16: Step 4 - Analyze
Ideally, the previous step will have provided a large number of ideas, and the goal of this step is to choose ones to pursue. You should at least consider every idea - though it is impractical to take the time to rigorously analyze and test them all. So there is a winnowing process that helps to identify a few worth pursuing.
If you have developed a hundred ideas, which is by no means unreasonable, and spend five minutes considering each of them, then you will move at a rate of 12 ideas per hour - or eight hours and twenty minutes, working at a constant speed without breaks - just to make the first cut.
Chances are that after about two hours, you mind will begin to go numb, and after four hours people will grow tired of the exercise. Someone will state, "Look, we have enough, let's stop talking and start doing something" and every other idea will be either abandoned or given short shrift. The winning idea might be the last one on the agenda to discuss.
Find Disruptive Ideas
When assessing ideas, people tend to like things that seem easy, safe, or familiar. Which is to say that they avoid things that seem difficult, risky, and novel. So the typical behavior is to choose things that are easy to do and carry low risk.
There is nothing inherently wrong with choosing the safe path and trying to make a quick buck with little effort, but it does not lead to a sustainable strategic advantage. The most obvious ideas have often occurred to the competition as well, and to pull ahead you need to find an idea they have not.
Dell's direct-to-consumer sales and Southwest's budget airline models were disruptive ideas that took their competitors decades to imitate or counteract. Their competitors did not recognize these as being simple and rewarding plans, and were resistant even to investing the time to consider the potential rewards of such unusual maneuvers.
So first, ask these questions:
- Is this an easy idea to execute?
- Does it carry low risk?
- Do we have the capabilities?
- Can it be done quickly?
- Does it cost much?
Then - and this is the more difficult part - ask the same questions of your competition. If it's easy for you and easy for them, it will create no competitive advantage. If it's easy for you and hard for them, it has definite potential.
(EN: The author skips the last one: if it's hard for you but easy for them. This is where you should pay attention, because it's likely how your competition is going to beat you.)
Criteria for Assessing Advantage
The author proposes "four Cs" to assess whether an idea has an advantage - which is to say, how quickly it will take for the competition to copy you and commoditize the plan.
- Conceive - How long will it take the competition to conceive of the same idea? If it's obvious, they probably already know about it. And the moment it hits the market, the will be aware but they will not fully understand it - they will catch up quickly.
- Consider - Once your competition learns your idea, will they even consider it? Some of the best ideas are those that the competition laughs at and refuses to take seriously, because this delays them taking action to imitate it.
- Choose - If your competition is willing to consider the idea, are they likely to choose to imitate it? Those who analyze the idea may not understand its potential and dismiss it, which happens quite often: a competitor decides that it's not a good idea, or not in their business model, and purposefully decides not to follow a strategy that will ultimately win.
- Can't - In some instances, you can devise a plan that your competitors can't copy: they don't have the resources and cannot purchase them, or are protected by patents from even trying. In some instances, a long enough lead will block them, as you build economies of scale and win customer loyalty.
The more of these criteria you meet, the greater your chances that the competitors will be left far behind: by the time they wake up, you will already have won.
Classifying Ideas
The notion of a binary evaluation, a yes/no assessment of whether an idea is worth pursuing, instead categorize the ideas into five categories:
- Tactical Moves - Ideas that are very easy to execute, and have the ability to generate a little profit with a little risk, but which can be easily copied by competitors. You can dedicate some resources to implementing these immediately.
- Winning Moves - Ideas that are disruptive and will be difficult for the competition to imitate. These merit further exploration, as they will ultimately become your strategic advantages and game-winning plays.
- Time Wasters - Ideas that are disruptive, but do not seem very profitable and are difficult to achieve. Many initiatives fall into this category, and require a lot of effort to achieve small results. They are not bad ideas, but your resources are better spent elsewhere.
- Unattainable Ideas - Ideas that are difficult, but could lead to significant strides. In particular, these are ideas that cannot be done at present because the firm does not have the resources (infrastructure and technology) to pursue them. While they cannot be executed, they should be watched for when conditions change and the idea becomes attainable.
This classification system means that nothing is ever completely rejected - the last two categories sit on the bench, waiting for a time when it will be possible to pursue them - and perhaps research and development can come up with a way to more efficiently accomplish a time-waster, or overcome the barriers that make an idea unattainable.
The unattainable ideas are of particular interest, because very often what is unattainable for you is attainable for a competitor (which spells trouble) - or if you can revisit them and find a way to implement them, they will be the ideas that competitors will be unable to easily imitate.
So do not dismiss the time-wasters or unattainable ideas. Select a few of them and discuss how they could be made feasible. Very often, a winning competitive move that takes the market by storm comes from finding a way to do what most consider to be impossible.
So in your planning process, consider the following:
- Identify the best tactical moves and devote some resources to quick wins, but do not allow these to consume your best and brightest people.
- Identify the winning moves and put your best minds on them, and make plans for execution
- Pick a few of your best time-wasters and unattainable ideas and put some bright people on brainstorming to overcome obstacles
The Exercise
The exercise for this chapter is fairly straightforward:
If your ideas from the previous step are post-it notes, then place them on a matrix: how profitable are the ideas (or how much impact will they have) on one axis, how easy they are for you to execute on the other.
The high-impact high-ease items become your tactical maneuvers - worth pursuing but not strategic. Hand them off to execution.
The high-impact low-ease items become fodder for strategic planning. Classify them as winning moves, time wasters, and unattainable ideas.
Take at least two of the time wasters and unattainable ideas and brainstorm whether they can be made more feasible. Add them to the winning moves if you can overcome the obstacles.
Winnow the winning moves to the best three to seven, according to how quickly you believe your competition can copy you. Those will be your "game plan" for a strategic maneuver.