Preparing and Using Business Maps to Help Develop More Effective Strategy

1. Preparing and Using Business Maps toHelp Develop More Effective Strategy Participant Guide Jay Kurtz President, KappaWest Inc. 2008 National Conference February 26, 2008 Project Code: ASP-NC0208 Prepared : February, 2008

2. Foreword This Participant Guide has been prepared to support the Business Maps seminar/workshop conducted by Jay Kurtz of KappaWest during the ASP 2008 National Conference. It is intended to be used as a learning aid during the program and as a valuable (we hope) post-program reference. Given the very limited time available, this document and the session itself covers only a very limited range of Business Maps that an organization might use. However, we believe they will demonstrate the great value of Business Maps and the importance of using them to develop more effective business strategies at several levels. Those participants interested in learning more about how Business Mapping might be used to help their organizations are encouraged to contact: C. Jay Kurtz President KappaWest, Inc. Office: 714-259-0680 Facsimile: 714-259-0681 E-Mail: JayKurtz@kappawest.com i

3. Contents - 1 Misc. Maps Program Purposes Program Agenda Setting the Stage Data…Information…Intelligence Levels of Planning Red Path vs. Green Path Planning Position vs. Room to Maneuver What is a “Business Map”? Types and Levels of Business Maps Types and Levels of Business Maps – Continued Market and Competitive Map The Basics Market and Competitive Map – Example 1 Example 1 – What Does it Tell Us? Market and Competitive Map – Example 2 Example 2 – What Does It Tell Us? Advanced Market and Competitive Mapping Techniques Looking at the Same market from Different Perspectives Creating and Using the Market and Competitive Map Using the Map to Support Triage Using the Market and Competitive Map to Support a Business Wargame Team Task A Menu of Segment Strategies Menu of Segment Strategies (Continued) What Should Competitor Blue’s Strategy for this Market Involve? Decision/Selection Map The Basics 5-11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 iii

4. Contents - 2 Decision/Selection Map – Example 1 Example 1 – What Does It Tell Us? Decision/Selection Map – Example 2 Example 2 – What Does It Tell Us? Menu of Opportunity Strategies Preparing and Using the Decision/Selection Map (Segment Level) Using the Decision/Selection Map to Support Triage Using the Decision/Selection Map to Support a Business Wargame Team Task B Putting It Al Together Questions? 39 40 41 42 43 44 45 46 47 48 49 iv

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12. Program Purposes To demonstrate how Business Maps can be used to display a large amount of data and information in a way that facilitates the development of intelligence that can be used to develop more effective strategic and operational level plans. 12

13. Program Agenda Introduction Setting the Stage Team Task A Market and Competitive Map Team Task B Decision/Selection Map Putting It All Together Conclusion 13

14. Setting the Stage Four Key Concepts: • Data…Information…Intelligence • Levels of Planning • Red Path vs. Green Path Planning • Position vs. Room to Maneuver 14

15. Information } A.O } Brown } A.O. A.O. Green Blue Green A.O. } A.O. Blue Blue Green Red Brown Red A.O. Green Blue Brown A.O. A.O. A.O. Red Blue A.O. Blue A.O. Red Brown Brown Blue Red Green Red Blue Red Data Information Intelligence • Raw, random, “bits and pieces” • Dangerous to use in isolation or out of context • Pictures, patterns, trends, maps, etc. generated by processing enough confirmed data. • The product resulting from a rigorous analysis of information in the context of a mission. Data…Information…Intelligence Mission Data • Intelligence • Opportunities • Obstacles • Risks…Threats Jan. 15 Processing Analysis .627 Peter Jones New Product Insights Experience Smarts A Business Map displays data, in the form of pictorial or graphical information that makes it much easier to generate actionable intelligence. 15

16. Levels of Planning Vision and Grand Strategy • Why we are in this business • Key stakeholder expectations to be satisfied • Where this plan fits in bigger picture Strategy • What we will aim to achieve to satisfy our stakeholders • What goals … in what market(s)…with what portfolio • The “Four P’s” Operational Level Plans • Critical linkages between strategy and tactics • Focuses on the “sub whats” … positions in key market segments • Who … when … where … coordination • Specific objectives … e.g. sales or market share Tactical Execution • How we will execute at the front-line levels • May vary from situation to situation • Near term targets Business Maps can be prepared to support planning at any level. 16

