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Total quality management at work: Development of an effective competitive analysis process
NORTH- HOLLAND
Total Quality Management at Work Development of an Effective Competitive Analysis Process
Michael P. Bigwood The management team of a business unit in a global specialty chemical company wanted better incorporation of competitive information in their strategic business planning process. Applying the tools of total quality management (TQM), the members of the business team developed a competitive analysis process that simultaneously met the needs of the management team and incorporated the attributes that its future users felt would insure its lasting success. The key TQM methodology applied in this project was a gap analysis, in which the desirable characteristics of a process (the future state) were compared with the way in which the process is currently being performed (the current state). This comparison leads to the identification of new process elements or changes in procedures that will allow the organization to reach the desired level of performance. The project's outcome was a computerized database, managed by a process champion and supported by competitive teams. © 1997 Elsevier Science Inc. Address correspondence to Michael P. Bigwood, International Technology Information, P.O. Box 58, Oreland, PA 19075-0058.
INTRODUCTION Do you feel that the members of your department know a lot about the competition but you don't do much with the information? Do you know where the gaps are in your competitive information database? Most companies realize the need for incorporating competitive information into their strategic planning process. Fewer companies, however, are fully satisfied with the processes they have in place to achieve that objective. Some of the issues cited as barriers to the implementation of an effective competitive analysis process are the lack of resources, the difficulty in gathering meaningful information, and the lack of sustained commitment to a competitive intelligence effort. An industrial business unit identified competitive analysis as an area where improvement would significantly increase the quality of their overall business planning process. This article describes how some of the tools of the total quality management (TQM) approach were applied toward the development of an effective competitive
IndustrialMarketingManagement26, 459-466
(1997) © 1997 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010
001%8501/97/$17.00 PII S0019-8501 (96)00157-5
Most companies realize the need for incorporating competitive information in their strategic planning process. Fewer companies are fully satisfied with the process they have in place. analysis process. The key to success was the development of a process that met management's objectives while responding to the needs of the process stakeholders; the users of the process as well as the people needed to provide the necessary competitive information. Applying the TQM methodology helped identify the two key elements that lead to the implementation of a successful competitive analysis process: a completely computer based database and analysis system, and the assignment of dedicated resources to maintain and operate it.
TQM METHODOLOGY The quality movement, originally aimed at ensuring consistent quality in manufacturing, broadened its scope in the second half of the 1980s to include services as well as management processes. Quality control evolved into the broader concept of TQM. The path that leads an organization to TQM has been extensively discussed by Berry [1] while others have described in more detail the tools and techniques that are used along the way [2-4]. When an organization decides to embrace the TQM approach, it is recommended that it start by taking a very broad view: which are the areas where management process improvements would have the biggest impact, who are the best people to define and implement the necessary changes, what training will be required, etc.?
MICHAEL BIGW©OD is the founder of International Technology Information in Qreland, Pennsylvania.
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The project that we describe was narrower in scope. It took place at a company that was well on its way to internalize a TQM culture and its employees were familiar with the concept. Furthermore, the need to be addressed had been identified and the team already in place. The team could therefore immediately focus its attention to those tools of TQM that deal specifically with process improvement. One of the major techniques relied upon was the gap analysis concept, a tool that helps identify those key elements that will substantially improve the quality of a process. In the gap analysis approach, one first develops a picture of the current state and identifies the desired features of the state to be achieved (the "future state"). By comparing the current and future states, one can understand what prevents an organization from performing at the desired level and identify the elements that could be introduced to reach that higher level. The overall project consisted of six distinct, sequential steps: 1. Statement of the project objectives 2. Definition of the current state 3. Definition of the desired state (scope and desirable attributes of the competitive analysis process) 4. Identification of the gaps between the current and desired states 5. Development of the competitive analysis process 6. Implementation, training, and evaluation of the competitive analysis process. A significant fraction of the time spent on this project was dedicated to completing steps 1 through 4. The establishment of a clear definition of what a process is to achieve and the development of an understanding of what people expect from the final product are critical to success. It is also im-
A gap analysis reveals what could help an organization perform at a superior level. portant to give the future users of the process an opportunity to express what they believe would make it work and what they think might become barriers to its implementation and use. From a TQM perspective, this is equivalent to identifying customer needs (internal customers in this case), a well recognized critical success factor of the total quality model (1, Ch. 4). The whole project was driven by well defined objectives formulated by the management team in response to a perceived need. The general scope of the effort had also been outlined, but open to further modifications and refinements. The next step was to ask the future stakeholders of the process, through individual interviews, what they thought were the characteristics that would insure its successful implementation. The pool of interviewees was made up of two groups. The first group included all the business unit's marketing managers, as they would be the heaviest user of the process and would have some accountability in maintaining it. The second group included individuals that either would be asked to contribute information to the system or could benefit from using it. Individuals in the second group were selected to represent a broad range of functional responsibilities (research, sales, manufacturing, and operations). Overall, 15 interviews were conducted. Discussions within the management team, together with the data gathered through the interviewing process, provided the background information used to develop the picture of the current state. At that point, the actual design of a competitive analysis process could begin. During this phase of the project, which lasted approximately three months, periodic progress reviews were conducted within the management team to insure that the project was headed in the right direction. Originally, the project included a pilot phase between the development and implementation phases. As the product evolved, it was realized that because of its very high flexibility (see below), it would lend itself quite readily to a continuous improvement mode. Therefore, the decision was made to move directly from development to implementation. The advantage of this approach was that it gave
the future users another chance to review the product and to provide feedback on how to fine tune it to best serve their needs. On the down side, there was a possibility that some people, upon being shown a perhaps imperfect prototype, might reject the whole process. To mitigate that risk, the product was introduced to small groups (four to six people) in a training session format in which participants were told up front that the session had a dual purpose: show them how to use the product and hear from them how it could be further improved.
