Early Warning

Traditional early warning and scenario analytical techniques can be too strategic, built to identify a new competitors, technologies and relegations, focussed on successfully isolating major long term shifts.

A difficultly emerges when they are applied tactically dealing with issues such as pricing, tackling new promotion campaigns and product launches.

You need to know about positive and negative situations that can affect your company and be in a position to do something about it to avoid damaging your ability to compete or been left behind when you could have been first to market.

STEEP analysis and other similar models can deal with long term strategic issues but the following will assist you in forming an excellent Early Warning Process.

Step 1   -              Player identification

• Map out your competitive environment.
• Who do you want to keep an eye on?
• Who are the likely future competitors?
• Prioritise the importance of these competitors.
• Which of your competitors use and interact with your suppliers?

Step 2   -              Define and prioritise situation

Once you have isolated the players in your field of expertise set the actual situations you wish to monitor.

As discussed, as pricing, tackling aggressive new promotion campaigns and product launches are the common situations but  budget depending, you have to determine which situations you can monitor.

Take each competitor in turn and conduct an assessment of the impact they have on your company and your current/future performance. The greater the impact the higher the priority to monitor.

Step 3   -             Isolate major indicators

Once you have isolated situations you need to be aware of you need to isolate the indicators that will inform you of any changes to these situations.

It is likely that each competitor/supplier will have different indicators and share indicators for each situation even if they are involved with the same product.

For instance, one of the competitors may use a distribution supplier which is slower and more expensive than yours. Discussions with that competitor and your superior distribution supplier would be a major indicator for you.

Step 4   -              Monitor

Delegate throughout the organisation to departments who are best placed to find the information easily and have a full understanding of the indicators.

• Any requests for information about indicators must be specific and clearly defined.
• Think about sub contracting the collection efforts to a third party, such as our selves.
• Primary and secondary sources to be updated and revised in terms of quality of information on a regular basis.
• Enter the information onto a single source, either CI software or a simple spreadsheet

Step 5   -              Analysis

It is usual for observation to produce a limited amount of usable information about the situations you are monitoring.

Analysis is the process that turns this information into usable intelligence.

Analytical techniques such as “Competing Hypothesis” (Heur 1999), Scenario Analysis or the introduction of a War Gaming exercise are recommended.

Step 6   -             Decide and take action

The early warning analysis isolated intelligence will produce a number of valid indicators. Once these indicators have been monitored further and validated, you will be in a position for your management team to predict a rival’s next move.

For each analysed indicator you need to define a number of options for action for each of your indicators.

For instance, if rival X purchases X product please let us know straight away and you will have predefined associated actions (no more than 4) to take place.

One of the actions is of course to do nothing.

Your options for actions should be decided by considering the following process:

• A description of the situation.
• The likely impact of that situation could have on your company.
• Recommended actions by your management team.
• The strengths and weaknesses of your team recommended actions and the other alternatives.
• Most importantly, the possible response by your competitors.

Step 7   -              System review

Once you have completed the process and realise the the objective of it all is to avoid surprises, take effect decisions and actions, it is essential that you (what ever the result) appraise your teams.

You need to determine what they did well and what they could have done better.