The Qualitative Social Sciences and Competitive Intelligence 117 Figure 8.2 The Portfolio Analysis Model Source: Walle (2000), p. 63, based on common usage. Reprinted by permission of The Popular Press. profitable, should be groomed as the wave of the future, because (if they suc- cessfully mature) Stars may evolve into lucrative cash cows. Question mark products are weak competitors, but the product category is rapidly growing; as a result, they, too, might be transformed into popular and lucrative cash cows. Dogs, in contrast, are weak, low-growth products and are likely candidates for elimination. The key principle of the Product Life Cycle (and parallel models) is that products are viewed as having a distinct role at a specific point in history and it is assumed that this role continues to evolve through time. Analysts need to be concerned with both the present and the future of the products/services that are provided by the organization. GENERAL ELECTRIC/M C KINSEY STRATEGIC PLANNING GRID As indicated above, Portfolio Analysis is derived from quantitative measures involving the growth rate of the product and the strength of the organization in the marketplace. Although the analysis is based on quantitative measures, the model tends to be used in intuitive and qualitative ways. 118 Competitive Intelligence and Cross-Disciplinary Tools In addition, strategic planners using Portfolio Analysis often need to rely upon their own intuition and qualitative analysis in order to effectively benefit from the Portfolio Analysis. Harley-Davidson Motor Cycle Company, for example, once controlled over 50 percent of the total motorcycle market, but today its market share has shrunk to 5 percent or 10 percent. Using Portfolio Analysis, it could easily appear that Harley-Davidson motor cycles are “Dogs” and that the company is in trouble. If, on the other hand, Harley-Davidson is viewed as a manufacturer of large, expensive motorcycles, it emerges as a dominant and powerful player within that particular market segment. As a result, the analyst needs to apply intuition and judgment when using Portfolio Analysis; quanti- tative measures must be mated with qualitative insights. Should Harley- Davidson’s products be viewed as “motorcycles” or “large, expensive motorcycles”? If this question is answered in an inappropriate way, the use of Portfolio Analysis can lead to wrong and profoundly hurtful evaluations. While analysts may have the option of utilizing a quantitatively based Port- folio Analysis and then simultaneously veneering a qualitative and intuitive ap- praisal onto this formal evaluation, other methods overtly build intuition and judgment into the method by which products are investigated and evaluated. The General Electric “Strategic Planning Grid” developed in conjunction with McKinsey and Company, a major consulting firm, provides a method that is outwardly similar to Portfolio Analysis, while being based upon qualitative measures of evaluation. The Strategic Planning Grid has a superficial resem- blance to Portfolio Analysis in that its findings are presented in a matrix format in which different cells represent distinct circumstances faced by products. In the case of the Strategic Planning Grid, however, the matrix has nine compo- nents instead of the four in Portfolio Analysis (Hofer 1978). Still, at first glance, the two models seem to be obvious variants of one another. Looking more deeply, however, the Strategic Planning Grid can be seen to be based on broad intuitive/subjective categories while Portfolio Analysis relies on quantitative measures. Thus, while Portfolio Analysis deals with the quan- titative measures of “Market Share” and “Product Growth Rate,” The Strategic Planning Grid makes evaluations based on the more intuitive categories of “Business Strength” and “Industry Attractiveness.” These evaluative criteria are centered around the intersection of many different factors that must be evaluated using insight and judgment; they are not merely quantitative measures that are calculated in a routine and formulaic manner. Once these intuitive evaluations are made, the measures of “Business Strength” and “Industry Attractiveness” are intuitively ranked as “strong,” “av- erage,” or “weak.” When plotted on the grid, these two measures converge on one cell; this cell provides a thumbnail sketch of the attractiveness of the op- portunity. Rival products can also be plotted in an identical manner; doing so provides the analyst or strategic planner with an intuitive view of the attrac- tiveness of the opportunity of the product and the strength of the competition. The classic form of presentation is shown in Table 8.1. The Strategic Planning The Qualitative Social Sciences and Competitive Intelligence 119 Table 8.1 Strategic Planning Grid Grid, therefore, embraces the basic orientation and format of the quantitative Portfolio Analysis while smuggling qualitative insight and intuitive judgment back into the analysis. The obvious goal of the organization is to choose to compete in areas where a high (or at least a medium) overall rating