PROGRAM OBJECTIVE The program's objective, as stated by the management team, was to develop and implement a system that would allow better incorporation of competitive information into the strategic business planning process. There was a strong desire to develop a system that would become a permanent element of strategic planning activities, as opposed to providing a one-time snapshot of the competitive landscape. The process needed to be in a user friendly environment, with access available for input and analysis from locations world wide and be focused on four aspects of competitive knowledge: plants, people, technology, and products. Building a model along these four dimensions would generate clues to competitor strategic direction and possible future actions. The management team felt that building a model based on anything less than these four competitive dimensions might lead to flawed analyses. Beyond these requirements, few constraints existed with respect to the process structure or format, but some boundary conditions had been established in terms of available level of support.
CURRENT STATE At the inception of this project, as is often the case in well established business units, a significant amount of competitive information was available within the department through the collective knowledge of its members.
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This competitive information resided primarily with individuals, and there was no systematic process in place to either gather it all in one place or to make the other members of the department aware of what was available. Although some of the information was captured in computer databases, these were owned and managed by individuals having a personal interest in a specific piece of the whole picture. Access to the data was restricted by lack of access to the various existing databases as well as a lack of user friendly database searching protocols. As a result, incorporation of the existing relevant competitive information into the strategic planning process was dependent on what the participants in the planning process happened to know, or thought that someone else might know. Another characteristic of the current state was the tendency of the competitive analysis effort to fluctuate in intensity; some deliberate attempts at improving understanding of competitors had been initiated in the past but had faded away after a period of time. No formal model or framework of competitive analysis was in use.
SCOPE AND DESIRABLE ATTRIBUTES The management team had established that, in order to meet its stated objectives, the competitive analysis process should be global and ongoing. It should initially include information about eight key competitors and cover all relevant market segments. Selection of the key competitors in such an analysis represents a major challenge, particularly to a global business operating in fragmented market segments with many regional, national, and multinational suppliers and technologies. The criteria used to select the key competitors included, but were not limited to: • Competitor's share of the market in a strategic segment placing them in the top three, • Demonstrating technologies and know how that could influence the direction of the market, • Possessing a cost structure that may provide advantageous positioning. The ability to add additional competitors at a later date was also deemed desirable. The need to take a global view of the competitive landscape was driven by the fact that all the major players in this market were themselves global competitors. Developments in one part of the world could not be ignored; they might be early warning signs of what was to happen else-
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where at a later date. To maximize its predictive capabilities, the competitive analysis process should provide historical trends which could be extrapolated into the future. It was agreed that going back in time three years would provide an adequate initial historical base. Continuous update of the information would gradually build longer historical trends and allow for the identification of changes in direction. The competitive analysis process to be developed had to provide information about the business unit's eight key competitors, including data about financial perfonnance, sales and marketing strategies, technology base, and manufacturing capabilities. Finally, the process to be developed should allow for incorporation of the information resulting from a technology tracking effort already in place in the company's research division. The data gathered through the 15 individual interviews, (previously described in the TQM Methodology section) was analyzed using an affinity diagram (3, Ch. l) to yield 10 groupings. The response was very homogeneous and showed significant overlap with the criteria outlined by the management team. The participants in the interviews felt that a competitive analysis process should be: • • • • •
Manageable Managed Current Predictive Ongoing
• • • • •
Expandable Uniform/allowingcomparisons Accessible User friendly Interactive/flexible
The first two elements were deemed most critical to the successful implementation of the competitive analysis process. Interview participants unanimously felt that, in order to be viable, the process should be functional without requiting significant time commitment from its users and that management should give one or more individuals responsibility and accountability for keeping the process going. The other elements were cited with similar frequencies.
GAPS As mentioned above, the management team felt the need for better incorporation of competitive information into the business strategic planning process. At the same time, it appeared that significant amounts of competitive information was already present throughout the department. This clearly pointed to a major gap, namely the lack of a mechanism to convert dispersed information into an organized body of knowledge readily usable in the busi-
One frequent g a p is a lack of accountability. ness planning process. The absence of such a mechanism further impeded competitive analysis in two ways. First, people who did come across relevant information did not have a conduit to make it available to those who could use it, nor were they motivated to develop one, because they saw no evidence that the information would be put to use. At the other end, those people who could use the information were not aware of what was available or where the information gaps might be. The second major gap was the lack of responsibility and accountability placed on people to keep the competitive analysis process going. From a TQM methodology standpoint, it is sometimes necessary at this stage of the process to perform a quantitative evaluation of the list of identified gaps. This allows for prioritization and focus on developing those elements that will have the highest impact on closing the gaps. In this particular case, the limited number of gaps allowed for all of them to be addressed simultaneously.
