Competitive Stupidity - Case Studies on the Art of Intelligence Failures

[Andreas Romppel]

The fabulous active dialog session at SCIP 09 on CI 2020 (thanks again, Arik and Craig!) produced several great insights - not only on the future of our business but also on our current practice. I would like to pick up and develop one of those insights.

The problem: For good reasons, we have a professional reluctance towards success stories - what makes it a really hard task to do PR for CI as a profession and a discipline (and, by the way, is one of the reasons for those popular "are we in a rut"-discussions).

My suggestion: let's build up a body of knowledge that consists of embarrassing events, disastrous decisions and funny failures due to a lack of competitive intelligence. As a template we might look at the wonderful book by Merrill R. Chapman, In Search of Stupidity.

Thus, we could kill a lot of birds with one stone: showing the importance of CI, suggesting CI research and analysis tools that could have prevented those failures easily, telling interesting war stories, providing excellent plots for Hollywood movies and showing up the competitors of our companies or clients (please don't take that too seriously...). And maybe it all ends up as a new book of the CI foundation. What do you think?

[Eric Garland]

My favorite story is the Duncan Hines product launch into Japan. A major producer of cake mix in the United States, they discovered that Asia was an untapped market. They did great market research on the Japanese per capita income, grocery spending, even consumer tastes to determine the right level of sweetness in their baked goods.
A check of potential competition showed that there were virtually NO competitors in this space - an incredible Blue Ocean of profit just waiting!

The product launch was a failure.

It turns out the Japanese generally do not have OVENS in their apartments.

Think broadly, my friends.

[Arik Johnson]

Wow, now that's a great story!

[Andreas Romppel]

Just added the URL www.competitivestupidity.com - I couldn't resist to claim this domain name... :-)

[Arik Johnson]

Fantastic Andreas!

[Craig S. Fleisher]

My favourite story of competitive stupidity is one that was performed by a well-known consumer goods manufacturer, but which shall remain nameless to protect those still at the company who weren't part of this intelligence-challenged decision, who was a major international pet food manufacturer. This company had been number one in its market space for decades; however, it had run into a period of market share erosion due to, among other things, new-fangled competitors who developed "gourmet" brands, veterinarians who saw dog food sales as a way to enhance their bottom lines, and new distribution channels that were growing outside of their traditional strengths in grocery and supermarkets.

The CEO tasked their R&D and Marketing departments to work together to create a new product that could reverse this adverse tide. The R&D people went right to work looking at the composition of ingredients in all of their competitors' foods, hoping to identify those "secret" ingredients that would help create a new success. They and their marketing colleagues "benchmarked" all of their competitors' products. The intelligence staff members even went to all the different kinds of retail points of purchase in several major cities of their largest North American markets to see why success was being achieved at that point in the value chain. They also enjoined their customer service department to log all of the comments received about their existing foods and brands and did an immense amount of statistical analysis (i..e, cluster analysis, factor analysis, regression, etc. -- even our statistician friends would have been impressed with the levels of confidence they were achieving...).

Anyhow, and to make a long story shorter, about 12 months after the CEO's challenge, the group had produced their newest product, which all of the data told them was going to be a huge hit and would help them regain and even add to their market share totals. The product was launched with all the textbook marketing support a product manager could ever ask for. Coupons were given out, contests were held, web and media spots purchased, events held, celebrity spokespersons giving endorsements, and so on. Again, this went exactly as it would have been taught in a quality business school classroom.

A year after its expensive and expansive launch, the new product barely registered in the marketplace. It had failed to achieve even a 1% share of its niche. One late afternoon, the CEO called his executive team into one of their quarterly meetings and started asking questions of all his experienced executives who were a part of this task force about what had happened and who would care to share a hypothesis about what was happening with their new product. Every one of the executives trotted out their reports, PowerPoint slide shows, pages of impressive looking statistics, and the like. The CEO heard for nearly an hour about city-by-city sales figures, competitor reactions, ad pick up rates, pricing considerations, channel efficiencies, etc.

Finally, after the marketing head had finished his spiel, the custodial staff member who had come into the room to clean and tidy it reluctantly chose to open his mouth. He commented, with a shaky voice, "I think I know what happened. I brought home several samples of the stuff you had laying around the offices and gave it to my dog Blackie (a big Labrador who was known for his ravenous appetite). You know what happened next? He sniffed it, took a few kibbles, and walked away,. He never would go near his bowl as long as that food was in it. He hated it."

Any of our intelligence folks know what the morals to that story of competitive stupidity are???

