This interactive session for CI veterans focused on how to utilize information to change the strategic direction of organizations. It was facilitated by Gary Maag, CEO of Proactive Worldwide, Inc, and Joseph Metallo, Managing Director EMEA and head of global brand protection for Proactive Worldwide, Inc.
The pressure point analysis (PPA) approach is a work in progress, but it was put in place for a couple of clients and it resonated with them. Using PPA can seriously impact the future direction and financial health of companies.
Pressure Point Analysis is more like Brazilian Jiu-Jitsu than Japanese Aikido. Both techniques teach smaller, weaker people to successfully defend themselves against stronger competitors, but Brazilian Jiu-Jitsu teaches how a weaker person can leverage his limited strength and employ certain holds to defeat a larger opponent while Aikido adherents align their movement with the attackers and re-direct the attack instead of fighting head-on.
In Brazilian Jiu-Jitsu, the body can only take pressure on so many points. If pressure is applied on too many pressure points, body collapses. The same principles apply to CI:
• Identify threats and opportunities
• Control packets
• Primary based evidence
• Future casting, predict and influence
Case Study of a Turnaround Situation
What do you do when CEO hands you an analysis of declining sales and profits? Ideas from the attendees included:
- Check the financials again
- Legislative changes
- Reduction in costs
- Product mix
There could be more options
What is PPA? Think of whack-a-mole. The mole keeps re-appearing in different holes and you have to whack it each time to get points. Apply this to PPA. Understand each hole - how deep is the hole and what are its salient points. Once all the mole holes are analyzed, apply pressure simultaneously so the mole can not get out at all.
- First list all the potential holes or pressure points for the project
- Do deep dive on each point. Analyze each hole independently as if you were putting together a playbook for war gaming. Do forensics accounting by category if needed.
- You must rectify any vulnerabilities of your own before applying pressure points. In this case, Proactive did a blind penetration of the client to assess vulnerabilities. Only one or two top executives at the client in the example knew that this effort was taking place.
- You must do SWOT analyses on competitor and on yourself. In this example, R&D was a significant problem. The client took 18 months from idea to ship while the key competitor took only 9 months. Also an analysis found 10,000 emails from client addresses to the key competitor over a year. Of course, within an industry, typically people move from company to company so these emails were mostly between friends, but still 10,000 is a substantial number. The client had a CI group that began to collect emails and acted quickly on potential information leaks.
- Apply pressure simultaneously so the mole can not pop up at all. While you may research numerous pressure points (in this case, 29 points were studied), typically 3-4 pressure points that together make a difference, but you do not know which ones are key until you do the analysis.
- Do second blind penetration test six months after the first. If the client has not addressed the vulnerabilities, do a third test.
The client in the case study made a number of assumptions; some were wrong. For example, the client believed its material costs were 10 while the competitor’s material costs equaled 12, but the research later determined that the competitor included temporary labor in materials. When the temporary labor was subtracted, the competitor’s material costs dropped to 9; less than the clients’.
You do need to do historical analyses. For example, look at Nielsen numbers to understand how your marketing campaign affected your sales. You also need to involve other departments.
The research revealed that the competitor was hedging its raw material costs, which were a significant cost component, but when raw materiel prices dropped, the client was better off. The client company was so large; it could not make a decision to begin a hedging program quickly which was actually a benefit. However, the client had to do some internal re-structuring to remove some vulnerabilities.
• Perform full analysis of competitor
• Perform full analysis of self
As PPA is resource-intensive, the approach is best used in a crisis situation although you do not want to wait until the CEO comes to you. You should be pro-active. In this case, a private equity firm was concerned about the millions of dollars it had invested in the client firm. Proactive had multiple staff around the world working on the project, but the results were dramatic. The private equity firm sold its shares at a profit after the turn-around at the client driven by the results of the PPA.
The same principles could apply to other situations, but the deployment might be different. For example, one cannot compare a competitor to oneself in a new market entry opportunity. In this case study, there was one key competitor, but in CI software, there are about 40 rivals, so again, it can be applied depending on your goals for the project. PPA requires significant effort, but offers substantial payoff in appropriate situations.