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The impact of disruptive innovation – on PCs and on Retail

January 17, 2013 11 comments

Two recent items highlight the impact of disruptive innovations on industries. The first is a presentation from the Business Insider called the The Death of PC. The second is an article looking at Amazon and mentioning its March 2012 purchase of Kiva Systems.

Since 2009, the PC market has hardly grown. In the same period, Smartphone & Tablet sales boomed. Many tasks that used to be done on PCs are now done on these newer devices: email, web-searching, social media, and more. This has had a massive impact on the traditional PC market and its suppliers such as Intel and Microsoft. Whereas Apple’s and Samsung’s share prices have grown substantially, Dell & HP have been static or fallen. The introduction of both Smartphones and Tablets illustrate how disruptive these technologies are to the traditional PC industry – although as the The Death of PC presentation shows, things are actually more complicated. This is typical for a disruptive innovation – especially in the earlier stages.

Disruptive innovations do not always kill the products and industries they replace. What they do is change them radically. Smartphones haven’t killed the camera industry. They have, however transformed it so that DSLR and higher-end / special function cameras are now the main products sold. The cheap mass-market snapshot camera has gone – who needs one, when a Smartphone does everything that they could do, and much more. Disruptive innovations also mean that companies that fail to adapt quickly enough disappear. Kodak’s filing for Chapter 11 bankruptcy is an example of this. Kodak and photography were synonymous – but the company failed to anticipate how digital camera usage would change the way people process photographs.

In the case of the PC market, so far it’s only the home PC that’s dying. The PC in the workplace is doing fine – and that’s because the type of task it is used for is different. It’s hard to work on a spreadsheet, or a complex graphic or even a long report using a Tablet and almost impossible on a Smartphone. These aren’t tasks that the home computer was used for. So Tablets haven’t changed the work PC – only the home PC market. However expectations have changed – and this has led to newer devices and cloud computing which promises to be as disruptive for the traditional hard-disk based PC and so the PC as we knew it last century is gone or going. It’s not yet dead – just changed.

Amazon’s purchase of Kiva Systems in another example of a disruptive innovation. Amazon itself has shown how disruptive e-commerce is to traditional retailing. The high-street and even the out-of-town retail outlets struggle to compete with Amazon on price. However they can still compete on service: if you want something on the same day, then such outlets beat Amazon, even if the price is higher. Further, Amazon’s warehouse distribution system could be copied and many of the larger retailers now offer online options. Currently both use human labour to select and package products for delivery – and this represents a significant proportion of retail costs. The Kiva Systems purchase promises to change all this. Kiva Systems manufactures robots and the software used to control them. The robots are designed for use in warehouses for accessing goods. They remove the need for a human being to go to the relevant shelf and remove a product for sending to a customer – instead a machine does this. Eventually such systems are likely to completely automate the distribution process – meaning that Amazon’s labour costs will fall dramatically.

Any retailer that still depends on human labour in their warehouses or retailing is likely to find it even harder competing with Amazon’s prices. Such retailers should start thinking now on how they could compete. Options include looking at ways of improving service or focusing on narrow niches requiring in-person expertise. Waiting and hoping that some shining knight on a white charger will come and rescue them is not an option. There will be no shining knight because, however much retailers may wish it was, true life is not a fairy story.

[After writing this post, Michel Bernaiche, Program Development Director of AurowaWDC and current Chairman of the SCIP board, pointed out this news story to me – highlighting how robots are impacting not just retailing but many other business areas – from hospitals & surgery to legal research. CBS News Video on Impact of Robotics in Industry]

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Competitive Intelligence & Culture

February 21, 2011 7 comments

My last few posts have gone off my topic – and the main raison d’être of this blog – competitive intelligence and finding business information. I’m tempted to write about the turmoil currently going on in the Middle East – but echo the reply that Zhou Enlai of China is reputed to have told President Nixon when asked for his views on the 1789 French Revolution: “It’s too soon to tell”.

