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As businesses identify trends and implement data, the need for vulnerability analysis (VA) arises. Knowing critical elements of the market in which you’re competing is a vital and ongoing exercise. As part of a broader competitive intelligence strategy, vulnerability analysis provides key data and insight. 

The goal of a vulnerability analysis is to create an action plan that shores up weaknesses.

Why Do Vulnerability Analysis?

Vulnerability analysis is an essential exercise for numerous reasons. Innovative business models, channels and products remove barriers to entry, which allows for quick and frequent shifts in a market. Large organizations are often not equipped to react fast to market disruptions. Knowing your vulnerabilities also addresses the following:

  • Cognitive biases that cloud strategic decision making
  • Not challenging current perceptions that leads to future blind spots

When Vulnerability Analysis Should Happen

There are two steps in which vulnerability analysis should occur:

  1. During the alignment process with leadership on high-level business differentiation and strategy (outline the impact of trends on differentiation)
  2. When your competitive intelligence or leadership teams are working to identify and prioritize potential disruptors

Having a monitoring and communication process will help you catch important data and trends that will help as inputs to the vulnerability analysis process, and provide the essential information you need to drive real action. 

First: Establish Differentiators 

Goods and services must have valuable differentiators to be essential and sought-after. Differentiators sometimes become table stakes, which is a minimum entry point for the market. Once teams understand their own differentiators, they can identify and prioritize disruptors.

Second: Identify and Prioritize Disruptors

Disruptors may be occurrences, technologies, competitors, strategy shifts and more. These are only relevant if they threaten your business. They should be prioritized using one of many available methodologies. One example methodology is described in this article: the 11 macro sources of disruption, identified by futurist and author Amy Webb published by the MIT Sloan Business School.

competitor-analysis-how-to-guide

Vulnerability Analysis: Strategic Lenses

Differentiators and disruptors provide foundational insight for vulnerability analysis, which can be viewed through a few different lenses. These include:

  1. Customers
  2. Competitors
  3. Capital
  4. Corporation
  5. Competencies
  6. Culture

The paradigm you select is based on the nature of your business. For example, if you are a value discipline, you’ll implement culture and competencies methodologies. If you’re looking at customer value drivers, you may use the Kim’s Happy Line methodology. How you look at your position in the market and the methodology you use will frame the vulnerability analysis process.

Applying VA Outcomes to Your Strategic Planning

Rather than continuing your incremental planning process, dynamic strategic planning is achievable on the heels of completing a vulnerability analysis like the process outlined above. Having a strategic mindset will transform your growth trajectory. The key takeaways and driving principles for this process should include:

  • A focus on the greatest threats to your company’s differentiators
  • Prioritization of efforts based on probability of threats occurring, how much they will impact your business and when they might occur
  • Capturing identified opportunities
  • Recommendations and action
  • Setting a process and assigning roles and responsibilities
  • Developing contingency plans and alternative strategic options
  • Identifying action points

 

Bottom line? “Business as usual” often results in little business in the future. Ongoing evaluation is an important exercise.

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Prioritizing Growth Through Competitive Analysis

On the heels of vulnerability analysis should come the input of ongoing, relevant competitive analysis information. A strategic mindset will take the aggregated data collected through all analyses (vulnerability and competitive) and create a streamlined action plan. 

It’s essential that you can trust the data you collect. The best data will be comprehensive and only come from authoritative sources.