I’ve been thinking about what makes a good business analyst, and in general the soft knowledge is harder to pick up in many cases than explicit knowledge like accounting or marketing. To that point, here are a few of the rules of thumb I try to follow. None of them is particularly sophisticated, but I include them because they are the issues that people tend to neglect when rushing to finish a project or a deliverable. These more ambiguous thought processes are often what separate good analysts (and for that matter decision-makers) from great ones.
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Now that we’ve taken a closer look at analyzing cost advantage, let’s turn to differentiation. The topic is a complex one, and to be honest, Porter’s organization of it can be a bit haphazard and difficult to follow. I want to walk through the thought process in this post. Once we have that foundation, the next post in the series will take a closer look at Procter & Gamble. Continue reading Competitive Advantage by Michael Porter, Part 4 I wrote about my hypothetical Twitter customer segmentation recently, and I thought I’d follow up with a rough stab at a market sizing for Twitter advertising. The exercise is helpful one for thinking about Twitter’s business model and potential revenue, even if some of the numbers are placeholders. Continue reading A Twitter Market Sizing For some reason, many of the CEOs at my previous consulting clients like to review their companies’ results on a daily basis using top-line metrics. How many widgets were sold, how many hospital beds are full, etc.? If yesterday’s numbers for a particular product or location are down, they often go into fire-fighting mode and spend time trying to figure out what happened, talking to the relevant manager, and planning a response. This kind of monitoring can be useful to flag sudden problems, but it’s mostly a big time sink. More importantly, it doesn’t provide any substantive insight. You feel like you’re keeping track of the state of the business, but mainly you’re just going through the motions. Looking at high-level numbers provides no deeper understanding into why the business is performing a certain way and can even be misleading. Not that I don’t do the same thing. I get far too fixated on the visitors and page views for this blog at times. So what should you do instead? Well, business intelligence, as it’s called these days, has matured into its own vast (and expensive) field, but here are a few thoughts to start with. Continue reading Look at Business Drivers, Not Just Results I’ve been doing a series on Michael Porter’s Competitive Advantage book and the value chain analysis framework. Specifically, I’m using Clorox, Procter & Gamble, and Method Products to provide slight more concrete examples of Porter’s generic strategies and how to analyze them. The value chain is an odd framework in that Porter uses it to conduct at least two different analyses, for cost advantage and differentiation. The value chain approach to disaggregating what a company does is similar in both, but from there the two analyses diverge. In this post, I’ll be doing a deep dive into cost analysis. This type of work is especially important for figuring out whether a competitor has a true cost advantage (one of Porter’s generic strategies) and also for analyzing your company and competitors in general. In my last post, I held Clorox up as an example of a cost leadership strategy, but I have realized since that I was wrong. The company is actually pursuing more of a differentiation strategy. See the Clorox background section below for details. Nevertheless, let’s use the company as an example for a cost analysis. Along the way, we’ll also compare them with Procter & Gamble and Method Products to continue to add more depth to our understanding of the overall value chain analysis. This post is a long one, so my feelings will not be hurt if you choose to skim it. Think of it as a reference work. Continue reading Competitive Advantage by Michael Porter, Part 3 |
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