At the same time, any attempt to understand what is happening has to take into account the cultures involved. Too many pundits ignore culture as an influencing factor and expectations that the Middle East will suddenly adopt Western democratic ideals strike me as unlikely. That is not to say that some form of democratic rule won’t appear – it just won’t be the same as found in the US, UK, France, Australia and other countries dominated by Western Christian traditions.

Understanding culture is also important for competitive intelligence professionals – yet is often ignored. Several years ago I was speaking to a US based consultant – and asked how he went about doing cross-border research. His response was that all research was done in-house. I then asked how he coped with different languages and time-zones. He replied that he used people fluent in the relevant languages working in shifts. At no point did he accept that different countries expect differing approaches – and that his approach may not always give the best results and so be value for money (or even safe) for his clients.

A few months ago, I led a workshop on competitive intelligence in Indonesia. On the second day I was asked a question that I’d never been asked previously. I was asked when I was going to teach the attendees “unethical” ways for gathering competitor intelligence. The reason given was that they knew that their competitors did not follow ethical approaches to gathering competitive intelligence and they also wanted to learn such techniques. They felt that if they only used the standard ethical approaches used in America and the UK then they would be at a disadvantage. Unfortunately they were probably correct.

Of course the ideal situation is to be ethical in all that you do – but if your competitors don’t follow US/UK ethical guidelines it can cause a problem for you, if you do. Especially if ethical norms are different in the country concerned. I handled the query by spending some time talking about counter-intelligence and what to watch out for – mentioning the sorts of things that could be done against them, and how to detect them. This way, hopefully, my questionner will realise that they can stop their competitors gathering material unethically – and that they can do things the right way themselves. (Of course they could turn what I told them round – and use the same approaches back. That is their decision and at least they’ll know the risk to their reputation if caught).

The point about the question however was that it illustrated a cultural difference. The standard SCIP code of ethics is essentially an American construct and relates to US business. I personally believe it is correct – but that may be because my cultural background as a Brit is not too dissimilar to American business norms.

As another example, I have had to spell out to a non-European client of mine that I am not willing to recruit “a company insider” to provide a constant flow of information. He kept asking me to try and locate an employee who I can periodically pay for the latest information on his employer. My client found it very difficult to understand why this is unethical – as he views it as normal that employees will want to supplement their income by sharing information. When I pointed out that this was industrial espionage he disagreed – as I was not hacking, or using bugs but just speaking to somebody who is willing to provide information on a regular basis, and rewarding this person for their time and effort.

Then there was the client who failed to understand why I preferred to interview UK contacts via the telephone rather than arrange meetings. In his culture, unlike in the UK,  face-to-face contact is crucial for any form of business relationship or transaction. The telephone is used to set up meetings – and the idea that you could ever do business over the telephone instead of in person seemed strange.

Japanese vs. European greetingsThese are just some of the ways that cultural differences can impact competitive intelligence practice. There are more. Imagine that you want to find out whether a particular product is about to launch. Within the UK, you may call up a contact and simply ask whether the product will launch within 3 months. You will get a yes or no answer. However doing the same research in Japan needs a different approach, as the standard response in Japan will be yes even if the answer is no. Saying no would be bad form – and result in a loss of face. A better approach would be to provide an alternative e.g. “when will the new product launch – less than 3 months or more than 3 months”. This way, you have to get an answer – it is not a yes/no type question.

These are extremes. However even within Europe there are differences – traditionally in Germany you would not use a first name to speak to a contact, while within the UK that is generally acceptable. Behaving in the wrong way can put a distance between you and your interviewee – so it is important to know the cultural impact of your approach.

Unfortunately not much appears to have been written on the impact of culture on competitive intelligence practice – and this is a topic ripe for research.

Emotional responses

May 26, 2008 Leave a comment

I’ve not posted anything for months – not because I’ve not had things to post, but because of work pressures, and perhaps also not having anything I thought worth posting.

