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Embrace the Business Model That Threatens You | HBR

  
  
  
Embrace the Business Model That Threatens You | Harvard Business Review
By Leonard Fuld | May 22, 2013

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If your company is already well established and has smart management, it is likely that it will become a hybrid in the next ten years, blending its legacy business with a new business model that is rising to threaten it. Take Walmart, for example. After suffering several years of Amazon's online hegemony, Walmart responded with a hybrid approach. Merchandise ordered online can now be drop-shipped for same-day pickup at local stores. This and other creative solutions have driven over $9 billion of online sales to Walmart. (It's no surprise that Amazon — which has no physical stores — has mirrored the move from the other direction, installing lockers in neighborhood stores to allow for direct pickup.)

Entertainment and medicine are other industries where hybrid models are beginning to emerge as resilient success stories. Netflix, formerly a media distributor increasingly threatened by the very entertainment companies whose programming it sells, has begun producing its own original programming (such as the recently released series House of Cards.) According to Netflix, offering popular original programming has attracted its customers to order more items from the rest of its media catalog — a hybrid win-win. The Veterans Administration hospital system has formed an alliance with Bosch Healthcare to offer a more efficient means to monitor and diagnose the elderly or infirm remotely, from their homes.

To understand how strategic logic leads readily to such hybrids, consider the results of a recent war game I helped to stage, in which participants sought winning strategies in one fast-changing sector: the US higher education market. Teams playing the roles of traditional large state and non-profit colleges confronted other teams representing the new Massively Open Online Course (MOOCs) and distance learning enterprises, such as Coursera and The University of Phoenix. At first the teams circled each other in the plenary session, each declaring its position and revealing strengths and weaknesses. It soon became clear to the teams and to the observers in the room that neither the online nor the traditional college "education delivery" model alone could prevail. Traditional brick-and-mortar schools suffer from a high cost base that has resulted in tuitions reaching stratospheric heights. Meanwhile, the alluring proposition of the online offerings — courses you can take anywhere, anytime, at a lower price point — is tainted by high drop-out rates and the somewhat lower credibility of their certificates and degrees.

As the war game evolved, so did the teams' strategic positions. The teams representing traditional schools knew they needed a strong — not just a token — distance learning component. In contrast, the online technology-driven entities sought the revenue stream and prestige the brick and mortar schools enjoyed. Each side appreciated that it needed the other model to grow, and that partnering was the most expeditious way forward, but the combinations had to figure out how they would build revenues and student bases without cannibalizing each other's position. Forced to deal with gathering change in the market and perceiving a need to catch a fast-moving wave before it crested, these teams began arriving at solutions that screamed hybrid, all of them combinations of the two worlds.

One, for example, featured the MOOCs of the world, such as Coursera and the Harvard-MIT joint venture EdX, playing the Netflix courses-on-demand card. At the same time, this solution called for the MOOC to serve as a student lead generator and revenue producer for brick-and-mortar university partners. The MOOC would receive funds from all its partner universities when students who had taken and completed the free online courses actually applied and were accepted into the four-year institutions. At the point of acceptance and enrollment, the universities would pay the MOOC a fee for each MOOC student enrolled. Thus a hybrid concept yielded a win-win for all participants.

Hybrids are not necessarily mergers. Often, one company is grafting on a piece of another's competency to solve a business challenge, without having to buy the entity outright. Both entities can remain intact and both can win in the marketplace. One way or the other, the hybrid approach allows an incumbent to address market shifts without losing the essence of what made it successful in the first place. It turns the threat of disruption and disaster into an opportunity. Instead of the outsider disrupting and destroying the legacy firm, it can pave the way to the incumbent's next strategic position.

Not every company can find or benefit from a hybrid solution. For an indication of whether one is in your company's future, ask yourself a few basic questions. Are there market pressures that we cannot respond to on our own, drawing on our existing model? Are the proposed solutions too far out of our competency range? Is the disruptive offering missing a piece of the strategic puzzle? Is the disruptive firm unable to make its own market soon enough or show a profit? Finally, can we find a combination — through partnership or merger — that will create a whole greater than the sum of the parts each company brings to the table? If at least some of the answers are coming up "yes," then the hybrid approach should be a strategic solution you start working toward — ideally, before your competition beats you to it.

