those of your desired customers in an explicit way? What is driving their businesses, and how are those drivers changing? What is their cost to switch suppliers or to another alternate solution altogether? What are their buying patterns? What exactly is their buying process in terms of decision points, people involved, and value expected at various stages of it? (This is a big question, and its answer is the cornerstone of our sales methodology.) If your customer is an OEM, then you also have to understand these characteristics of their customers. too.
You must be able to define the characteristics of your channels explicitly. Channels are really special types of customers, and all the information you need about customers above, you need about your channels.
Finally, there are other influences on your business. Social, political, regulatory, international, economic influences, and so on. The extent that these and other factors play in your business varies by the business you are in, but there is no doubt that it is influenced significantly by at least several. Sea changes appear every so often in every business, and these must be analyzed and anticipated, too.
That’s quite a list of information that you must gather, organize, coordinate, analyze and disseminate appropriately. And we’ve listed only examples in each category above. Most companies have a market research function, and this function is a good place to start. See what you are doing there now, and expand it or re-configure is as necessary. But remember that this information comes from many places—not just the market research function. Everyone in the company who touches the outside world has something to contribute: marketing people, product managers, technical people, and so on, but most particularly your sales force. Your sales force—if they are good—will be a great source for more than just tactical information (competitors prices and tactics, for example.) Good sales people will have assimilated much of strategic value, too, in many cases.
What every company needs is someone in charge of gathering, organizing, coordination analyzing all of this information from all the places its generated in the firm. Our general term for this information is Environmental Influences (EI), and a thorough understanding of your EI is the beginning point for starting your company on its path to real value acceleration.