That’s not to say that things haven’t happened – but others will have posted on the London Online conference, the SCIP annual and European conferences in San Diego and Bad Nauheim, Germany, and the AIIP annual conference in Pittsburgh. I attended all – and each was worthwhile in its own way. (My favorite was AIIP – but then this is such a great organisation anyway!).

In the last few months I’ve also been to China where I led a workshop on CI, and on a personal level, celebrated my oldest nephew’s wedding in Jerusalem and saw the loss of my father a month later.

So what has prompted this post?

Well I try and link ideas to marketing and competitive intelligence. Those who know me will know that one of the areas I specialise in is competitive intelligence analysis and game theory. My talk at SCIP Europe (and also at the SCIP 2007 conference) was on Game Theory.

One of the areas I emphasise is that when looking at a competitor you should try and look at things from their perspective. Just because something looks stupid or illogical to you doesn’t neccssarily mean that it is stupid and illogical. It could also be that the competitor is viewing something from a different angle to you – and that if you switched viewpoints it would make perfect sense. Developing an ability to switch perspectives could save you $, £, €, or ¥ as it should lead to greater anticipation of how competitors are likely to respond and thus better and more effective strategies. The assumption is that competitors behave logically, and choose strategies based on the information and knowledge they currently have.

There is, however, an exception to this. Sometimes a competitor can be blinded by hatred, greed, fear, or another strong emotion. In such cases their decisions are likely to be stupid and illogical as they can’t see reality and instead, they base what they do on their emotionally biased view of the world.

As a result, when looking at a competitor it is also important to look for any emotional aspect in their decision making. Is this leading to how they behave or react? If it is, then you can use it against them to win out. Of course the same applies to you – and it’s important that you make decisions that are not based on emotional reasons. Decisions need to be made based on facts, evidence and logic – anything else will lead to vulnerabilities that can be attacked by a competitor.

There are many examples of companies that have made poor decisions based on emotion: a classic is the failure of the 2000 Time Warner – AOL merger, which was partly driven by Time Warner management’s fear of being left behind in a digital world. In fact many mergers fail as they are not really motivated by logic but more by fear of being left behind or greed – seeing acquisition as the best way to grow.

So when looking at a competitor, you need to

  1. assume that they are behaving logically – try to see things from their perspective
  2. consider that they may be acting emotionally, and not basing decisions on fact and logic.

Which of these two applies will depend on the pattern of decision making, the decisions made, and the competitor’s management. Part of the job of the CI analyst is to step back from their own emotional perspectives and, dispassionately, look at the competitor and decide what has led to their decisions and strategies: logic or emotion.

I still haven’t answered what prompted these thoughts.

Generally I try to understand the opinions and views of people with whom I disagree – and accept that often there is a valid rationale to these views. I fervently disagree with Islamic terrorist groups, and I totally support Israel. At the same time, I understand the view of the Palestinians and believe that they have a case. I understand the Islamic religious view of Hamas that Israel is occupied Islamic land and that only Islamic rule is valid. I don’t personally agree with this – but I accept that from some Islamic perspectives (not all) this is logical as it follows some Koranic precepts. So I’m applying my rule above of trying to understand the other side, and looking at things from their perspective.

I can even apply this (with difficulty) to some terrorist actions in Europe and the USA. The attacks on 911 were reprehensible, evil and criminal. However using the above principles I can understand these actions – as they fall into a logical pattern.

  1. Western Values represent an attack on Islamic values.
  2. Western Values are winning out – even in Islamic society.
  3. For Islamic values to triumph, Western values must be destroyed, so that the world realises that it’s only true Islamic values that will lead to human peace and happiness.
  4. What the West calls terrorism is actually a misnomer – and is, in fact, an attempt by true Muslim believers to alert their own governments to how they’ve been led astray, while at the same time to destroy the forces that are doing this – leading to a growth in Islamic values and beliefs.

