SCIP Boston enjoyed the presence of Cliff Kalb on April 20, 2011 as he presented to the New Jersey and Boston SCIP chapters; NJ via the e-learning platform provided by SCIP.
Cliff’s presentation about his experiences managing and growing Merck’s CI group, called Strategic Business Analysis at the time he left Merck, provided food for thought about how competitive intelligence (CI) professionals can partner with executives on a strategic level.
Cliff began by outlining the current environment for the pharmaceutical industry as a model for other industries. Cliff uses a four pointed diagram with current competitors opposite new competitors and suppliers opposite customers. Many CI professionals are very knowledgeable about current competitors, he observed, but miss the new competitors. Influencing these are economic conditions, politics, demographics, regulations, and science/technology. For example, demographics favor the pharmaceutical industry as baby boomers age and need more medical care.
A mentor told Cliff, “You don’t drive a car by looking in the rear view mirror.” Foresight is required; 2 days, 2 months, 2 years depending on the situation. Anticipation leads to a competitive edge which results in leadership.
Cliff reminded us that intelligence as actionable and providing a company with sustainable competitive advantage in the marketplace. Otherwise, it’s not worthwhile.
Despite this analogy with driving, a competitor’s actions in the recent past (12-18 months) can be useful in predicting future behavior, thereby reducing uncertainty about the future—the ultimate goal of intelligence. Intelligence is also rooted in history and carefully examines the actions, not the words, of competitors. Just read any CEO’s letter in annual reports. They are all the same.
Cliff also observed that the CI professional may not be the most popular person around because he or she is not drinking the cool aid. To be effective, you must view your employer as the “competitor” and think counter strategy. You must have faith in your convictions to challenge conventional wisdom and be the bearer of bad news. When Cliff worked at Roche, he created marketing plans with 10 pages of plans and 70 pages of contingency plans which contained multiple potential scenarios. If we do X, then competitors do Y, we must do Z. The Z actions were approved in advance. Between 30% and 40% of the time, the potential actions did happen.
The majority of SBA clients included headquarters marketing, senior management, research labs management, business development and the country managers. In supporting these clients, Cliff’s group did not respond to every request. If a request could be handled better by another group, the requestor was referred to that group. That included requests for data. Cliff systematically devised a matrix that outlined the best groups for handling specific types of request. If the resources were available directly to the user, for example via a desktop application, the user was taught how to use that resource. The project needed to be scoped so an evaluation of available resources could be made. About 50% of the requests for assistance were handled by the Strategic Business Analysis (SBA) group while 20% were referred to another function. In 30% of the cases, the response was shared by SBA and another group within Merck.
The analytical process used by the SBA group is very similar to something we all learned in school: the scientific method. The steps including defining the question, gathering the data, analyzing the data, drawing meaningful conclusions, preparing recommendations, drafting the report, delivering the report, and seeking feedback.
The SBA group required that requests for assistance be conveyed in writing. Half of the initial requests disappeared because the requestor did not know what he or she really wanted. After meeting with the client if necessary to clarify the need, the SBA group submitted a written response with expected timing and deliverables. Since the group had 40 to 45 active projects at once, priorities had to be assigned to each project.
Interestingly, the time spent defining the questions was highly variable. Even after examining hundreds of project records, no clear pattern emerged for this step although the subsequent steps clustered around a fixed number of days.
After each project, a feedback was requested of the sponsoring manager. If the feedback was not good, Cliff immediately had a closed door session with the project manager.
Cliff’s group existed for 25 years, and still exists today, although the name of the group changed several times. He noted that only Kodak’s group at 27 years can claim a longer history.
The SBA group did not do big, fat competitor profiles, work that was more focused a particular aspect of the competitor asking, “What will the rival do?,” so Merck could figure out how to preempt them. Support for licensing and business development became more important over time.
Cliff noted that the competitor tracking and early warning were the most important aspect of the work. For example, the country manager of Brazil called to say that Johnson & Johnson (J&J) had put a sign in the empty lot across the street from the Merck facility saying future site of J&J plant. The SBA group found out that this sign had appeared in 8 other locations and 9 months later, the buildings were finished, and J&J was busy recruiting Merck employees. Cliff suggested giving all employees an immediate raise to fend off raiding by J&J.
How did senior management use the SBA group? For quantitative forecasting, insight into competitive behavior, early warning, market modeling/benchmarking, and war gaming. For example, the SBA group analyzed the most successful product launches of all time and then assigned the same metrics to the country managers. The SBA group; had one person doing war gaming full-time with senior management always assigned to the competitor side. Especially if the game occurred just before budgeting, budgets were more realistic.
Cliff views the maturation of the SBA group as typical of CI functions. All CI functions begin with data, then use synthesis and analysis to turn data into information. Information evolves into intelligence with the use of insight and experience. Intelligence gives sustainable competitive advantage. Cliff’s direct reports, by the way, averaged 25 years of experience in the industry.
The issue with many CI functions is measuring their value. The SBA group was measured by the long term accuracy of quantitative forecasts, the ability to complete sensitive projects internally, recommendations on cost avoidance, and, rarely, a case with a tangible outcome. One example was the ability to delay a competitor’s entry into a market, relegating it to a minor position, and benefiting Merck by $400 million.
Contact Cliff at CKalb55205@aol.com or 617.956.2742.