PROCESS DEVELOPMENT Two elements contribute to the successful implementation of any new process: the features of the system itself and the people who develop and later use it. This dual requirement of process feature and people "buy-in" has been discussed extensively by Berry [1]. Both elements were considered during this project. Although closely interrelated, the system and people elements will be discussed separately, starting with the process itself. We will then review the people related elements as they relate to the system. The expressed need for a competitive analysis process that is current, expandable, accessible, and interactive pointed strongly toward the selection of a computer based approach, as opposed to the publication of periodic reports. Computer based systems can be continuously updated and adapted as needs change over time. Furthermore, they can be made accessible to a wide distribution through PC networks and allow maximum flexibility in use. Because predicting what specific questions might arise during the practice of strategic planning can be difficult, the competitive database was
designed so that it could be searched, in real time, during the practice of strategic business planning. This level of flexibility can be achieved only with computer based systems. To meet the requirement that information about eight key competitors be tracked, a standardized competitor profile format was developed, aimed at capturing information about finances, sales and marketing strategies, technology base, and manufacturing capabilities. Most of the information is in the form of historical trends. To address the concern expressed by the future users, that creating and updating competitor profiles might become a time consuming task, software was developed that automatically creates all the graphs used in the competitor profiles upon entry of the raw data. To generate comparable data, some standardized on-line literature searching protocols were also developed. One of the reasons for capturing key information about competitors in a standardized format is that it helps develop meaningful comparisons between competitors' capabilities or strategies. Because comparing oneself with one's competitors can be as revealing as a comparison between two competitors, a standard "competitor profile" describing the company was incorporated in the database. In this particular case, the data contained in the competitor profile was deliberately limited to publicly available information. This allows the users of the process to understand how they are perceived by their competitors. There is a risk associated with limiting the scope of a competitive analysis process to a set of known competit o r s - t h e emergence of new players might be missed. Therefore, some mechanism to capture competitive activities beyond the eight "tracked competitors" was deemed necessap/. In this particular case, the on-line databases created to capture field information (see below) provided that function. A significant fraction of the information contained in the competitor profiles was provided by the published literature (annual reports, market surveys, interviews of key executives, etc.). As mentioned in the discussion of the current state, a significant amount of field information was also available within the department. It had been collected through customer and supplier visits, conversations at trade shows, seminars, etc. Typically, field information is
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Relational PC databases help build a broad picture from highly fragmented datasets. of a very fragmented nature, revealing for instance the selling price of a given product at a given customer location or the move of an employee with expertise in a given area from one department to another, or to another company. Modem, PC based relational databases provide a very powerful way of capturing such fragmentary pieces of information and organizing them in a way that allows the broader picture to emerge. After reviewing the nature of available (and desirable) information, a relational database was created that separates the information in five categories: events, people, plants, products, and technology. The information can be analyzed using one of 15 searching protocols designed to answer frequently asked questions such as, "how many new products has company X introduced in market segment Y over the last two years," or "how many scientists work on technology A at our various competitors' labs." The user friendly nature of recent relational databases makes it easy to create additional searching protocols aimed at answering the numerous questions about competitors that come up during the practice of strategic planning. On the people side of the equation, the key success factor was the realization by management that keeping the competitive database alive and up to date required dedication of resources to the task, of employees not only interested and motivated by the competitive analysis process, but also understanding that this was a part of their job for which they were accountable. In practical terms, one employee became the "champion" that everyone felt was necessary to keep the project going, a quarter of an employee' s time was dedicated to keeping the field information database current while teams of two employees, one from marketing and one from sales, were charged with creating the competitor profiles and updating them twice a year. The process was not designed to support a specific competitive analysis model or format. It does, however, provide the information and the flexibility that allows one to use it in connection with some of the competitive analysis models that have been described in the literature, such as the classic five forces model developed by Porter
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[5], Thompson and Strickland's "competitive characteristics" [6] or the competitor assessment process described by Harkleroad [7]. A comparative study by Prescott [8] of various competitive analysis tools also illustrates how the data in the competitive database can be applied.