can be derived. The weaker the rating, of course, the less desirable and more risky the opportunity. Since the Strategic Planning Grid is based on intuitive judgment, however, there is much more leeway for individual subjective opinion. This makes the method more flexible and opens up the criteria that can be used when evaluations are made. As a result, different people can look at the same data and come up with sig- nificantly different evaluations. Consider the tobacco industry, for example. On analyst might observe that a great outcry against tobacco currently exists. Government controls are on the rise. Lawsuits against the tobacco industry are running rampant. Many powerful people and organizations are avowed enemies of the tobacco industry. The in- dustry is beset with profound moral and ethical problems. As a result, this analyst might consider the tobacco industry to be a very unattractive opportunity. Another analyst may note that due to its current bad image, it may be possible to expand into the tobacco industry very cheaply; and since nicotine is addictive, millions of people will continue to buy and use the product. This analyst, fur- thermore, may believe that legal settlements, destined to limit the liability of the 120 Competitive Intelligence and Cross-Disciplinary Tools tobacco companies, are on the verge of materializing. In addition, the interna- tional market for tobacco products appears to be growing as people in third world countries gain discretionary income. Viewing these factors, the tobacco industry may appear to be a very attractive opportunity. Since both evaluations are intuitive judgments based on qualitative measures, the Strategic Planning Grid can lead to divergent interpretations of the same data. Both Portfolio Analysis and the Strategic Planning Grid consider products in terms of the total environment and how the role of the product evolves over time, and both methods chart the progress of products in relation to other alter- natives. The Strategic Planning Grid, however, tends to be more subjective and intuitive. What is crucial for competitive intelligence analysts to remember is that mar- keting scholars and practitioners tend to look at products and their “place in the world” as evolving and ever-changing. In addition, strategic planners believe that most products tend to eventually fade from the marketplace or at least become redefined in the public mind. It must be acknowledged, of course, that formulaic “matrix models” can be misused and they have been severely criti- cized as a result. Furthermore, they can be costly and time-consuming, and, as we saw in the Harley-Davidson example, appropriately defining the strategic business unit (“motorcycles” versus “large, expensive motorcycles”) can be dif- ficult. Nonetheless, Portfolio Analysis and the Strategic Planning Grid are conven- ient means of operationalizing the Product Life Cycle when evaluating product lines and their evolving role in the marketplace. Like the Product Life Cycle model, Portfolio Analysis and the Strategic Planning Grid can be intuitively understood by the non-specialist. This type of approach, furthermore, employs various analogies that are potentially useful when interacting with the diverse groups of people that make up organizations. DELPHI METHOD Experts have opinions, and these opinions have value. Experts, furthermore, are prone to reliance upon intuition and subjective judgment, usually based on many years of observation and/or participation in an industry. But this raises an important issue: how much trust should we place in experts and their subjective/ intuitive opinions? In an often quoted study of technological forecasting over a 50-year period, George Wise found that in predictions that go at least ten years into the future, less than half were correct. Indeed, Wise continues, the predictions of experts tend to be only slightly more accurate than those made by non-experts (1976). Thus, although experts have a vast wealth of intuitive and qualitative insights, they don’t typically provide actionable information that gives organizations a competitive edge. The Delphi Method is a technique that attempts to harness the subjective insights of experts in useful and productive ways. The Qualitative Social Sciences and Competitive Intelligence 121 The Delphi Method begins when a panel of experts are provided with an array of questions about some issue, problem, or situation. To prevent a clash of strong personalities, the participants (supposedly) do not know who else is taking part in the project. After the results of the first round have been generated, they are shared among the group. Having read the responses of their colleagues, the participants revise their evaluations. Those with atypical responses are asked to elaborate and more fully justify their positions. This process continues until a consensus is reached or until the group fits into rival camps and their positions solidify. Sometimes the Delphi Method can give impressive results; thus, the American Hoist and Derrick Company reported that it used the