It’s been fascinating to watch the accelerated adoption of data analytics in the sporting world. It’s not limited to understanding post game statistics. It’s extended to predicting the future. Having powerful and deep insight into today’s competition, including the physical and social attributes of the athletes competing, can provide predictive capabilities about future competition.
Most NBA and NFL franchises have staff dedicated to analytics. NBA franchises understand that when recruiting a talented free agent, it requires spending time with the athlete presenting analytical models depicting how he will fit into the rotation and how competitive the team will be. Players have come to expect this and use the generated insights, in addition to contract terms, as a basis for their decisions. The athletes, management, and ownership know that the right insight leads to the right strategy and ultimately, the best execution.
Such insight is not just reserved for sports franchises. It extends to businesses seeking a competitive edge. And insight doesn’t need to be mired in mathematics, but it does feed off of inquisitive minds, minds that dig deep and ask the right questions. In the book, “The Growth Gears”, written by our two Chief Outsiders Principals, Art Saxby and Pete Hayes, the authors do a great job of providing a framework for business people seeking to grow their companies. The first gear in this framework addresses insight. As a precursor to making strategic bets, it’s imperative that you gain insight on your current customers, or prospective customers, competitors, and the company itself. Insight is the first step to landing a winning strategy for the future. Not that different from an NBA or NFL franchise.
Gaining insight is an on-going process that will require you and your staff to dig deep, with your eyes and ears focused on what is happening outside the four walls of your business. Insight can uncover significant opportunities that you never thought about before and frame some winning plays that set you apart.
Over the course of the next several posts, I’ll explore some insight techniques to guide companies considering one of the most challenging areas: The white spaces- the markets you haven’t participated in before; a game not yet played. It’s a journey that can combine elements of invention, innovation and even entrepreneurship, not to mention tweaking other parts of the business model, such as go-to-market. I once heard innovation described as the creation of new capacities and entrepreneurship as the exploitation of those capacities. The objective for the next several posts is to describe how your company can gain insight on potentially exploiting new capacities- without taking on the excessive risks often associated with an entrepreneurial endeavor. In other words, you don’t need to be an entrepreneur to demonstrate entrepreneurship.
I’ll close this first post in the series by painting a scenario that I’ve come across a number of times. Established companies, per my last post, are generally wired to execute an existing business model efficiently. Markets and customers are known, partnerships well established, and Sales and Marketing have a pretty good idea of market behavior. Enter a new market opportunity, a white space that the company hasn’t competed in. The temptation is to slice and dice existing data, or even perhaps data from subscribed sources and create your perspective on that new market. Insiders craft the size of the Total Available Market. One might then make broad assumptions about customer capture and sales cycles, often using rules based on the firm’s existing business model. Finance may ask for a business plan and the temptation is to create a pro-forma income statement for that market using ratios resembling your current model. Analysts end up creating elaborate and eloquently built spreadsheets.
This may be all good, but the litmus test is this: How much of the data collected in generating this model resulted from you and your staff spending face-to-face time with prospective customers or users in that new market? How much time was devoted to really understanding the most pressing problems these prospective customers face, living a day in their shoes and gaining an appreciation for their workflows and processes? How much time was spent discussing with these prospective customers how they prefer to purchase products or how they go about evaluating new products? This is often data that you can’t buy from an analyst or find on the Internet. The way to collect this data is to leave the building and invest in discovery. If you invest some time in discovery, you’re on the right track to gain valuable insight. Discovery is hard work, but it’s rewarding and for many an opportunity to learn and grow professionally. It’s my belief that owning deep insight into your markets, inclusive of relationships, and taking that insight to build and deliver products achieves the power positions in business
In my next post, I’ll break it down into steps. As a teaser, it’s often about turning guesses or assumptions about markets into hypotheses that can be tested and validated and not investing heavily until you have the answers.