IMPLEMENTATION At this point, the development of a computer based prototype had been completed and the implementation phase ready to begin. A number of issues had to be dealt with to successfully complete this last part of the project. One of the difficulties was that, although the process that had been developed captures and analyzes competitive information, it does not supply the data itself. As a result, there was concern that users opening the new database for the first time might find it useless, not because of its process capabilities but because of lack of data. This issue was addressed by making future users aware, during their training sessions, that what they would get out of the process would only be as good as what they feed in. People were prepared for the likely scenario that the first few times they try to use the system for planning purposes might end up being an information gap analysis. This activity can be valuable in and of itself, as it helps focus future information gathering toward filling the gaps in the database. Another issue was the fact that some employees coming in frequent contact with field competitive information, such as members of the salesforce, are not always involved in the strategic planning process. Two avenues were implemented to encourage these employees to pass along the information. The first was the implementation of a "Frequent Competitive Information Contributor Award Program." Second, it turned out that although designed originally to support strategic planning activities, the on-line competitive information database was also useful for tactical decision making in areas such as pricing or customer targeting. By making the data available to field and technical employees, all were motivated to contribute information whether or not they were active participants in the strategic planning process.
It is the m a n a g e r ' s role to define and c o m m u n i c a t e the objectives of a quality team. In an attempt to lower barriers and minimize time requirements, various channels were put into place to conveniently convey competitive information to the person having responsibility for data entry (E-mail addresses, FAX template forms, and voice-mail boxes).
from it. The former approach allows faster development of a TQM culture throughout an organization but must be driven by top management. The second approach can be initiated at any level in the organization and the resulting improvements used to demonstrate the benefits of TQM to other parts of the corporation.
DISCUSSION Because the group involved in this project had, to some extent, internalized the practices of TQM, it was able to start applying them right away toward the solution of an already identified need. As a result, the program could be completed over a period of seven months. The first two were spent defining what the final product should deliver, and how. The next three months were dedicated to the development of the process itself, while the last two were used to implement the process, train users, and incorporate their feedback into the product, in effect completing a second cycle around the "circle of quality." Although the overall project spanned a significant period of time, the people involved only dedicated a small fraction of their time to it (a few hours a week). Yet, by applying the tools of TQM, that time was used very effectively toward the development of a process that responded to a strategic need in a format designed to facilitate and encourage its use. In a different organization, one less familiar with TQM, one would spend more time up front identifying the areas where commitment of time and resources would provide the largest returns, selecting the team members best suited to participating in the program, and providing them with TQM training. One would also assess which way of initiating a TQM program would be best suited for that particular company. One can either embrace the concept at the corporate level and work down through the organization to identify specific projects. One the other hand, one can start with a specific problem and spread the TQM approach
CONCLUSIONS Application of the TQM principles and tools leads to the development of a competitive analysis process that not only fills a need, but does so in a way that takes into account the input and concerns of those that would actually use the process. Six months after the onset of the implementation phase, the database contained five competitors profiles and 384 items of competitive information had been entered into the searchable tables. That amount of information is sufficient to start using the database in support of the strategic planning process, even if its role is partially to point to the areas where more data gathering is needed. The high accessibility of the on-line data led some members of the business unit, not necessarily involved in strategic planning, to realize that the competitive information contained in the database also has value at the tactical level. As a consequence, most employees are motivated to contribute information to the database. Early use of the process has also identified additional features that would further increase its effectiveness, such as automated protocols allowing generation of comparisons between competitors based on the information contained in their respective profiles. The flexible design of the process will allow continuous incorporation of additional features in an ongoing circle of quality. The successful implementation of this competitive analysis process illustrates the benefit resulting from involving employees in the development of processes in
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which they will participate. Seeking their input led to the development of a process that they felt they had contributed to and considered their own. The TQM approach offers tools to gather information from large numbers of employees without requiring a lot of their time, help analyze that information, and incorporate it in a product that will provide (internal) customer satisfaction. From a manager's perspective, the key elements emerging from this case are: • It is the manager's role to insure that the objectives, tasks, and accountabilities of a quality team are clearly defined and communicated. • However, members of the team are internal customers. The more they are involved in the development of those objectives and assignment of those tasks, the more they will support the resulting business process. • Management must be realistic about the amount of time that the team member will need to contribute,
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both toward the development of a new business process and to its operation once implemented.
REFERENCES I. Berry, Thomas H., Managing the Total Quality TransJormation. McGrawHill, New York, 1991. 2. Scholtes, Peter R., The Team Handbook: How to Use Teams to Improve Quality. Joiner, Madison, Wisconsin, 1988. 3. Brassard, Michael, Memo~ Jogger Plus. GOAL/QPC, Methuen, Massachusetts, 1989. 4. Schuler, Randall S., and Harris, Drew L., Managing Quality: The Primer ./or Middle Managers. Addison-Wesley, Reading, Massachusetts, 1992. 5. Porter, Michael E., Competitive Strategy: Techniques for Analyzing Industries and Competitors. The Free Press, New York, 1980. 6. Thompson, Jr., Arthur A., and Strickland, A. J., III, Strategic Management, Concepts and Cases. Irwin, Boston, Massachusetts, 1978. 7. Harkleroad, David, Making Intelligence Analysis Actionable. Competitive Intelligence Review 5(2), 13-17 (1994). 8. Prescott, John E., and Grant, J. H., A Manager's Guide for Evaluating Competitive Analysis Techniques. Interfaces 183, 10-22 (1988).