What I fail to understand however, is how a follower of any religion can take advantage of people with mental problems and use them for terrorist activity. One of the basic principles behind all religions: Christian, Jewish, Islamic, Hindu, Sikh, Buddhist… is the protection of less-well-off and weaker members of society. They teach that it is a major sin to take advantage of such people.

The recent bomb attempt in Exeter, England, when an Islamic convert who was reportedly mentally ill, with low IQ and suffering from Aspergers, was so radicalised that he was preparing bombs to use to maim and kill people, suggests that the people behind him were not acting under any religious framework at all – but were driven by emotions only: hatred and fear. Worse, they bring shame on true Islamic believers, and through their actions will lead even more people to see Islam as an evil creed that only destroys and has no respect for the poor, sick and down-trodden. This is false! So called “Imams” who believe that they can recruit victims like poor Nicky Reilly have desecrated Islam and the teachings in the Koran and Hadith, and should be denounced by all true Muslims as false.

It’s April – so it must be Spring, SCIP and AIIP

April 20, 2007 Leave a comment

April is a peak time for information professionals. There are two major industry events – and AWARE managing partner – Arthur Weiss – can be seen at both.

The first is the Association of Independent Information Professionals (AIIP) annual conference – taking place this year in sunny Minneapolis. The second is the Society of Competitive Intelligence Professional’s conference – a week later, in New York.

Both are major events on the calendar – and major networking opportunities. Networking is a crucial skill for info-pros – and it pays off. A few years ago I helped out a colleague and she has now put me in touch with WS Radio who just interviewed me on my role as a CI professional. You can listen to the broadcast now: Radio Interview with WSRadio.

What better proof of the power of networking than being heard on a network 🙂 I hope that you enjoy listening to the show as much as I enjoyed participating in it.

Leadership and the Terrorist Plague

July 30, 2005 Leave a comment

The last couple of weeks have set me thinking about what leadership is or should be. This entry will be fairly rambling – as I want to throw up ideas. I’m still unsure myself what the ideal leader should be like.

Maureen Sharib’s blog entry (Psychopaths in the Hallowed Halls touched on this. Maureen mentioned an excellent article – a must read at www.fastcompany.com/magazine/96/open_boss.html. This great item looked at the psychology of business leaders. However it did not go far enough in my opinion, by looking at national leaders. If your boss is a psychopath at least you have the option to change jobs. If you live in a democracy, then if the President/Prime Minister is psychopathic then he/she may not get re-elected. But what if you are not in a democracy – what then! Iraq under Saddam Hussein, Syria under Assad, Myamar (Burma), Zimbabwe….

A couple of years ago there was a session at the SCIP London conference (SCIP Europe 2003) entitled “Advanced Analysis: Pychological Profiling” by Jens Hoffman and Everhard von Groote. The aim was to teach methods of leader profiling, and several of the examples were national leaders. Four leadership styles were discussed:

  • Narcissistic (feelings of grandiosity, lack of empathy, need for admiration, power fantasies);
  • Paranoid (General distrust, jealousy, provokes interactions, aggressive, feeling of superiority);
  • Compuslive (High structure, perfectionism, rigid, highly adapted socially);
  • Pyschopathic (Superficial charm, grandiose sense of self worth, a liar, manipulative, no guilt, lack of empathy. Often impulsive and reckless – and lifestyle may be parasitic, feeding off others).

Several national leaders were discussed – Clinton, Margaret Thatcher. There is a wealth of literature on the topic. (For example: Profiling Political Leaders: Cross-Cultural Studies of Personality and Behavior edited by Ofer Feldman – containing essays on several political leaders e.g. on Mao Zedong’s Narcissism).

What worries me about all this is that it gives the impression that those who reach the most senior positions in countries or companies are all suffering from some kind of personality disorder – paranoia, narcissism, pyschopathy and so on.

