Central to the creation of expert planning systems as part of Ibis services and training are three questions:
Where are we?
Where do we want to be (and when)?
How are we going to get there cost effectively?
Competitive analysis is crucial element in the first two questions, as it will identify how far ahead or behind the competition the enterprise is, setting priorities for investment appraisal and
action planning and
implementation.
Building knowledge Centres
The development of knowledge centres, responsible for their own parallel planning and
business monitoring will be part of the bottom up rather than top down plan creation which is vital for well grounded and realistic plans. By using
key performance indicators within operational units and incorporating benchmarks, the entire range of competitive performance can be rapidly identified. Though key performance indicators vary from enterprise to enterprise, an example of selected components from the various divisions ( a subset of a much greater amount of information) could be as shown as in this table:
Factor
Source
Company
Benchmark
Target
Gross profit
Financial monitoring
59.00%
61.00%
62.00%
Customer satisfaction
Product performance monitoring
72.00%
88.00%
80.00%
% new products <3 years old
New product development
43.00%
65.00%
52.00%
AER
Administration monitoring
7.00%
2.80%
5.50%
Productivity
Personnel monitoring
$83590
$124845
$95500
Web hits/ month
IT monitoring
237200
145000
250000
Stock turn ratio
Production/ logistics monitoring
5.6
7.3
6.2
Customer spread ratio
Marketing monitoring
82.00%
47.00%
61.00%
This company has chosen to build its core competence in seven areas, with the data showing considerable differences against benchmark for these chosen operational KPI's. There are some components that are ahead of benchmark (such as Web hits), some that are close to benchmark (such as gross profit margin), and some that are considerably distant from benchmark requirements, such as productivity per employee and administrative expense ratio or AER. It is normal for these two measurements to move in tandem, so this type of inter-relationship would be expected.
What this approach does of course define is the priorities that the enterprise needs to be placing within the development of its plan.
Consolidation or cost cutting will be needed to address productivity, stock turn and AER problems;
New product development will be important to improve the long term viability of the enterprise against its competition;
Improvements in customer satisfaction and customer spread ratios will be important for market penetration and driving higher levels of customer life value.
Within each of the knowledge centres, clear priorities for action become easily established, with each of the components converted to a project with associated investment requirements, timelines, milestones and responsibilities, all of which are then incorporated back into the monitoring system.
Qualitative competitive advantage
Knowledge centres can also assist in the assessment of qualitative measures of competitive strength and weakness.
The most rapid technique is to use a Likert scale to subjectively assess the relative position of the enterprise against the market leader(s) or against the competitor which can be most easily attacked. Such an analysis obviously requires the enterprise to be clear about which segment and strategic business unit/ profit centre is involved in the competitive analysis.
Factor
Strongly positive
Positive
Neutral
Negative
Strongly negative
Financial strength
Cost base
Production capacity
Production flexibility
Production sophistication
Speed of service
Political strength
Product/ service quality
Product/service depth of range
Product service width of range
Product positioning
IPR
End user loyalty
Intermediary loyalty
Skills base
Supplier effectiveness
Information systems
Potential problems with entrants
Potential problems with substitutes
The advantages of a knowledge centre based approach to competitive analysis
Builds knowledge (both within the knowledge centre and the enterprise as a whole);
Clearly identifies priorities;
Speeds actions which are mainly focused at an operational rather than at a corporate level;
Creates realistic rather than unrealistic targets within the overall planning horizon;
Converts all actions into projects with associated investment appraisal;
Enables plans to be created more easily and more effectively.
If you are interested in this approach to competitive analysis and knowledge creation,
e-mail Ibis for a no-obligation review of your current planning platform.