method and experienced only 1 percent error (Anderson et al. 1988, 173). Even if there is no uniform agreement, documenting a structured divergence of opinion may prove useful. Thus, if a member of a Delphi Method was eval- uating research methodologies, he/she (and like-minded colleagues) would tend to emphasize qualitative techniques while another faction would favor scientific and quantitative alternatives. In all likelihood, at some point “battle lines” would be drawn and the positions of the two groups would solidify; as a result, a consensus would never be reached. Nonetheless, the very fact that two distinct and unyielding factions exist is a valuable piece of information. Although there have been attempts (such as the Delphi Method) to more effectively benefit from intuition and qualitative judgments by providing a struc- ture to the way people view issues and juxtapose their opinions of different observers, these methods tend to be awkward, time-consuming, and highly com- plicated. Nonetheless, the rise of these methods demonstrates the need to use qualitative insights in carefully measured ways. A STRONG QUALITATIVE TRADITION There exists a strong tradition of using qualitative measures within business. Historically, strategic planners relied on “instinct” and used “seat-of-the-pants” techniques when evaluating opportunities. In the post–World War II era, the decision-making processes of organizations became increasingly routinized. Quantitative and scientific methods provide a standardized style of decision mak- ing; in addition, various techniques for using qualitative judgment exist. A key aspect of the qualitative methods that has emerged is the attempt to codify qualitative and intuitive judgments in a stereotyped way that could be duplicated, replicated, and applied in a systematic manner. Specific tools (such as the Product Life Cycle, Portfolio Analysis, and the Strategic Planning Grid) rely upon qualitative judgments and the intuitive opin- ions of individuals, but nest these inferences within a focused framework. In doing so, an attempt is made to harness the qualitative and intuitive thoughts of individuals and deploy them in ways that achieve organizational goals. The basic orientation of these models is to take divergent thought and codify it in system- atic ways that can be easily integrated into the decision-making process. 122 Competitive Intelligence and Cross-Disciplinary Tools Although the qualitative and intuitive judgments of experts provide valuable insights, they can also be viewed as an obstacle course since, as Wise (1976) has observed, the opinions of experts are not much more accurate than those of the non-specialist. As a result, techniques like the Delphi Method attempt to tease insights from groups of experts in ways that lead to the development of useful information. QUALITATIVE METHODS IN MARKETING SCHOLARSHIP As was argued above, although quantitative and scientific thought has tended to dominate business thought since World War II, a strong quantitative tradition has continued. This situation has been viewed by marketing scholars as both a justification for alternative qualitative research methods and as a window of opportunity for using them. The existing qualitative traditions within marketing thought underscore the value of subjective and intuitive judgments using meth- ods that might not be able to be duplicated by others. The systematic nature of most qualitative research, however, embraces guidelines that can be usefully applied in a number of important circumstances. As a result of these needs and opportunities, marketing scholars have developed their own unique means of conducting qualitative research and they have done so by embracing and adapt- ing relevant aspects of the qualitative social sciences. In the last 15 years, marketing research has increasingly embraced qualitative models. The reason for doing so stems from the fact that highly structured scientific/quantitative methods have proved to be incapable of effectively dealing with a range of crucial issues that impact marketing strategies and tactics. One qualitative stream of marketing research, for example, seeks to embrace the qualitative techniques of anthropological fieldwork. Here, the discussion will focus on that tradition and argue that it provides a useful means of applying qualitative insights in ways that can deal with unique and circumscribed situa- tions that are of interest to marketing professionals. Parallel methods can also serve competitive intelligence analysts. MARKETING ETHNOGRAPHY: BORROWING FROM ANTHROPOLOGY Modern marketing research has actively sought to embrace methods from the qualitative social sciences in order to more effectively interpret the situations being investigated. Nonetheless, the qualitative researchers who embrace this tradition are not willing to compromise the rigor and/or the intellectual respect- ability of their work merely to simplify or expedite the analytic process. Thus Wallendorf and Brucks observe that while consumer researchers are willing to embrace a wider range of techniques (including qualitative methods), they must still adopt a stance “that insists on carefully executed research” (Wallendorf & Brucks 1993, 355). The Qualitative Social Sciences and Competitive Intelligence 123 This specific observation, of course, is but the tip of the iceberg (Belk, Sherry, & Wallendorf 1989; Seigel 1988; Locander & Pollio 1989). Today, a vital qual- itative research tradition, pursued by careful and serious researchers, is rejecting the canons of science as the be-all and end-all of legitimate research, and it is accepting a wide array of qualitative alternatives. A key tradition that is emerging is the adaptation of the methods of ethnog- raphy that are most associated with anthropological fieldwork, in ways that can be related to the needs of business and marketing. The ethnographic method (as discussed above) is a technique for viewing how people act in the real world. Research does not take place in a controlled laboratory setting, but occurs within the social realities where behavior actually takes place. The justification for embracing this research strategy is based upon the realization that social life is profoundly complex and that it cannot be adequately replicated with the use of experiments or laboratory environments that have been contrived by the inves- tigator. As a result, research takes place in a real-world cultural milieu and, as a result, it more accurately reflects reality. There are, of course, certain inherent problems with this research decision. The investigator, for example, may (by mere chance) view phenomena that are atypical; if this occurs, the researcher may confuse unusual behavior for the norm; to whatever degree this error occurs, the findings of the research will be skewed. In addition, if researchers are interested in observing particular phenomena, they might be subjected to a long wait (until these events occurred by chance); these long waits could make the use of the ethnographic method inefficient. On the other hand, the ethnographer may control the social situation by actively interacting within it. Thus, if researchers wanted to see if women were treated differently than men when having their cars repaired, they could send an array of women and men with broken cars to mechanics and record the results. The resulting evidence would constitute real-life empirical findings that largely rep- licate the ethnographic method. Still, advocates of strict scientific research could complain that the researcher exerted an influence upon the result and, therefore, the research is compromised. In addition, the quantitatively oriented critic could object that the examples studied were so few that they cannot be viewed as a random sample whose behavior is typical of the larger reality. Overcoming these objections, an increased number of contemporary market- ing researchers have employed the ethnographic method (see Arnould and Wal- lendorf 1994 for a literature review). This outpouring of a specific type of qualitative investigation represents a trend that will be extended into the future. Actually, as Arnould and Wallendorf indicate, two separate but closely inter- connected research streams are emerging. One is the “market-oriented ethnog- raphy [that] refers to an ethnographic focus on the behavior of people constituting a market for a product or service” (Arnould & Wallendorf 1994, 484). The second involves “ethnographies of marketing [which] study people in organizations carrying out the activities of marketing management: planning, 124 Competitive Intelligence and Cross-Disciplinary Tools product development, and strategy execution” (Arnould & Wallendorf 1994, 484). Although two different research streams exist, the goals and strategies of ethnographic research are uniform: understanding people and their behavior by viewing them as they actually live their lives and/or pursue their professions. A key aspect of marketing ethnography is that it recognizes that marketing takes place within a sociocultural milieu (Sherry 1990) and that it must be evaluated accordingly. Although ethnography may include supplemental materials that are gathered in rigorous and scientific ways, the forte of the method is its embrace of qualitative, humanistic traditions of investigation. In ethnography, informants (the subjects being investigated) are often asked for their opinions and the re- sponses they provide are entered into the pool of evidence that is used by the researcher to interpret the phenomena being investigated. On some occasions, the researcher may actually join into the behavior being investigated and become an active participant. The rationale for doing so is that, in the process of interaction, the researcher gains an intuitive understanding of the behavior being studied. Nonetheless, as mentioned above, proponents of rigorous and scientific analysis are likely to conclude that such evidence is tainted and unusable. On the one hand, some critics argue that the observer, through participation, loses the objective and detached perspective that is essen- tial for legitimate scholarship. On the