[August Jackson]

Craig, this example and Eric's Duncan Hines case remind me of that great scene in "Sling Blade" when a group of mechanics are ruminating on how nothing they've done to repair a broken lawn mower seems to get the mower running again. The mentally-challenged lead character (played by Billy Bob Thornton) looks into the gas tank and clarifies "There ain't no gas in it." Just like the mechanics in this scene marketers and strategists can sometimes be too clever by more than half.

Thank you both for these great examples.

More great pop culture from along those lines: http://www.youtube.com/watch?v=uUY-OtbBKt8

[Arik Johnson]

I'll guess: "on the Internet nobody knows you're a dog"? Or maybe just if the product is bad, no amount of due diligence will avert certain failure... ;-)

[Arthur Weiss]

I totally agree - competitive stupidity would help show the value of CI. It's the reverse of a success story - and shows what happens when you don't have CI. Although not always - the pet food example and the Duncan Hines example could be used as examples of "competitive intelligence" gone wrong rather than "competitive stupidity". After all both companies did the research, the benchmarking, the analysis.... where they failed was more basic: a failure to understand the customer. (Yes - the dog is the customer. The pet-owner is just the middleman :) ).

I've lost count of the number of times i've had to explain to clients that it's not competitors that purchase products but customers and you also need to see things from the customer perspective. They come to me asking me to look at what their competitors are doing that has led to increased sales - but never think of asking customers for their reasons for switching.

So, real examples of "competitive stupidity" should really be cases where there was no CI - and so the company or product failed. There are numerous military examples - the problem is finding commercial ones.

Another approach is to spot evidence for good CI. You may not be able to get the company to admit it was good CI - but the result shows that CI must have contributed. Two examples are Virgin Atlantic's battle with British Airways - where they spotted BA's dodgy practices and P&G's battle with Unilever where they exposed Persil Power. The P&G example is my favorite as it involved two market leaders, with P&G outsmarting Unilever all the way. Analysis used including patent analysis, plus clever marketing to destroy the Unilever product. Another example i've used in the past - of both good and bad CI was the Barbie Doll. Mattel picked up the rights for Barbie from the German originator for peanuts - because the German company (O&M Hausser) failed to do any CI on Mattel. Interestingly, law suits for this rumbled on for decades.

[Eric Garland]

"I've lost count of the number of times i've had to explain to clients that it's not competitors that purchase products but customers and you also need to see things from the customer perspective."

This is a very pithy phrase, Arthur, one I'll no doubt steal, about how its only customers who buy, not competitors. This is one of the reasons futures studies tend to go broad - if only to get the CI team thinking about something other than their top four competitors.

I'm starting to understand why people get into these fixations. Some of it comes from a strain of what I like to call DWGS, or "Deranged White Guy Syndrome," a deadly mix of testosterone and competitive myopia that can be fatal to the company. Many corporate cultures were formed back in the 1950s and 1960s, and many of the leadership models, if not the leaders themselves were from a military background. And not the assymetric war model - one or two enemies with clearly marked uniforms. Your job? Get information and SMASH THE ENEMY WITH EXTREME PREJUDICE! NO PRISONERS! That would be great in war (actually it's dumb in war, too these days) but in the women's hygiene segment...the culture doesn't fit. Who wants to win "The Dog Food Wars?" Do you get to sit around a campfire years later and tell tales of SMASHING the guys and taking...SIX POINTS OF MARKET SHARE!!!

DWGS is treatable by bubble baths, Walt Whitman poetry, and enlarging your point of view to realize that if it's only competitors you are after, you're likely missing the million- and billion-dollar opportunities that present themselves with every upheaval, every crisis, every positive development.

Just imagine if Apple had chosen to smash Compaq, Dell and IBM instead of focusing on providing entertainment experiences, delivering music globally, and making pricier, better computers. I would be sad.

[Arik Johnson]

Awesome - as a consumer, I'm pretty happy Apple focused on the user experience rather than beating competitors - in the process, they raised the bar in consumer electronics design and forced competitors to improve with them.

[Woz Ahmed]

Here's a story from the high-tech space, during the dot com bubble era of 1999-2000.

The company was pre-IPO, and like many others at such a stage, was interested in acquiring companies for their revenue streams to help pump up the valuation. One of the VCs involved had suggested the company acquire a small software house called (name changed to protect the innocent and the incompetent) Whammo.

The exec team duly acquired that company.

Some months later, the VC told them they had acquired the wrong Whammo. They were supposed to acquire the company in Israel and not the one in North America, which shared the same name but nothing else.

Woz

[Babette Bensoussan]

Love the story... gave me a good laugh!! I will definitely be telling that one....