Total Quality Management at Work Development of an Effective Competitive Analysis Process
Michael P. Bigwood The management team of a business unit in a global specialty chemical company wanted better incorporation of competitive information in their strategic business planning process. Applying the tools of total quality management (TQM), the members of the business team developed a competitive analysis process that simultaneously met the needs of the management team and incorporated the attributes that its future users felt would insure its lasting success. The key TQM methodology applied in this project was a gap analysis, in which the desirable characteristics of a process (the future state) were compared with the way in which the process is currently being performed (the current state). This comparison leads to the identification of new process elements or changes in procedures that will allow the organization to reach the desired level of performance. The project's outcome was a computerized database, managed by a process champion and supported by competitive teams. © 1997 Elsevier Science Inc. Address correspondence to Michael P. Bigwood, International Technology Information, P.O. Box 58, Oreland, PA 19075-0058.
INTRODUCTION Do you feel that the members of your department know a lot about the competition but you don't do much with the information? Do you know where the gaps are in your competitive information database? Most companies realize the need for incorporating competitive information into their strategic planning process. Fewer companies, however, are fully satisfied with the processes they have in place to achieve that objective. Some of the issues cited as barriers to the implementation of an effective competitive analysis process are the lack of resources, the difficulty in gathering meaningful information, and the lack of sustained commitment to a competitive intelligence effort. An industrial business unit identified competitive analysis as an area where improvement would significantly increase the quality of their overall business planning process. This article describes how some of the tools of the total quality management (TQM) approach were applied toward the development of an effective competitive
IndustrialMarketingManagement26, 459-466
(1997) © 1997 Elsevier Science Inc. All rights reserved. 655 Avenue of the Americas, New York, NY 10010
001%8501/97/$17.00 PII S0019-8501 (96)00157-5
Most companies realize the need for incorporating competitive information in their strategic planning process. Fewer companies are fully satisfied with the process they have in place. analysis process. The key to success was the development of a process that met management's objectives while responding to the needs of the process stakeholders; the users of the process as well as the people needed to provide the necessary competitive information. Applying the TQM methodology helped identify the two key elements that lead to the implementation of a successful competitive analysis process: a completely computer based database and analysis system, and the assignment of dedicated resources to maintain and operate it.
TQM METHODOLOGY The quality movement, originally aimed at ensuring consistent quality in manufacturing, broadened its scope in the second half of the 1980s to include services as well as management processes. Quality control evolved into the broader concept of TQM. The path that leads an organization to TQM has been extensively discussed by Berry [1] while others have described in more detail the tools and techniques that are used along the way [2-4]. When an organization decides to embrace the TQM approach, it is recommended that it start by taking a very broad view: which are the areas where management process improvements would have the biggest impact, who are the best people to define and implement the necessary changes, what training will be required, etc.?
MICHAEL BIGW©OD is the founder of International Technology Information in Qreland, Pennsylvania.
460
The project that we describe was narrower in scope. It took place at a company that was well on its way to internalize a TQM culture and its employees were familiar with the concept. Furthermore, the need to be addressed had been identified and the team already in place. The team could therefore immediately focus its attention to those tools of TQM that deal specifically with process improvement. One of the major techniques relied upon was the gap analysis concept, a tool that helps identify those key elements that will substantially improve the quality of a process. In the gap analysis approach, one first develops a picture of the current state and identifies the desired features of the state to be achieved (the "future state"). By comparing the current and future states, one can understand what prevents an organization from performing at the desired level and identify the elements that could be introduced to reach that higher level. The overall project consisted of six distinct, sequential steps: 1. Statement of the project objectives 2. Definition of the current state 3. Definition of the desired state (scope and desirable attributes of the competitive analysis process) 4. Identification of the gaps between the current and desired states 5. Development of the competitive analysis process 6. Implementation, training, and evaluation of the competitive analysis process. A significant fraction of the time spent on this project was dedicated to completing steps 1 through 4. The establishment of a clear definition of what a process is to achieve and the development of an understanding of what people expect from the final product are critical to success. It is also im-
A gap analysis reveals what could help an organization perform at a superior level. portant to give the future users of the process an opportunity to express what they believe would make it work and what they think might become barriers to its implementation and use. From a TQM perspective, this is equivalent to identifying customer needs (internal customers in this case), a well recognized critical success factor of the total quality model (1, Ch. 4). The whole project was driven by well defined objectives formulated by the management team in response to a perceived need. The general scope of the effort had also been outlined, but open to further modifications and refinements. The next step was to ask the future stakeholders of the process, through individual interviews, what they thought were the characteristics that would insure its successful implementation. The pool of interviewees was made up of two groups. The first group included all the business unit's marketing managers, as they would be the heaviest user of the process and would have some accountability in maintaining it. The second group included individuals that either would be asked to contribute information to the system or could benefit from using it. Individuals in the second group were selected to represent a broad range of functional responsibilities (research, sales, manufacturing, and operations). Overall, 15 interviews were conducted. Discussions within the management team, together with the data gathered through the interviewing process, provided the background information used to develop the picture of the current state. At that point, the actual design of a competitive analysis process could begin. During this phase of the project, which lasted approximately three months, periodic progress reviews were conducted within the management team to insure that the project was headed in the right direction. Originally, the project included a pilot phase between the development and implementation phases. As the product evolved, it was realized that because of its very high flexibility (see below), it would lend itself quite readily to a continuous improvement mode. Therefore, the decision was made to move directly from development to implementation. The advantage of this approach was that it gave
the future users another chance to review the product and to provide feedback on how to fine tune it to best serve their needs. On the down side, there was a possibility that some people, upon being shown a perhaps imperfect prototype, might reject the whole process. To mitigate that risk, the product was introduced to small groups (four to six people) in a training session format in which participants were told up front that the session had a dual purpose: show them how to use the product and hear from them how it could be further improved.