17. Organization & Resources Future Reality • “Wiring diagram” • Existing products • Capabilities • Culture • Relationships • Systems & procedures • Technologies • People Red Path • Markets • Channels • Customers • Stakeholder’s expectations • Goals • Competition • Other “uncontrollables” Business Plan Green Path Red Path vs. Green Path Planning A Business Map will help significantly in understanding the “future reality”, so that proper Green Path planning can be undertaken. 17

18. Brown Early Maturity Birth Red Blue Red Green Black Green Maturity … Rebirth Childhood Red Brown Red Black Blue Turquoise Yellow Green Adolescence Old Age … Childhood Brown Red Brown Red Blue Black Turquoise Green Black Pink Position vs. Room to Maneuver Several forms of Business Map can be prepared to show Relative Competitive Position and Room to Maneuver, segment by segment, across a whole market. 18

19. What Is a “Business Map”? • Graphical representation of a large amount of data in a format that makes it much easier to generate actionable intelligence to support planning. 19

20. Stakeholder Map Market and Competitive Map Market Segment Map • To help identify and to develop strategies to deal with: • Unmet or changing stakeholder concerns • Ineffective prioritization of efforts • Critical stakeholder conflicts To help develop strategies to win in the “future reality”. Can be applied at the corporate, divisional, local or product levels. Very useful in helping to set goals and objectives for important market-related efforts. To help develop strategies and operational level plans to achieve goals and objectives set for particular market segments. Types and Levels of Business Maps Business Map Application 20

21. Territory Map Key Account Map Decision/Selection Map To help develop strategies and operational level plans to achieve goals and objectives set for particular sales territories. To help develop strategies and operational level plans to achieve goals and objectives set for particular key accounts. To help develop strategies, operational level plans and tactics to win major orders. Types and Levels of Business Maps - Continued Business Map Application 21

22. Market and Competitive Map What Is It? A graphic portrayal of the present and anticipated future reality of a designated market, segment by segment, in terms of: • Current size • Share held by each competitor • Minimum anticipated growth or decline • Maximum anticipated growth or decline What Is It Used For? • Anticipating the need to change overall market strategy • Setting operational level goals and objectives • Re-allocating priorities, budgets, resources, efforts, etc. • Planning new and upgraded products and services • Determining new intelligence missions 22

23. The Basics 23

24. Segment Size A B C D E F G H I J Segment Market and Competitive Map – Example 1 24

25. Example 1 – What Does It Tell Us? • The Market is probably in Adolescence or Early Maturity. • Blue and Red are “Shared Leaders” in the overall market, but their positions vary significantly from segment to segment. • Some segments are well-understood, but others are not. Think about: • Who is best positioned for growth? • Who is probably doomed without a major strategic change? 25

26. Market and Competitive Map – Example 2 Segment Size A B C D E F G H I J New Segment 26

27. Example 2 – What Does It Tell Us? • The market is at least Mature and might be approaching Old Age. • There is now a “Clear Leader” • There are still some opportunities to grow, but … • The total share held by “All Others” is quite small. Think about: • Who is best positioned to survive? • Who appears to be doomed? 27

28. Advanced Market and Competitive Mapping Techniques • Three-dimensional maps ... e.g. to show changes over time • Inter-segment cannibalization • Multiple segmentation schemes • Multiple “Segment Size” measures, e.g. - Sales dollars - Number of orders ... or prescriptions ... or contracts or ................ - Unit sales - Number of customers - Total doses ... or lines ... or people-days or …………. 28

29. C NW SW NE SE NC SC Geographic Segments Looking at the Same Market from Different Perspectives 29

30. Creating and Using the Market and Competitive Map Situation Strategic Mission Data Maps Needed Intelligence Mission Maps Gaps Analysis Intelligence Operational Plans Planning Execution 30

31. Using the Map to Support Triage Primary Focus Secondary Focus Triage Abandon or Ignore Triage Criteria • Higher level strategy • Mission • Capabilities • Potential Contribution • Competitors’ Intents • Etc. 31

32. Additional Rounds After Action Report Using the Market and Competitive Map to Support a Business Wargame Profiles Set-Up Starting Maps Round 1 Market and Umpire Team Analysis Team Outputs Updated Maps Market and Umpire Team Analysis Team Outputs Updated Maps Intelligence Summary 32

