A strategic visual competitive intelligence tool I like is an adaptation from the Boston Consulting Group’s (BCG) Matrix Share model which depicts share momentum. You can see at a glance with little explanation how to read this model. The size of the bubble or circle represents the company’s share of market relative to the rest of the competitors illustrated. Those companies which appear above the diagonal line are losing share and those below the diagonal line are gaining share. (See below)
In competitive intelligence terms, the BCG Matrix Share is a great primer to communicate a snapshot of competitor’s share of market. Many years ago when I worked at Bell Atlantic (now part of Verizon), we used the BCG Matrix Share model to show our management the relative share of market of our key competitors relative to the systems we marketed. This was the starting point for a discussion about acquiring the installed base of Northern Telecom, a key PBX (private branch exchange) telephone system manufacturer.
In the spirit of cooperative intelligence, we chose this model since we heard that our executive team was comfortable with it. It was often used in merger and acquisition decision-making, and this was supporting an acquisition that we were recommending. When using any model, I think it’s important to consider how receptive your audience is to it culturally, and if it’s the right model to persuasively illustrate your analysis and recommendations.
Before we could get to the specific reasons why we should acquire Northern Telecom’s installed base in our region, we needed to set the stage, and give our executives a clear picture of the competitive landscape. We focused on 5 manufacturers so as not to confuse our executives. The big 3 PBX manufacturers—AT&T (now Avaya), Rolm (now part of Siemens) and Northern Telecom—would have to be included in any discussion about telephone systems. Intecom and NEC were the two PBX systems we were marketing at the time. The BCG Matrix Share clearly portrayed their weak positions as compared to the big 3.
From here we could jump off and discuss the specific reasons why we should acquire Northern Telecom and not Rolm, for example. Looking at this BCG Matrix Share analysis, Northern Telecom’s share of market is larger than Rolm’s, but this alone was not enough reason to acquire Northern Telecom’s installed base. In my next blog, I’ll show the next competitive intelligence analytical tools we used to persuade our management that acquiring Northern Telecom’s installed base was the right move.
How have you used BCG model with your management? What do you see as its strengths and weaknesses?
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