New Leader Focus Area — Competitive Position

Per earlier posts (herehere, and here), I’ve been thinking about what goes into taking over a new organization.  This post takes a look at competitive analysis via benchmarking.  Benchmarking is always useful, though I’m always wary of getting too hung up on one’s competitors.  I don’t have any particular comment on the eight questions from the HBR New Leader article, but you might want to look at the strategy outline on the QuickMBA site (here):

  • How do you and your competitors compare in terms of returns on assets and relative market share?
  • How are the leaders making money, and what is their approach?
  • What is the full potential of your business position?
  • How big is your market?
  • Which parts are growing fastest?
  • Where are you gaining or losing share?
  • What capabilities are creating a competitive advantage for you?
  • Which ones need to be strengthened or acquired?

New Leader Focus Area — Customer and Profit Pools

Per earlier posts (here and here), I’ve been thinking about what goes into taking over a new organization.  In my last post on this topic, I may have given the impression that costs and prices should be one’s main focus. 

To that end, this area is one that I’ve neglected — the HBR New Leader article wisely emphasizes looking at customers up front.  In a past role, I spent too much time working cost, price, and process issues.  When I finally got to the customers I realized that I had left considerable revenues and profits on the table.  

  • Which are the biggest, fastest-growing, and most profitable customer segments?  This should tell you whether you’re in the right segments.
  • How well do you meet customer needs relative to competitors and substitutes?
  • What proportion of customers are you retaining?
  • How does your Net Promoter Score track against competitors?  There are a number of doubts about this specific methodology, but a systematic look at loyalty scores — and the reasons behind loyalty or switching behaviors — is essential.
  • How much of the profit pool do you have today?  How is the pool likely to change in the future?  Again, the authors are from Bain and are referencing a Bain-aligned approach.  On the same topic, I recommend this book on Strategic Cost Management by a business school professor of mine.  Shank and Govindarajan introduce some great tools for looking at the value chain.
  • What are the opportunities and threats?  Opportunities and threats to WHAT?  Use the preceding questions to focus the SWOT analysis.
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