 

Read Original Article Here:
http://blogs.hbr.org/cs/2013/05/embrace_the_business_model_tha.html#disqus_thread

Fuld & Co. Survey Finds the C-Suite Investing in Vital Intelligence Capabilities | Pharma Magazine

  
  
  
Fuld & Co. Survey Finds the C-Suite Investing in Vital Intelligence Capabilities | Pharma Magazine
By Kevin Robinson | April 18, 2013

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The pharma and biotech sector accounts for more than a quarter (27%) of all intelligence spend  – amounting to over $2 million per year - the largest of any industry.

A survey conducted by Fuld & Company, examining budgets and personnel in the competitive intelligence function worldwide, shows that overall budgets are increasing for this capability.  Competitive Intelligence (CI) tracks and analyses the competition so that meaningful information is provided to management to make strategic decisions about how to deal with opportunities and threats.

“Quietly but definitively, companies around the world continue to invest heavily in uncovering one, simple fact for senior executives:  What is my competition going to do next?” said Leonard Fuld, President, Fuld & Company.  “Increasingly, the C-Suite is arranging for direct access to information on competitor activity in real time, rather than burying the intelligence function many layers below within the corporation.”

Among the study’s major findings are

  • Pharmaceutical and biotechnology companies appeared to have only slightly reduced their expenditure in tracking competition.  Even with a slight fall in investment, this sector still represented over a quarter (27%) of all intelligence efforts spending more than $2 million per year, still the largest of any industry

  • Super programmes with multi-million dollar budgets have emerged with relatively generous budgets and lots of influence in the C-Suite.

  • In Asia and in Europe, companies with intelligence budgets of more than $2 million or more did not exist 5 years ago but today represent 2-3% of all intelligence budgets.

  • In North America, programmes that spend more than one-million dollars increased from approximately 5% to nearly 10% of all budgets.

  • Across the board, from Asia, Europe to North America, the surviving corporate intelligence programmes have increased their influence and direct reporting to the C-Suite. All regions report an approximately 5% increase in programmes that report directly to the chief executive’s office.

  • Professional service firms far outshine any other sector with over 28% of the programmes surveyed reporting to the C-Suite. Consumer firms and Technology/Telecom are next with each reporting over 22% of their sector reporting to the CEO, CFO or COO.

About this survey: Last released in 2007 (From Stick Fetchers to World Class:  A worldwide survey of Corporate Intelligence Programs), Fuld & Company’s Global Competitive Intelligence Benchmarking Project surveyed 141 companies from around the world, examining issues such as budget size, staffing, program age and accountability.  In the 5 years since the first the first report was issued, 394 additional companies with a similar profile participated in the study.

About Fuld and Company: Fuld & Company (www.fuld.com), based in Cambridge, Massachusetts, with offices in London and Manila, is the world’s preeminent research and consulting firm in the field of competitive intelligence. Founded by Leonard Fuld, a pioneer and recognized leading authority in the field, Fuld & Company has serviced more than half the Fortune 500 and FTSE 100 for over 30 years. The firm does research and analysis, strategic gaming, intelligence process consulting, and training to help clients understand the external competitive environment.

2013 Global Benchmarking Project Update from Fuld & Company

  
  
  

Fuld & Company's 2013 Global Benchmarking Project Update has just been released and we invite you to download a complimentary copy.

Today’s business climate is challenging for most corporations, with consolidations and downsizing very much a part of the business landscape. It seems the one shining exception is the function of competitive intelligence where particular industries and certain regions have witnessed a surge in large competitor monitoring efforts.

The C-Suite is also paying more attention to vital intelligence than it did five years ago. These findings are based on a five-year update report benchmarking nearly 400 companies from around the globe.