33. Competitor Primary Attention Secondary Attention Abandon or Ignore Team Task A Triage the market shown in the previous graphic from the perspective of each competitor. The relative marketing strengths of each existing competitor are: Assume “Newbie” is a powerful new player looking at entering the market Blue 10 Red 9 Green 6 Brown 5 Newbie 8 Blue Red Green Brown Newbie 33

34. Menu of Segment Strategies Strategy Applicability…Description Direct Offensive Grow within a segment by attacking a competitor’s existing base of business. This approach is usually applicable in a segment in which there is little room to maneuver, and in which the aggressor has significantly more power than the “defender”, i.e. the competitor whose position is being attacked. Flanking Offensive Grow within a segment by winning much more of the “growth” in it than do competitors. This strategy requires lots of room to maneuver and both the will and power to sustain growth at a rate significantly greater than the pace set by the competition and of course … much faster than the segment’s average growth rate. Probing Offensive Attack a competitor’s position within a segment to determine how willing and able it is to defend it. If the reaction is weak and profitable share can be gained at low cost, progress to a Direct Offensive. If the competitor reacts strongly, back off. This approach is normally used only in less important segments. Active Defense Invest in protecting position in a segment before a competitor threatens it. While near term profitability will be lower, competitors might be discouraged from attacking this segment, helping to ensure longer-term profits. This strategy is applicable in segments in which a company holds Clear Leadership and which are important to its overall market position. Passive Defense React only to a competitor when it makes a strong move against position in a segment. Some loss of share is likely until the defense is activated and effective. However, no near-term costs are incurred until or unless a defense is necessary. Consider this strategy in less important market segments to avoid spreading defensive resources too thinly. Guerrilla Conduct unconventional but low cost attacks in a competitor’s base within a segment to force it to tie up disproportionate resources to protect it. One unit of guerrilla effort can often force a competitor to invest five to ten units to protect a segment ... resources that are not available then for use elsewhere. This approach is almost always used as a complementary strategy to support a bigger picture campaign. 34

35. Menu of Segment Strategies (Continued) Strategy Applicability…Description Reconnaissance Conduct concentrated market and competitive intelligence within a segment to learn much more about it before making a major commitment to another strategy. Feint Make an apparent move into a segment but without a real intent to achieve much within it. The purpose of the strategy is to try to encourage a competitor to invest resources to keep up, and/or to disguise a strategic move into another more important segment. It is usually applicable only in less important segments. It can also create problems by confusing the market and one’s own company as much or more than the competitor. Scorched Earth Withdrawal Move out of a market segment slowly, giving up share to competitors in the process, but making them pay dearly for every point of market share they take. This approach is applicable only when the segment is largely saturated, the company has a sufficiently large share to be noticeable in the first place, and one or more competitors desperately want to improve their position within the segment. Bug Out Withdrawal Move out of a market as quickly and cleanly as possible. This move might involve selling one’s business in the segment or executing a spin-off. It is usually applicable in those market segments that are less significant and are not expected to become strategically significant. Alliance Effect an acquisition, merger or some other form of partnership with a competitor or other appropriate ally within one or more segments. 35

36. What Should Competitor Blue’s Strategy for this Market Involve? Segment Strategy A B C D E F G H I J Other Ideas? 36

37. Decision/Selection Map What Is It? A graphic portrayal of the present and potential future reality of a situation at the Market Segment or Major Sales Opportunity level that shows for example: What Is It Used For? • Planning segment-specific market strategies • Planning opportunity-specific sales strategies and tactics • Identifying fixes needed • Identifying critical intelligence gaps • Evaluating “Can Win/Will Win” probabilities • Market Segment • Relative importance • Decision/selection criteria • Drivers vs. satisfiers • Evaluation of each competitor relative to key “thresholds” • Potential evaluation of each competitor • Major Sales Opportunity • People involved and their logical roles in the decision/selection process • Decision/selection criteria • Drivers vs. satisfiers • Evaluation of each competitor relative to key “thresholds” • Potential evaluation of each competitor 37

38. The Basics Criterion A factor considered by a market segment, or an individual involved in a major sales opportunity when evaluating a product or vendor. Threshold • The level of satisfaction that a particular product or vendor has achieved, relative to a particular criterion in the mind of a segment or individual. Typical thresholds are: • Toleration – “I don’t like it, but I can live with it if there is nothing better”. • Satisfaction – It’s good enough to meet my “Satisfier” requirements”. • Superior – This exceeds my basic requirements (and if related to a “Driver” criterion), will make me favor this product or vendor”. Logical Roles Sponsor – Needs/wants the product or service and has the clout to make it happen. Decision-Maker – Has the authority to evaluate alternatives and to select a product or vendor … subject to approval of the … Approver – Has the power to veto a decision made by the Decision-Maker. Influencer – Has an interest in the selection, opinions relative to some criteria and ability to influence the Decision-Maker and/or Approver. Source – Can provide useful data/information about the decision/selection process. 38