PROGRAM OBJECTIVE The program's objective, as stated by the management team, was to develop and implement a system that would allow better incorporation of competitive information into the strategic business planning process. There was a strong desire to develop a system that would become a permanent element of strategic planning activities, as opposed to providing a one-time snapshot of the competitive landscape. The process needed to be in a user friendly environment, with access available for input and analysis from locations world wide and be focused on four aspects of competitive knowledge: plants, people, technology, and products. Building a model along these four dimensions would generate clues to competitor strategic direction and possible future actions. The management team felt that building a model based on anything less than these four competitive dimensions might lead to flawed analyses. Beyond these requirements, few constraints existed with respect to the process structure or format, but some boundary conditions had been established in terms of available level of support.
CURRENT STATE At the inception of this project, as is often the case in well established business units, a significant amount of competitive information was available within the department through the collective knowledge of its members.
461
This competitive information resided primarily with individuals, and there was no systematic process in place to either gather it all in one place or to make the other members of the department aware of what was available. Although some of the information was captured in computer databases, these were owned and managed by individuals having a personal interest in a specific piece of the whole picture. Access to the data was restricted by lack of access to the various existing databases as well as a lack of user friendly database searching protocols. As a result, incorporation of the existing relevant competitive information into the strategic planning process was dependent on what the participants in the planning process happened to know, or thought that someone else might know. Another characteristic of the current state was the tendency of the competitive analysis effort to fluctuate in intensity; some deliberate attempts at improving understanding of competitors had been initiated in the past but had faded away after a period of time. No formal model or framework of competitive analysis was in use.
SCOPE AND DESIRABLE ATTRIBUTES The management team had established that, in order to meet its stated objectives, the competitive analysis process should be global and ongoing. It should initially include information about eight key competitors and cover all relevant market segments. Selection of the key competitors in such an analysis represents a major challenge, particularly to a global business operating in fragmented market segments with many regional, national, and multinational suppliers and technologies. The criteria used to select the key competitors included, but were not limited to: • Competitor's share of the market in a strategic segment placing them in the top three, • Demonstrating technologies and know how that could influence the direction of the market, • Possessing a cost structure that may provide advantageous positioning. The ability to add additional competitors at a later date was also deemed desirable. The need to take a global view of the competitive landscape was driven by the fact that all the major players in this market were themselves global competitors. Developments in one part of the world could not be ignored; they might be early warning signs of what was to happen else-
462
where at a later date. To maximize its predictive capabilities, the competitive analysis process should provide historical trends which could be extrapolated into the future. It was agreed that going back in time three years would provide an adequate initial historical base. Continuous update of the information would gradually build longer historical trends and allow for the identification of changes in direction. The competitive analysis process to be developed had to provide information about the business unit's eight key competitors, including data about financial perfonnance, sales and marketing strategies, technology base, and manufacturing capabilities. Finally, the process to be developed should allow for incorporation of the information resulting from a technology tracking effort already in place in the company's research division. The data gathered through the 15 individual interviews, (previously described in the TQM Methodology section) was analyzed using an affinity diagram (3, Ch. l) to yield 10 groupings. The response was very homogeneous and showed significant overlap with the criteria outlined by the management team. The participants in the interviews felt that a competitive analysis process should be: • • • • •
Manageable Managed Current Predictive Ongoing
• • • • •
Expandable Uniform/allowingcomparisons Accessible User friendly Interactive/flexible
The first two elements were deemed most critical to the successful implementation of the competitive analysis process. Interview participants unanimously felt that, in order to be viable, the process should be functional without requiting significant time commitment from its users and that management should give one or more individuals responsibility and accountability for keeping the process going. The other elements were cited with similar frequencies.