“Quietly but definitively, companies around the world continue to invest heavily in uncovering one, simple fact for senior executives:  What is my competition going to do next?” said Leonard Fuld, President, Fuld & Company. “Increasingly, the C-Suite is arranging for direct access to information on competitor activity in real time, rather than burying the intelligence function many layers below within the corporation.”   

Among the study’s major findings are:

  • Super programs with multi-million dollar budgets have emerged with relatively generous budgets and lots of influence in the C-Suite.
     

  • In Asia and in Europe, companies with intelligence budgets of more than $2 million or more did not exist five years ago but today represent 2-3-percent of all intelligence budgets
     

  • In North America, programs that spend more than one-million dollars increased from approximately 5-percent of all corporate intelligence program budgets to nearly 10-percent of all budgets

  • Across the board, from Asia, Europe to North America, the surviving corporate intelligence programs have increased their influence and direct reporting to the C-Suite. All regions report an approximately 5-percent increase of their programs that report directly to the chief executive’s office

  • Professional service firms far outshine any other sector with over 28-percent of the programs surveyed reporting to the C-Suite. Consumer firms and Technology/Telecom are next with each reporting over 22-percent of their sector reporting to the CEO, CFO, or COO

 

 

We look forward to hearing your thoughts on the report. Please feel free to comment below on this blog post.

Competitive Intelligence Insights Newsletter

  
  
  

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How the biz world took a page from the CIA | Fortune

  
  
  

How the biz world took a page from the CIA | Fortune
By Omar Akhtar | December 20, 2012

Companies use a variety of methods to stay one step ahead of their rivals. Competitive intelligence is one of the fastest growing ways to pull this off.

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Corporate espionage may be illegal, but companies can still keep tabs on the competition. Some large corporations around the globe spend more than $2 million a year hiring outside firms or staffing internal departments to track and analyze the actions and strategies of their competitors. These companies pull this off with the help of public resources and investigative research, a practice collectively known as competitive intelligence (CI).

"Competitive intelligence is gathering information, which is analyzed to the point where you can make a decision," says Leonard Fuld, president of competitive intelligence and research firm Fuld & Company. This includes gathering information about competitor's products, pricing, business culture, and investments, as well as external factors like market conditions and government regulations.

More than anything, CI aims to eliminate surprises. "Companies seem to have been caught off guard more by new and disruptive technologies in the last five years," says Jan Herring, former director of intelligence at Motorola. "As a result, senior management has become more appreciative of gathering intelligence and we're seeing expanded areas of application."

Herring, a former CIA officer, was asked to bring his government intelligence experience to Motorola in the mid-80s. "I believed that, much like governments, multi-national companies were going to need their own intelligence departments to be able to make the right decisions," says Herring.

In many ways, competitive intelligence is as old as business itself. In the late 1800s, the Rothschild family sent its bankers to France to observe banking techniques and adopt the best strategies. However, Herring says the modern incarnation of competitive intelligence took root in the 1980s, pointing to the publication of Harvard Business School professor Michael Porter's Competitive Strategy: Techniques for Analyzing Industries and Competitors. "It was the seminal document that caused everybody to focus on intelligence gathering as a profession," says Herring.

Recession-proof business service?

While businesses have been slashing budgets in the wake of the recession, expenditure on intelligence has actually edged up. A survey of 400 global companies by Fuld & Company reports that in the last five years the number of companies that spend more than $1 million on CI has increased from 5% to 10% of all companies with CI programs.

The pharmaceutical industry accounts for 27% of companies that spend more than $2 million on competitive intelligence, far more than any other sector. "Pharmaceutical companies are probably the best at doing what we do now," says Herring. "Plus there is a lot of public information out there they can utilize." Predictably, the financial services world has seen the largest decrease in spending while technology is the fastest growing sector for CI programs in the last five years.

Pharmaceutical companies (and the outside firms they hire) perform competitive intelligence in a variety of ways. CI practitioners like Fuld attend scientific conferences, often hosted by drug companies looking to generate buzz for their latest product. They keep their eyes and ears open for gossip, insider information, and questions asked by attendees that might lead to a better understanding of what's actually going on in a given industry.