39. Current Status Notes Decision/Selection Map – Example 1 Decision/Selection Map Segment Name: Demographic Group C Updated on: Mar. 15 Prepared By: Market Research Team Importance Level: 2 Criterion Driver or Satisfier? Competitor Features D Us Red Blue Front-end cost S Us Red Blue Life Cycle Cost D Us Red Blue Vendor Reputation S Us Red Blue Customer Support S Us Red Blue D = Driver … “More is better” S = Satisfier …”Good enough is OK” Satisfaction Threshold 39

40. Example 1 – What Does It Tell Us? • Red will win most of the segment • Blue will win very little • Our strengths are only “Satisfiers” Think about: • What should we do to improve our position? • What will Red try to do? • What should Blue try to do? 40

41. G S T Decision/Selection Map – Example 2 Decision/Selection Map Opportunity: Project NEWTON Updated on: Mar. 15 Prepared By: Pursuit Team Alpha Importance Level: 1 Stakeholder Role Criterion Driver Or Satisfier Competitor Current Status Notes HOLDEN, George SVP systems App Vendor Reputation S Us Blue Red Vendor Commitment S Us Blue Red ? ? ? User Acceptance S Us Blue Red ? ? ? ANDREWS, Susan Director, Major Systems DM Sp Confidence in Vendor D Us Blue Red ? Technology S Us Blue Red Price/Budget S Us Blue Red ? CORTEZ, Ric Project Team Leader Inf Technology D Us Blue Red Vendor Support ? Us Blue Red ? ?? ? Us Blue Red ? ? ? Role Codes Sp = Sponsor DM = Decision Maker App = Approver Inf = Influencer Status T = Tolerable S = Satisfaction G = Good…Superior D = Driver … “More is better” S = Satisfier …”Good enough is OK” 41

42. Example 2 – What Does It Tell Us? • Blue is leader in the Decision-Maker’s opinion • There are significant intelligence gaps: • Approver’s opinion’s • Red’s positioning • Influencer’s opinions • We need to act to change opinions Think about: • Actions relative to Approver • Actions relative to Decision-Maker • Actions relative to Influencer 42

43. Optional Strategy Appropriate when…. Menu of Opportunity Strategies Improve position relative to competitors Lower threshold Raise threshold Add a criterion Eliminate a criterion Change Driver to Satisfier Change Satisfier to Driver Change Role Add an Individual Eliminate an individual 43

44. Preparing and Using the Decision/Selection Map (Segment Level) Market, Competitive and Internal Data Market and Competitive Map Analysis Intelligence Missions Decision/ Selection Maps Key Segments Business Wargame ? Analysis Intelligence Summary Segment Plans Operational Level Planning Execute 44

45. Using the Decision/Selection Map to Support Triage Primary “Must Do” Actions Mission Decision/Selection Map Secondary “Could Do” Actions Intelligence Summary Triage Analysis Menu of Possible Strategies Ignore or Abandon • Key opportunities • Significant obstacles • Risks and threats • Needs 45

46. Using the Decision/Selection Map to Support A Business Wargame Decision/ Selection Map Analysis Key Concerns • Wargame Preparation • Teams • Profiles • Etc. Business Wargame Updated Decision/ Selection Maps Decision/ Selection Map Analysis 46

47. Team Task B Consider the opportunity shown in the previous graphic and suggest what each competitor will try to do. Competitor Suggested Actions Us Blue Red 47

48. Putting It All Together Higher Level Mission Available Information Intelligence Need Assessment Intelligence Mission(s) Sources • Market research • Customer contacts • Competitor intelligence • Internal info. • Consultants • Etc. Data/Information Collection Missing? Actuals? Maps Mapping Analysis Intelligence Summary Planning and Execution 48

49. Questions? For further information about any aspect of Business Mapping or Wargaming please contact: Jay Kurtz c/o: KappaWest, Inc. Telephone: 714-259-0680 Facsimile: 714-259-0681 JayKurtz@kappawest.com 49