GAPS As mentioned above, the management team felt the need for better incorporation of competitive information into the business strategic planning process. At the same time, it appeared that significant amounts of competitive information was already present throughout the department. This clearly pointed to a major gap, namely the lack of a mechanism to convert dispersed information into an organized body of knowledge readily usable in the busi-
One frequent g a p is a lack of accountability. ness planning process. The absence of such a mechanism further impeded competitive analysis in two ways. First, people who did come across relevant information did not have a conduit to make it available to those who could use it, nor were they motivated to develop one, because they saw no evidence that the information would be put to use. At the other end, those people who could use the information were not aware of what was available or where the information gaps might be. The second major gap was the lack of responsibility and accountability placed on people to keep the competitive analysis process going. From a TQM methodology standpoint, it is sometimes necessary at this stage of the process to perform a quantitative evaluation of the list of identified gaps. This allows for prioritization and focus on developing those elements that will have the highest impact on closing the gaps. In this particular case, the limited number of gaps allowed for all of them to be addressed simultaneously.
PROCESS DEVELOPMENT Two elements contribute to the successful implementation of any new process: the features of the system itself and the people who develop and later use it. This dual requirement of process feature and people "buy-in" has been discussed extensively by Berry [1]. Both elements were considered during this project. Although closely interrelated, the system and people elements will be discussed separately, starting with the process itself. We will then review the people related elements as they relate to the system. The expressed need for a competitive analysis process that is current, expandable, accessible, and interactive pointed strongly toward the selection of a computer based approach, as opposed to the publication of periodic reports. Computer based systems can be continuously updated and adapted as needs change over time. Furthermore, they can be made accessible to a wide distribution through PC networks and allow maximum flexibility in use. Because predicting what specific questions might arise during the practice of strategic planning can be difficult, the competitive database was
designed so that it could be searched, in real time, during the practice of strategic business planning. This level of flexibility can be achieved only with computer based systems. To meet the requirement that information about eight key competitors be tracked, a standardized competitor profile format was developed, aimed at capturing information about finances, sales and marketing strategies, technology base, and manufacturing capabilities. Most of the information is in the form of historical trends. To address the concern expressed by the future users, that creating and updating competitor profiles might become a time consuming task, software was developed that automatically creates all the graphs used in the competitor profiles upon entry of the raw data. To generate comparable data, some standardized on-line literature searching protocols were also developed. One of the reasons for capturing key information about competitors in a standardized format is that it helps develop meaningful comparisons between competitors' capabilities or strategies. Because comparing oneself with one's competitors can be as revealing as a comparison between two competitors, a standard "competitor profile" describing the company was incorporated in the database. In this particular case, the data contained in the competitor profile was deliberately limited to publicly available information. This allows the users of the process to understand how they are perceived by their competitors. There is a risk associated with limiting the scope of a competitive analysis process to a set of known competit o r s - t h e emergence of new players might be missed. Therefore, some mechanism to capture competitive activities beyond the eight "tracked competitors" was deemed necessap/. In this particular case, the on-line databases created to capture field information (see below) provided that function. A significant fraction of the information contained in the competitor profiles was provided by the published literature (annual reports, market surveys, interviews of key executives, etc.). As mentioned in the discussion of the current state, a significant amount of field information was also available within the department. It had been collected through customer and supplier visits, conversations at trade shows, seminars, etc. Typically, field information is
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Relational PC databases help build a broad picture from highly fragmented datasets. of a very fragmented nature, revealing for instance the selling price of a given product at a given customer location or the move of an employee with expertise in a given area from one department to another, or to another company. Modem, PC based relational databases provide a very powerful way of capturing such fragmentary pieces of information and organizing them in a way that allows the broader picture to emerge. After reviewing the nature of available (and desirable) information, a relational database was created that separates the information in five categories: events, people, plants, products, and technology. The information can be analyzed using one of 15 searching protocols designed to answer frequently asked questions such as, "how many new products has company X introduced in market segment Y over the last two years," or "how many scientists work on technology A at our various competitors' labs." The user friendly nature of recent relational databases makes it easy to create additional searching protocols aimed at answering the numerous questions about competitors that come up during the practice of strategic planning. On the people side of the equation, the key success factor was the realization by management that keeping the competitive database alive and up to date required dedication of resources to the task, of employees not only interested and motivated by the competitive analysis process, but also understanding that this was a part of their job for which they were accountable. In practical terms, one employee became the "champion" that everyone felt was necessary to keep the project going, a quarter of an employee' s time was dedicated to keeping the field information database current while teams of two employees, one from marketing and one from sales, were charged with creating the competitor profiles and updating them twice a year. The process was not designed to support a specific competitive analysis model or format. It does, however, provide the information and the flexibility that allows one to use it in connection with some of the competitive analysis models that have been described in the literature, such as the classic five forces model developed by Porter
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[5], Thompson and Strickland's "competitive characteristics" [6] or the competitor assessment process described by Harkleroad [7]. A comparative study by Prescott [8] of various competitive analysis tools also illustrates how the data in the competitive database can be applied.