"A lot of times, companies will hire us when one of their drugs is about to be approved for the market and they want to know how the competition will respond," says Fuld. Other points of interest include results from clinical trials, articles in medical journals, and "messaging," the words and rationale companies use to market a drug. Fuld will keep a close watch for news about mergers and acquisitions, government regulations, and anything else that could affect his clients' prospects.

Another strategy is to monitor online voices, especially on blogs and social media. Fuld says Twitter is a great place to glean information about customers' thoughts on a product and how the competition responds to them. "Patients will talk about their experiences, their illnesses, and their needs," says Fuld. "They'll be the ones who bring the drug to market." Companies also use social media channels to send out alerts for their activities, such as notices for participation in clinical trials.

However, the CI industry is still figuring out how to use data from social media. Michel Bernaiche, CI practitioner and interim CEO of the Society of Competitive Intelligence Practitioners, says the amount of information available on social media networks can be overwhelming and thus hard to process. "The amount of information can be cumbersome, and the data analysis is not easily repeatable," says Bernaiche. "It's going to be a huge game-changer if we can figure out how to harness it, but I think we're still a couple of years away from that."

'We're not really spies, promise!'

Both Bernaiche and Fuld assert emphatically that gathering intelligence on the competition is not spying, nor is it unethical or illegal. Fuld says he does not uncover trade secrets, gather dirt, or mislead anyone about his identity when talking to people, so any information gleaned is fair game. He says he also makes sure to avoid the kinds of conflicts of interest that could arise from working for a client's competitor.

A few years ago, corporate investigation and security firm Kroll Inc. came under fire for its work for Texas financier Allen Stanford. Stanford, best known as the mastermind of one of the largest and longest-running Ponzi schemes in U.S. history, hired Kroll to unearth embarrassing information on a senior State department official who was investigating him. Kroll obliged by reporting that the official's wife was a lesbian who had left him for another woman, information that was patently untrue.

Bernaiche admits CI can involve gathering information and doing due diligence on some executives' backgrounds, but not to uncover dirt. "We do it to find out what motivates their decision making and to possibly anticipate their actions," says Bernaiche. "We look into their college background, who they hung out with, what they studied, and their previous decisions, you can often see a pattern."

Fuld says he has received requests to dig up dirt but not in the way one would think. "I had one company who couldn't believe their competitor could be such a low-cost operator," says Fuld. "They seriously asked,  'We think that company is a money laundering front for the mafia, can you please check it out?'" Fuld says that while the mafia didn't own it, he did find out why the company was able to keep costs low.

For Bernaiche, sometimes gathering "intelligence" comes down to making good old-fashioned phone calls. "Marketing departments are great places to get information from," says Bernaiche. "And I've found that sales people love to talk, they love to correct you."

Bernaiche says he will sometimes make an intentionally false statement so that a competitor's salesperson will correct him and give out information in the process. "Sometimes they'll slip up and reveal information, but just because they give you information you're not supposed to have, doesn't mean you can't use it."

 

Read Original Article Here:
http://management.fortune.cnn.com/2012/12/20/corporate-intelligence-gathering-cia/


Health services at Springs Creative include medicine, physicals, flu shots | heraldonline.com

  
  
  

December 3, 2012 | By Don Worthington

The number of on-site clinics nationally is expected to dramatically grow. A study by Fuld & Co., a Cambridge, Mass.-based research firm, estimated that by 2015 there could by 7,000 on-site clinics. Fuld & Co. estimates 10 percent of the U.S. population under age 65 will have its health-care needs met by employer on-site clinics by 2015.

Managing health care costs was a reason Springs Creative, Red Venture and the city of Rock Hill opted for on-site care.

Springs Creative looked at what was affecting its medical expenses and insurance claims, Guilliams said. Care for diabetes, hypertension and other chronic diseases has driven up health care costs dramatically. Companies have found that the sooner a chronic disease is diagnosed, the greater the likelihood that long-term disease management costs can be reduced.

Effective on-site healthcare can reduce employers healthcare costs by 10 to 30 percent, according to Fuld & Co. On-site care can also improve worker productivity. Several studies suggest that companies lose as much as 15 percent of productivity daily because of ill employees seeking health care.