At the same time, there is a second element to leadership – trust. Without trust, you won’t get people to follow you. Instead you need to rely on control and your status.

In the bible there is an odd story – of Phinehas, who was the great nephew of Moses (and grandson of Aaron). The book of Numbers discribes a plague that came about following an episode of immoral behaviour. (See Numbers ch 25). It appears that none of the leaders of the Israelites did anything to stop this – other than talk. That is until, Phinehas (who was not in the chain of command) caught one couple in flagrante delicto. In a gesture of righteous indignation, Phinehas killed the couple. The strange thing is that instead of being condemned for murder, or taking the law into his own hands, Phinehas is praised, the plague stops – and Phinehas is granted a covenant of peace.

The Jewish Rabbis spent a lot of time on this story – discussing what was meant by it and what was meant by the covenant of peace. They also raised questions on leadership and what it involved.

Re-reading this story (the weekly reading in synagogues this week) set me thinking about all the above issues – what is leadership?

  • Is leadership managing others and controling them?
  • Is it the ability to be decisive – like Phinehas – and take actions which might be unpopular, damning the consequences?
  • Or is it something else?

A lot of this thought has also been tied in with recent events in London. How do you fight terrorism? What do you do with a suspect who runs? (As happened last Thursday, when an innocent man was shot dead – in a Phinehas like act by the police. He’d been linked to one of the bombers, although the link appears coincidental, and when ordered to stop, he ran. He was also wearing a quilted jacket on a hot day. The police thought that this hid a suicide bomb belt, and rather than risk shooting his torso and setting off a possible bomb belt, or allowing him to set it off, they shot to kill).

Mistakes may be made – but in fighting terrorism the leader needs to be prepared to take positive action, even if this is unpopular. Appeasement and other approaches to avoiding an unpleasant decision are not really options as they only sort things out in the short-term – deferring the problem until later. (Think of Chamberlain, the pre-WW2 British Prime Minister who followed a policy of appeasement with Adolf Hitler – letting Hitler carve up a bit more of Europe, and proclaiming peace in our time, while giving Hitler a chance to arm up).

Terrorism is a plague! (Blaming it on the Iraq war, the situation in Palestine/Israel, and so on is just such appeasement in my view. Otherwise how do you explain the weekend bombing in Egypt, or last week’s bombs in Turkey – both unrelated to the Iraq and Palestine issues.) I believe that the only approach is to hit hard at the terrorists and not give them a chance to group up. Obviously you also use other approaches to try and stop people joining the terrorist movements – and without clarity and a willingness to emphasise this is wrong some people will continue to be brainwashed into believing that setting off bombs on buses, trains or in shopping malls is an acceptable way of reaching heaven or achieving political aims. Perhaps this is what the Bible is trying to say when it talks about the covenant of peace. That it is only through strong and decisive actions that will we be able to defeat such plagues and gain peace?

There is leadership story told about Presidents Bush and Clinton.

When President Clinton turned over the reins of government to George W Bush the public and political pundits were all quite surprised how short the two of them met to discuss transition issues. In a recent exclusive, it was revealed what Clinton discussed with Bush.

It appears that Clinton handed Bush three envelopes, each consecutively numbered from 1 to 3. Clinton told Bush that his father, George Bush Senior, had provided him with the same briefing and the same three envelopes, as had all Presidents done from the time of George Washington.

“When things get tough,” said Clinton, “open the envelope marked Number 1 and follow the instructions. If things get worse, open the second envelope. And, when things get really impossible, open the third. Do not,” emphasized Clinton, “open these envelopes under any other circumstances” The envelopes were passed on to a new era of leadership and the two shook hands and took their leaves.

Bush, being an intensely curious and impatient man and one who is frequently up at all hours of the night, became rather curious as to the contents of the envelopes opened the first. He read “Blame your predecessor.” His curiosity piqued, he opened the second. “Blame the Senate.” He then tore open the third. It read “Prepare three envelopes.”

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