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Post a Lookout Monitoring for Disruption Should Be a Full time Job

Peter Grimm

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March 14, 2016

As the Officer-of-the-Deck on a US Navy warship, I had a lot of demands on my attention. I had to manage the ship’s systems, maintain awareness of where friendly and potentially hostile forces were, and implement the Captain’s orders for the day.  Rarely did I have time to actually look out the window of the ship’s bridge to make sure our path was clear.  Fortunately, I had a team of individuals working with me whose entire job was to look out into the sea to ensure the ship’s path was safe—in the Navy they’re known as “lookouts.”

Today’s corporate leaders often find themselves in a similar situation. All of their attention and energy can be consumed in the day-to-day operations of the company—Charles Hummel called it the “Tyranny of the Urgent.” But unlike a Navy warship, in many companies there is no one whose sole job is to peer in the distance to identify danger.

Working with companies in highly competitive markets, such as pharmaceutical and medical device manufacturers, we often discuss the application of competitive intelligence to help our clients anticipate market changes and disruptive competitors. In an industry where disruptive innovation can make an entire product line obsolete almost overnight, the importance of monitoring trends to strengthen responsiveness is critical. Corporations are like ships—they take a long time to change course. So seeing obstacles in your path at a distance is critical.

The paths of these disruptions are typically reviewed in post-mortem case studies as cautionary tales for business school students. But, how do companies stay ahead of the threats? Here, we explore two types of competitive pressures, and approaches organizations can implement to maintain vigilance.

Wargaming for Disruptive Innovators

As Clayton Christensen recently reminds in the Harvard Business Review, the theory of disruptive innovation focuses on smaller competitors challenging larger market leaders by securing footholds at the low end of a market, providing fewer benefits, often at a lower price. Disruptors continue to serve less profitable market segments, improving their product offering until it reaches mainstream performance, thus challenging the incumbent. Disruptive innovators can also enter a market by converting non-consumers.

A recent example of disruptive innovation is the story of Airbnb. The company began by providing bookings for shared spaces and airbeds, focusing on high profile events where lodging was at a premium or otherwise scarce. The service quickly moved up market to private apartments, homes and a variety of alternative lodgings, such as boats, igloos and private islands. Airbnb lodging is available globally today, and recently began operating in Jersey City as a taxable hotel service, competing within the regulated industry.

Wargaming can be an effective method for understanding and predicting the strategies of nascent competitors. A technique used in military strategy, wargaming exercises engage organizational leaders to think and act like competitors within a simulation of business conditions to discover opportunities and dependencies. This competitive intelligence tool can help companies explore potential paths and develop responses.

Monitoring for Outliers

Malcolm Gladwell dispels the notion of the “self-made man” with the 10,000 Hour Rule, the idea that mastery is achieved through practice. In Outliers, he says, “practice isn''t the thing you do once you''re good. It''s the thing you do that makes you good.” Gladwell points to examples of successful people, not as inexplicable, but produced through a combination of backgrounds, circumstances, access and application of effort that results in high achievement.

Organizational success could be explained using these same principles. In the case of Nike’s expansion into the Golf market, the company’s growth over rival Reebok, described by James Allen and Chris Zook in HBR’s “Growth Outside the Core,” was due to its methodical approach in addressing adjacent markets. Nike enters a new market with an athletic shoe product, followed by apparel worn by a well-known player. The company then expands into higher margin equipment, and then global distribution. Allen and Zook conducted a study which concluded that companies sustain growth through entering adjacent markets, and that doing so with a repeatable formula yields far greater success.

Make It Someone’s Job to be Looking

By monitoring the skills sets a competitor is cultivating, its processes and approaches, financial metrics, news and events, and a host of other data sources, a predictive profile can be developed. Competitive intelligence software that collects information from multiple sources, and facilitates analysis and reporting enables organizations to make data-driven decisions to stay ahead of competitors.

Developing competitive intelligence as a core competency within your organization, and implementing tools to help analysts discern the signal from the noise, can enable you to better see disruptions coming, and provide you with the time and space to plan for them effectively. Training programs for teams on the collection of information in the market and protecting corporate assets prepares an organization to navigate the unexpected successfully.

The bottom line is, you will only be able to see things coming if it is someone’s job to be looking. Contact Cipher today to explore how to build or expand your company’s competitive intelligence practice. -- Peter Grimm

Peter Grimm is CEO of Cipher Systems. Following service in the US Navy and as a government counterterrorism analyst, he joined the strategy practice of Deloitte Consulting where he led teams delivering strategic planning and business transformation services for clients in both the Federal and commercial spaces. Peter is passionate about helping clients make smarter, faster decisions. He holds a B.S. from the US Naval Academy and a M.S. from the National Intelligence University.

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Peter Grimm
Peter Grimm

As CEO, Peter Grimm brings a rich blend of national security and commercial strategy consulting experience to Cipher. Following service in the US Navy and as a government counterterrorism analyst, he joined the strategy practice of Deloitte Consulting where he led teams delivering strategic planning and business transformation services for clients in both the Federal and commercial spaces. Peter is passionate about helping clients make smarter, faster decisions.

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