Tactical, Operational & Strategic Analysis of Markets, Competitors & Industries
Horses for Sources, an IT research firm has written an incisive essay about the fate of the role of the industry analyst in decision making. If you read one thing this week, it had better be this.
This firm sees the traditional industry analyst becoming increasingly irrelevant to decisions any smart leader ought to be making. They are nominally talking about big analyst firms such as Gartner and IDC, but these indictments cover, I believe, all of the consulting world, especially strategic and competitive intelligence.
The piece presents five main points:
I resonated with this immediately because I thought of how useless I find the majority of "serious" industry research. Sure, the big groups can get companies to open their kimonos and reveal (largely distorted) hard numbers about their operations. But the strategic implications of such work are almost always about the status quo. The scenarios are classically dull, almost always along the lines of "Well, we'll either have 1%, 3% or 5% growth." Such work often described the past quarter perfunctorily, and halfheartedly refers to a similar future.
This type of work is losing relevance because so few people look at the implosion of the real estate market, the explosive rise of social media, the impending doom of the Euro currency, or the destabilization of the bond markets and want to hear, "Hey, business as usual: expect 3% growth for the near future!" Something else is clearly afoot.
I think the entire consulting world had better be on its collective toes.
What do you think? Are the Horses guys being a little harsh? Do they see the future with clarity? What does it mean for intelligence?
This has been happening for quite awhile now actually; ie; various corporations waking up and realizing that the IDCs, Gartners, Infotrends, etc of the world offer up very little in the way of real insight. (And this is a surprise (?), more on this below) However, perhaps contrary to your position, I think this has VERY positive implications and tremendous upside for skilled intelligence pros. It certainly has for me.
So, first- why do these firms offer so little in the form of real insight? Well, let's keep in mind what their predominant business is, it's selling numbers! Secondly, who are their clients, and where do they really get the majority of their money? In my industry, printing and publishing, the vast majority of dollars flowing to IDC, Infotrends come from none other than XRX/HPQ. Accordingly, do you think the MR firms are really going to be critical of either of those companies strategies? Heck no! They've become nothing other than extensions of their PR departments accordingly! Say something negative, like one outside analyst I know very well, and HPQ doesn't invite you to their analyst relations meetings; you're effectively blackballed.
Now, getting back to the second piece of the above, regarding their business model and how they work. The emphasis is short term, quantitative, project by project, and heavily emphasizes selling those numbers/forecasts. Exactly how does this really help illuminate whats happening under the covers? It doesn't. It runs counter to the CI approach, which is more systematic, holistic, ongoing focused research over time. Hence, why a CI pro can blow these guys away and bring the heavy hitting insights to the table that the IDCs of the world simply cant. With that in mind, when I took over as the CI Manager of one large multinational in the publishing industry, one of the first questions I got, before they saw real CI output, was well gee how do you differ from IDC? I said give me a few weeks and I'll show you! And I did. Wow, the folks who were originally skeptical said when they saw CI output versus what they were getting from the outside MR firms, gee you CI guys really get deep, you give us historical perspective, an insider view. Yep, so all in all, I'm very happy that the world is waking up and realizing not to go looking for much from IDC, Gartner, etc. Frankly, this is tremendously ironic- I mean the companies should know better..... as who bought off said research firms to only put forth positive spin and who blackballs their analysts if they ever dare ask any potentially embarrassing question or bring forth any challenge to the version of the truth they want put forth?
I think it's true that industry analyst roles like at IDC and Gartner Group are dimishing and that the negative ramification this has for CI analysts is: most people at least think they know what IDC and Gartner Group do. They have brand ID. Probably more people know what these firms do that can define what competitive intelligence is. There in lies the problem, lack of brand ID and cachet around competitive intelligence.
I agree, Monica, that we can dig a lot deeper and that our insight can be more specific to the area(s) the client might be targeting, but we have to get in the door in the first place.
My 2 cents,
You've definitely got great points here. First, you are precisely right -- more folks get what they do than those that get what we do. Absolutely true. MR is far better understood than CI. A lot of reasons for this which we have discussed repeatedly on this board.
You are also correct that getting in the door versus those guys with the brand can be hard too, once you are on the outside. Funny though how so many big firms have seemingly forgotten they once had crackshot CI analysts like us in house, who gave them the real deal before they decided to haul off and only focus on quarterly EPS and keeping Wall St happy. Hmm I can name more than a couple once regarded as "powerhouse CI " functions that are no more..... So now all these firms have is a bunch of MR lackeys, I mean, analysts, whose limited perspectives they dictate to them and they wonder why no real insights are coming their way? Yep its all PR all the time! Excellent....and in time, the pendulum will swing back our way....or so I hope....
I wonder what opportunities this opens up for CI firms like Fuld or other companies made up of CI folks?
I've worked with research firms before, but never with a CI firm. I know that in my past positions, I've given unvarnished data and my interpretations of them, sometimes with less-than-pleasing results to the person/dept asking for the information and analysis.
Given this, what type of company would really benefit from real CI work...and by "type", I mean culturally mature enough to understand that smoke-and-mirrors might make them feel good, but won't necessarily give them what they need. (Does that make sense? It's very early and the coffee is only now kicking in... :) )
So far we've hit on most the important themes that I feel are implied by the above article.