Growth of Onsite Health Clinics
The program can also result in employee savings. Services at the city of Rock Hill’s clinic will be offered at no cost to employees and their spouses and children who are covered by the city’s health plan.

“It was a conscious decision for it to be free. We want to encourage employees to go there,” said Gerry Shapiro, an assistant city manager.

How effective on-site clinics are, in part, rests with a company’s culture, said Betsy Hayden, director of Corporate Health & Wellness for Carolinas HealthCare Systems. “You want your health care provider imbedded into your business culture,” she said.

Battle for Wireless Health Event Videos

  
  
  
A war game is a business simulation that helps a company to understand the present and future behaviors of its competitors. This event demonstrates how powerful this strategic tool is for enhancing management decision making.

April 20, 2012 -- Fuld & Company's 8th annual war game, "The Battle for Wireless Health," stress tested the wireless health strategies of Bosch Healthcare, GE Healthcare, Independa and Medtronic in a market that currently wastes up to $2.5 trillion each year. Business school students from Dartmouth, MIT, Northwestern, and Yale formed teams to role play executives from each rival company. 

Fuld & Company has been helping companies compete in the global marketplace for over 30 years. Its approach to war gaming is highly effective and designed to meet the unique needs of each client. Contact us if you are interested in learning how a war game can engage your executive team and inform their decisions. Please visit www.fuld.com or contacts us at info@fuld.com.
View more videos from The Battle for Wireless Health

Fuld & Company Acquires Outward Insights, Consultants In Intelligence Process and Strategic Gaming | PRESS RELEASE

  
  
  

CAMBRIDGE, Mass., Sept. 5, 2012 /PRNewswire/ -- Fuld & Company today announced the acquisition of Outward Insights, a competitive intelligence firm that specializes in intelligence process and strategic gaming consulting.

"Outward Insights broadens our capabilities to our clients by bringing scenario planning, war gaming and intelligence process design capabilities," said Leonard Fuld, Fuld president. "Additionally, it is led by Ken Sawka who is uniquely suited for our culture as prior to his leading his firm he managed our intelligence process and consulting practice."

"Melding our capabilities with Fuld's deep research and analysis strengths, and global reach, will enhance and accelerate our ability to provide our clients with an understanding of their external threats, business opportunities and strategies so they can achieve a leadership position in their markets," said Ken Sawka.

Outward Insights is a team of intelligence and strategy professionals from leading organizations in the corporate, consulting, and government communities.

Fuld & Company (www.fuld.com) is a Cambridge, Massachusetts-headquartered pioneering firm in the field of competitive intelligence, providing research and analysis and strategy gaming for over 33 years with offices in London and Manila.

Change is in the air between Consumer Healthcare and Food Companies

  
  
  

The Nutraceuticals industry has finally emerged - and threatens to destabilize both the traditional packaged food and consumer healthcare industries. We have witnessed enormous pressures in both industries – for example, by private label brands and eroding margins. Fuld’s research shows how two industries combining under pressure is opening a door for nutraceuticals:

 

Fuld & Company has delivered research for consumer healthcare and consumer packaged goods companies for over 30 years, yet we rarely see a relatively new category develop. As pharma’s core business is threatened by generics and increasing competition, can consumer healthcare opportunities, such as nutraceuticals, help reignite growth? Will consumer packaged goods companies better understand this market opportunity and assume first-mover advantage?

We encourage your feedback and to join the conversation below.

Leonard M. Fuld

President

Nutraceuticals: 'Designer Foods' to Grow Through M&A Activity | Pharma Magazine

  
  
  

‘DESIGNER FOODS’ TO GROW THROUGH MERGERS AND ALLIANCES BETWEEN GIANT CONSUMER COMPANIES AND THEIR PHARMACEUTICAL COUNTERPARTS

Scientific rigour and demand for personalised foods will drive these partnerships

 

A business war game contest on Monday 30th April between Oxford University’s Saïd  and Cambridge’s Judge Business Schools, run by Fuld & Company[1] predicted the outcome of the so-called ‘Battle for Designer Foods’ (nutraceuticals).

