Intelligence 2.0: Creating New Business Models–SLA 2009

SLA’s Competitive Intelligence division’s breakfast featured visionary speaker, Arik Johnson, CEO of Aurora WDC, based in Chippewa Falls, WI, home of Seymour Cray, founder of Cray Research.

Asymmetric information models are passé and information interpretation is NOW: the ability to understand and anticipate! The open source world and resultant information glut makes analytics and interpretation all the more important. This practice will help you make decisions more quickly than the competition.

Arik shared three trends in Intelligence:

1. Human capital and collaboration – (this is a lot like cooperative intelligence that I preach)!

2. Corporate Governance Oversight – it’s a priority to ensure the reliability of earnings forecasts, yet difficult to predict the unexpected

3. Disruptive & Value Innovation – predict the outcome of competitive battles by anticipating product/strategy dynamics

During his talk Arik had us all squirming as he posited that many of the models and processes that we use to collect competitive intelligence and conduct our various forms of analysis–including voice of the customer and market research–do not lead to innovation. So often these processes concentrate on what customers “want” rather than what they “need,” and they don’t know what they need.

He feels that “fear based” CI concepts like Porters 5 Forces are not as effective as they were developed during the Cold War when it was “us versus them.” He notes that KITs, KIQs and the CI cycle are incomplete for much the same reason: fear based.

Success breads complacency. In the same vein continuous product improvement is too gradual and companies don’t take enough risk in product development. Many companies are crippled by their culture and slowness to adapt to market shifts or create change!

lighbulbBrainInnovation is most easily defined as productivity. Yet innovation is a sloppy process. Employees innovate most readily within a culture of “learning and growing from mistakes” rather than being punished for making mistakes. According to Larry Keeley, 96% of innovative attempts fail. You need errors to innovate, lots of them!

Here are a couple of tippers from Disruptive Innovation Theory that Arik shared:

Look at different performance measures: where do you see non-consumption? Be willing to put up with less good performance in order to find growth opportunities. Learn how to articulate the truth in ways that management will listen (cooperative leadership).

Arik outlined 5 great practices to encourage innovation (RECON):

1. Risk – Learn how to protect your core (cashflow) while creating anew

2. Efficiency- Be ruthless: when assets become sunk costs, sell them or divest that business

3. Customers – Don’t be too dependent on your best customer’s input. They will tell you why the product was good enough yesterday. You are looking at tomorrow!

4. Outlook – Typically market is research is outdated…only one in seven products survives for one year. Develop based on customers’ needs which they are not great at articulating.

5. Novelty – Differentiation is key. Create less imitable values, products etc. Kill “good” ideas to focus on the GREAT ideas.

For more details about using Innovation in business development, Arik recommends Seeing What’s Next: Using Theories of Innovation to Predict Industry Change  by Clayton Christensen.

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2 Responses

  1. Ellen, I’ve greatly enjoyed all of your postings, including this one. And I think Arik is one of the brightest people in CI. (Ready for the “but”?)

    But, one line in your posting above…. if Arik did say, “… that ‘fear based’ CI concepts like Porters 5 Forces are not as effective as they were developed during the Cold War when it was ‘us versus them’ – then I respectfully disagree.

    I strongly believe Michael Porter’s concepts are as valid today as they were the day they were first published around 1979.

    As one who has used Porter’s methodologies since 1986 (and the company where I work, http://www.ecompetitors.com, maintains five-forces industry information for the top 10,000 global industries) there is nothing fear-based about them.

    Porter’s five forces model elegantly decouples all of the components of industry structure – the factors which determine industry attractiveness. Sure he discusses competitive rivalry – because it’s a fact of free enterprise. Be he also discusses in great length how competitors can be “good” competitors, rather than “bad” competitors which move towards commoditization and compete mainly on price. In fact, Arik’s last major point, that “Differentiation is key” – is Porter’s main point.

    Porter also talks a lot about optimization with channels, optimization with customers, optimization with business partners, and optimization with vendors. You could just as easily say that Porter highlights how to get along. In my opinion, the best description is that Porter provides the framework to analyze every option – and a business unit should determine its “route to competitive advantage” and then align all activities in concert with that strategy.

    I could go on… but if you or Arik want to have a debate on this topic on this blog or on Arik’s CI Ning (at http://competitiveintelligence.ning.com/) or on eCompetitors’s Corporate Planning Ning (at http://corporateplanning.ecompetitors.com/), I’m ready!

    Thanks again for your postings.

  2. Hi Alan,

    Arik delivered a provocative talk and I can see it worked! His point was that Porter’s model and many of the models developed years ago are not great at uncovering innovation. I use the 5 P’s in CI in combination with STEEP as a starting point often enough to help people uncover great opportunities or squelch bad ones and to uncover business blind spots.

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