IMPLEMENTATION At this point, the development of a computer based prototype had been completed and the implementation phase ready to begin. A number of issues had to be dealt with to successfully complete this last part of the project. One of the difficulties was that, although the process that had been developed captures and analyzes competitive information, it does not supply the data itself. As a result, there was concern that users opening the new database for the first time might find it useless, not because of its process capabilities but because of lack of data. This issue was addressed by making future users aware, during their training sessions, that what they would get out of the process would only be as good as what they feed in. People were prepared for the likely scenario that the first few times they try to use the system for planning purposes might end up being an information gap analysis. This activity can be valuable in and of itself, as it helps focus future information gathering toward filling the gaps in the database. Another issue was the fact that some employees coming in frequent contact with field competitive information, such as members of the salesforce, are not always involved in the strategic planning process. Two avenues were implemented to encourage these employees to pass along the information. The first was the implementation of a "Frequent Competitive Information Contributor Award Program." Second, it turned out that although designed originally to support strategic planning activities, the on-line competitive information database was also useful for tactical decision making in areas such as pricing or customer targeting. By making the data available to field and technical employees, all were motivated to contribute information whether or not they were active participants in the strategic planning process.
It is the m a n a g e r ' s role to define and c o m m u n i c a t e the objectives of a quality team. In an attempt to lower barriers and minimize time requirements, various channels were put into place to conveniently convey competitive information to the person having responsibility for data entry (E-mail addresses, FAX template forms, and voice-mail boxes).
from it. The former approach allows faster development of a TQM culture throughout an organization but must be driven by top management. The second approach can be initiated at any level in the organization and the resulting improvements used to demonstrate the benefits of TQM to other parts of the corporation.
DISCUSSION Because the group involved in this project had, to some extent, internalized the practices of TQM, it was able to start applying them right away toward the solution of an already identified need. As a result, the program could be completed over a period of seven months. The first two were spent defining what the final product should deliver, and how. The next three months were dedicated to the development of the process itself, while the last two were used to implement the process, train users, and incorporate their feedback into the product, in effect completing a second cycle around the "circle of quality." Although the overall project spanned a significant period of time, the people involved only dedicated a small fraction of their time to it (a few hours a week). Yet, by applying the tools of TQM, that time was used very effectively toward the development of a process that responded to a strategic need in a format designed to facilitate and encourage its use. In a different organization, one less familiar with TQM, one would spend more time up front identifying the areas where commitment of time and resources would provide the largest returns, selecting the team members best suited to participating in the program, and providing them with TQM training. One would also assess which way of initiating a TQM program would be best suited for that particular company. One can either embrace the concept at the corporate level and work down through the organization to identify specific projects. One the other hand, one can start with a specific problem and spread the TQM approach
CONCLUSIONS Application of the TQM principles and tools leads to the development of a competitive analysis process that not only fills a need, but does so in a way that takes into account the input and concerns of those that would actually use the process. Six months after the onset of the implementation phase, the database contained five competitors profiles and 384 items of competitive information had been entered into the searchable tables. That amount of information is sufficient to start using the database in support of the strategic planning process, even if its role is partially to point to the areas where more data gathering is needed. The high accessibility of the on-line data led some members of the business unit, not necessarily involved in strategic planning, to realize that the competitive information contained in the database also has value at the tactical level. As a consequence, most employees are motivated to contribute information to the database. Early use of the process has also identified additional features that would further increase its effectiveness, such as automated protocols allowing generation of comparisons between competitors based on the information contained in their respective profiles. The flexible design of the process will allow continuous incorporation of additional features in an ongoing circle of quality. The successful implementation of this competitive analysis process illustrates the benefit resulting from involving employees in the development of processes in
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which they will participate. Seeking their input led to the development of a process that they felt they had contributed to and considered their own. The TQM approach offers tools to gather information from large numbers of employees without requiring a lot of their time, help analyze that information, and incorporate it in a product that will provide (internal) customer satisfaction. From a manager's perspective, the key elements emerging from this case are: • It is the manager's role to insure that the objectives, tasks, and accountabilities of a quality team are clearly defined and communicated. • However, members of the team are internal customers. The more they are involved in the development of those objectives and assignment of those tasks, the more they will support the resulting business process. • Management must be realistic about the amount of time that the team member will need to contribute,
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both toward the development of a new business process and to its operation once implemented.
REFERENCES I. Berry, Thomas H., Managing the Total Quality TransJormation. McGrawHill, New York, 1991. 2. Scholtes, Peter R., The Team Handbook: How to Use Teams to Improve Quality. Joiner, Madison, Wisconsin, 1988. 3. Brassard, Michael, Memo~ Jogger Plus. GOAL/QPC, Methuen, Massachusetts, 1989. 4. Schuler, Randall S., and Harris, Drew L., Managing Quality: The Primer ./or Middle Managers. Addison-Wesley, Reading, Massachusetts, 1992. 5. Porter, Michael E., Competitive Strategy: Techniques for Analyzing Industries and Competitors. The Free Press, New York, 1980. 6. Thompson, Jr., Arthur A., and Strickland, A. J., III, Strategic Management, Concepts and Cases. Irwin, Boston, Massachusetts, 1978. 7. Harkleroad, David, Making Intelligence Analysis Actionable. Competitive Intelligence Review 5(2), 13-17 (1994). 8. Prescott, John E., and Grant, J. H., A Manager's Guide for Evaluating Competitive Analysis Techniques. Interfaces 183, 10-22 (1988).