 

The world of food is about to change, and the companies represented by the MBA students in the war game (Abbot Nutrition, Danone, GlaxoSmithKline and Nestlé) are amongst those that will be part of the revolution.  It is uncertain whether consumer packaged goods or pharmaceuticals will take control of this new space.  Can the food companies complete against the pharmaceutical companies, some of which are moving back into the PPTC market, including the nutraceuticals business?  Pharma companies, looking for growth opportunities as drug patents expire may be better-equipped to endure the costly and time-consuming clinical trials for products.  So which industry – food or pharma – and which companies, were best-positioned to win “The Battle for Designer Foods”?

 

A strategy game, or ‘War Game’, is an enlightening and engaging analytical exercise that can lead to truly creative strategies. Briefly, two sets of MBA student teams represented the companies mentioned. Working in breakout rooms they created a picture of the company and developed strategic options it expects to pursue.  The teams reassembled and presented their company’s marketing strategy.  Teams, judges and observers had an opportunity to analyse and critique each others’ strategies.  Based on what they learned they retreated to their breakout rooms to refine their strategies then returned for a further critiquing session. 

 

The facilitators then offered a fictional but plausible surprise event for the teams to consider.  At that stage, they could talk to each other if they wished, and negotiate deals.

 

One of the war game’s predictions include the fact that giant consumer packaged goods companies are likely to join forces with their pharmaceutical counterparts to catapult the nutraceuticals (Designer Foods) business in Europe and in the U.S. into a major market, projected to be worth $250 billion in just a few years.  With the European Food Safety Agency beginning to regulate designer foods, the war game arguments made it clear that this category will be subject to increased regulatory scrutiny on both sides of the Atlantic, requiring some of the clinical trial expertise and capabilities pharmaceutical companies bring to the market with consumer companies adding their knowledge of customer segmentation and mass market resources.   

 

“We are confident about this prediction, as past competitions have accurately forecasted events and competitive activities in a number of industries,” commented Leonard Fuld, Fuld & Company president. “This is the ninth such event run in as many years and the first between these universities with a centuries’ old rivalry. “

 

In addition to the above general prediction, other key insights emerged, including:

 

  • Tailored foods will be coming to a grocer near you: A ‘One size fits all’ model will be supplanted in the future nutraceuticals market.  Consumers present many nutritional challenges and will require companies producing variety in their nutraceutical portfolio to fulfill the need for each consumer segment.

 

  • Regulators will impose stricter requirements, forcing producers to demonstrate either a product’s efficacy or health claims:  At the moment, the designer foods industry offer products that do not require them to put their products through advanced, scientific testing to prove more than the basic health claims.  As the interest of companies in designer food products increase, companies will migrate to issuing products that may contain compounds offering specific medicinal value – for example, treating diabetes or cardiovascular disease.  While the games’ judges cited the difficulty in adding drug compounds to foods because of dosing and other issues, companies that do seek to differentiate with drug-like treatments to achieve higher value and possibly higher prices for products in this category will find regulators likely to require firms to conduct rigorous and far more expensive clinical trials, which is not the case at the moment – particularly for designer foods sold by consumer package goods companies.

 

  • The greatest advances in designer foods will come from firms with highly focused objectives and highly focused portfolios:  The game exposed the fact that the large multinational players are likely to be at a disadvantage by having to manage too wide a portfolio of products, not allowing them to focus on the designer foods segment.  Smaller – perhaps start-up companies – will be the ones to discover breakthroughs in this industry sector.

In the Designer Foods War Game Fuld conducted in the United States in 2011 on the same topic risk, or fear of risk, was a central theme but this was less of a discussion point among the Oxford-Cambridge participants.  In the Oxford-Cambridge game, teams demonstrated some concern about the risk of investing in functional foods but chose instead to form alliances and propose acquisitions. 

 

Full Article Here: http://issuu.com/via-media/docs/pharma_ja_12_digital?mode=window&backgroundColor=#222222

 

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