Week 3 Theme: Analyzing the External Strategic Environment and Evaluating Industry Dynamics

               Coming directly from a healthcare startup, I observed the fanfare of our executives’ strategy sessions with disillusionment. It seemed that from the beginning, the company’s leadership took for granted that our business plan was innovative enough to render a thorough market analysis a waste of time. This mindset continued to prevail as the company aged out of truly being a “startup” and continued to struggle to turn a profit. Michael Porter’s succinct description of a common analysis pitfall – “making lists instead of engaging in rigorous analysis” ^[1] – captures what went on in this startup’s strategy planning sessions, and what I imagined went on, at least to some extent, in all strategy sessions.

This paradigm was challenged repeatedly by this week’s readings, which reinforced the need for a deep analysis of a company’s competitors and competitive environment, giving myriad examples of companies that do so successfully. Amidst the familiar market forces, each article stressed that to truly analyze one’s competitive environment, it’s necessary to look beyond what is readily apparent. This reminded me of Marcus Aurelius’ quote "the secret of all victory lies in the organization of the nonobvious," and it struck me that this could be a significant reason why my former employer is still searching for victory. Rather than making quick observations – which in the case of this healthcare startup read something like “one direct competitor” and “people will continue to get sick” – we needed to take the time to dive deep into the hidden forces surrounding us.

Though that leadership team may have felt like no one was attempting to build a consumer healthcare platform like us, the article “Competitor Analysis: Understand Your Opponents,” encourages strategists to identify existing and potential competitors. Non-obvious players that could move in to the healthcare tech space might include employers who decide to build a proprietary platform for their employees (along the same lines as the Under Armor example – a retailer with plans to build the biggest connected fitness platform). ^[2] Expanding the competitor analysis further, Porter explains that “substitutes are always present, but they are easy to overlook because they may appear to be very different from the industry’s product.” ^[1] In the case of a SAAS healthcare product, substitutes for preventive healthcare could be simply waiting to get sick and then seeing a doctor. Looking back, not recognizing this particular substitute was a fundamental flaw in the startup’s strategy – we made the assumption that people wanted to be proactive about their health.

Beyond competition to the broader competitive environment, there continued to be a theme of subtle factors quickly blooming into defining aspects of the environment. The technology revolution is amplifying previously separate industries, and this innovation is compounding Moore’s law, giving companies even less time to respond to changes. ^{[3] [4]} My company was leveraging some of the synergies from mixing healthcare and technology, but the executives were still living in a slow-paced world. Crucially, they believed that we could hold on to our vast pool of data for the time being and decide what to do with it later.

Developing an ability to identify the non-obvious factors will be something I continue to work on and encourage in my future places of employment, so that I don’t fall into the trap of making a simple list and missing something important.

^[1] “The Five Competitive Forces that Shape Strategy” by Michael Porter

^[2] “The Global Forces Inspiring a New Narrative of Progress” by Ezra Greenberg, Martin Hirt, and Sven Smit

^[3] “The Four Global Forces Breaking All the Trends” by Richard Dobbs, James Manyika, and Jonathan Woetzel

^[4] “The Global Forces Inspiring a New Narrative of Progress,” excerpted from Marketer’s Toolkit: The 10 Strategies You Need to Succeed