I think that this is an incredible opportunity for the real analysts of the world. The last decade or so has seen a tracking toward just reporting what people want to hear - that there's nothing new going on, growth should trend upward, slightly, uh, no reason to get nervous. In reality, we're in an "extend and pretend" economy, not wanting to hear what's next because it is too scary, too random.
It is up to the intelligence profession to step up and fill the void left by analysts who no longer want to do their job. As things get more difficult for organizations pursuing strategies from the 1990s - and believe me, they will get tougher - some leaders are going to stand up and become curious about what's really happening.
We should be ready.
I think a huge challenge for our industry will be in convincing companies that CI *is* different from what the Gartners and IDCs of the world were doing. If they divorce those research companies for reasons that, to them, appear valid, I think CI companies/analysts will be challenged mightily to prove the differentiation.
In my experience, CI has been a tough sell in the best of economies, under the greatest of circumstances, mostly because of misunderstanding what our industry is, what it is NOT, and what value it can offer. Since many managers see it merely as another piece of market research, it appears CI functions fall into the marketing and sales area (not to say that's not where it might need to reside, but this seems to be the default for many companies) and support sales strategy, not corporate strategy.
Tim, this is a great opening for a broader discussion.
I don't think the future of competitive intelligence is in selling CI better.
I think the brand of competitive intelligence is moldy. Nobody really cares about it or finds it that impressive. Don't get sensitive; I call myself a futurist for the love of Pete, and our brand is even worse. (Don't believe me? Read my new book online for free, and tell me how sacred the image of the futurist is in real life. It's like telling people you juggle weasels for a living.) So selling both of those terms -or any other established job titles - is probably a waste of time. we cannot go back and fight the battles of 1992 all over again.
What I think this industry analyst story implies is that the field for providing insight is getting wider and wider. People that need to make decisions are not being well served by anybody right now, which makes sense given the immensity of the changes we face. This is the much vaunted Blue Ocean we have been told to chase. And it's even right in our own industry - how strange!
When nobody is doing their job properly, this leaves a lovely vacuum for people to step in with innovative approaches. For all the blathering about innovation being important, it's really quite scary; that's why most organizations stay as far away from it as they can get.
This is an incredible opportunity to get refocused on the needs of the customer with new approaches using new language. And now that the biggest players in market research are being questioned, we no longer have to resort to the very tired complex of being second class citizens. (Oh dear, if only competitive intelligence was treasured by all! What a wonderful world it might be - but we're doomed! I'm gettin' the vapors! Oh to be in the green fields of the marketing department!)
The playing field is being leveled. Time to have some real fun.
You speak of weasel juggling as a bad thing...in fact, I'd bet you could sell a weasel juggling act faster than a good CI report, but that's a different topic....
I use the term CI merely because it's convenient within our industry and, well, I don't have anything better.
I've d/l your book and will be giving it a read.
The only folks that are going to have an issue convincing firms that CI is different in my experience are people that frankly, shouldn't be in CI roles in the first place. For truly capable CI managers/analysts, its a piece of cake.
That said, I think a lot of the problem has stemmed from the convolution caused by MR, LS, and KM folks trying to cross over into CI, and they've failed miserably on a broad-scale basis. I've heard this from just about every firm that calls me up asking for consul. So, now the opportunity is emerging for real CI pros to clean up this mess, educate, and produce. I'm seeing it real time.
As to your point about CI being rendered to current marketing and sales, well the issue there tends to be in the instances where that transpires, that the analysts aren't of the strategic variety. They 're of the tactical variety, and they are far more numerous than good strategic analysts. The skill sets are different, and those of us that have proven ourselves highly adept on the strategic side, well yes we report to Corporate Strategy.....
Analysis will never die but the traditional analyst business community will not die by 2016, I believe is dead as we talk. I cannot tell you how many CI projects I have done on sensible raw material including minerals, metals, agricultural commodities, fertilizers, petroleum derivatives ... you name it, covering mainly the USGC and Latin America. For years these guys used to survey the main players in these industries in order to create indexes (that then they claimed the companies used) and forecast based on the recent past curve, and of course sell monthly, quarterly and annual reports. The global crisis of 2008 put a lot of pressure on currency values and raw materials availability, so customers started asking these geniuses (the analyst community) for clearer guidance and real forecasting, but this time based in future scenarios. Long story short. The gurus were in shock and denial; they failed to create actionable intelligence because they have never done that and started losing customers (These ones began arranging sales prices and conditions more secretly and stop participating in the mentioned surveys any longer)
The problem is that CI experts pander MBA strategic management tools as CI tools.
We have made CI a melting pot of MR + KM + BI
Is it not a joke?
As far as war gaming and scenario planning goes we claim it to be a CI tool but all you need to do is be a MBA management trainee and read Philip Kotler for five force analysis, war gaming and scenario planning etc.
So the day we learn that CI is not MBA analytical tools known to every tom dick or harry who has done MBA or MR or KM or BI then we will differentiate.
Intelligence is competitive otherwise it is not intelligence.
Unless one has real time operational experience to anticipate, all theory is trash.
Only those of us will survive who have Insight which again does not come from education qualification ie PhD but comes by the sheer operational experience.
How many of us truly have operational experience in Intelligence?
When we pander so desperately the MBA analytical tools as Intelligence, people will laugh at you.
The future of CI lies in Mitigating Black Swan events and identifying Strategic Inflection Points.
In simple words it means mastery over OODA loop ie processing ability of your mind.
We do not need to pander MBA strategic Management tools as CI tools.
This is why management consultants laugh at you.