other hand, since the observer becomes a part of what is being investigated (and may actually influence the outcome), the reliability and replicability of the observed phenomena is drawn into serious question. Nonetheless, such methods have a proven value. Arnould and Wallendorf, speaking in general, observe: “Ethnography gives primacy to observation of behavior in context to provide a perspective in action and relies on verbal reports of interviewees” (1994, 501). These methods are so powerful that they have rapidly established themselves as a key component of the toolkit of marketing research. As shown by Wallendorf and Brucks (1993), marketing ethnographies are more complicated than merely being examples of sloppy research conducted in the heat of the moment. Instead, many modern marketing scholars insist that profound and significant questions cannot be adequately explored using the strat- egies of science and the “rigorous” research methods associated with it. In order to address the crucial issues that marketing seeks to explore, researchers need to employ a broader toolkit. Certainly, all research needs to be pursued in a serious and legitimate manner; nonetheless, respectable and legitimate research- ers often find that it is useful to expand beyond scientific methods. Alternative research methods are being embraced because key questions cannot be answered using methodologies that are modeled after disciplines such as chemistry and physics. Especially significant in this regard is the ethnographic work of scholars such as Russell Belk, John Sherry, and Melanie Wallendorf. A few years ago, these The Qualitative Social Sciences and Competitive Intelligence 125 scholars and their colleagues collaborated on a research project known as the “Odyssey” which overtly applied qualitative ethnographic methods (that were developed in anthropology) to situations involving consumer research. Since then, marketing scholars have used variants of the ethnographic method to ex- amine patterns of consumption involving events including holidays such as Thanksgiving. These scholars and their research have demonstrated the value of using the techniques of the qualitative social sciences within marketing research. By view- ing behavior as it actually unfolds, the findings of researchers are less likely to be artifacts of the questions asked. Just as the focus group method allows people to respond in authentic and genuine ways and not merely answer the queries of the investigator, the ethnographic method views people in the actual act of buy- ing and consuming products. Even if the observed phenomena may not be “rep- licable” in a manner preferred by scientific/quantitative researchers, this method is useful because it actually records and analyzes a true slice of life. Basically, ethnography seeks to understand people by observing their behavior and by intuitively interpreting it as it unfolds in a real-life setting. In ethnog- raphy, the researcher studies life as it is really lived and does not usually estab- lish a contrived or artificial environment in which to conduct research. Researchers, however, may choose to interact within the cultural milieu being studied (participant observation) and they may even create situations in order to study the response to specific circumstances that are of particular interest. Pro- ponents of the ethnographic method insist that the value of viewing people as they actually live outweighs the limitations and drawbacks inherent in doing so. Ethnographers also remind their critics that the ethnographic method is a long- established and well-respected intellectual tradition and, therefore, it cannot be written off as sloppy or unprofessional. Ethnographers seek to discover recurring patterns in society in ways in which people actually respond. These patterns are viewed as clues regarding the un- derlying mainsprings that impact people’s behavior. Admittedly, much of the resulting interpretation tends to be subjective in nature. As we saw in earlier chapters, scientifically oriented researchers often discount this style of research because it does not meet the methodological standards they set up for their own work. Ethnography, however, is a well-established research tradition with its own criteria of rigor, and it has proved to be of value in many important cir- cumstances. Innovative marketing scholars have turned to ethnography because they rec- ognized that scientific/quantitative methods are incapable of dealing with a num- ber of vital problems that impact the marketing profession. People live and interact within a specific social context; in order to understand their patterns of behavior and response, therefore, people must be studied from within a relevant and real-world context. Not believing that artificial experiments adequately re- flected reality, these researchers made the decision to study people as they ac- 126 Competitive Intelligence and Cross-Disciplinary Tools tually interacted within society and as they lived their lives. The results of this research agenda have been highly praised. THE QUALITATIVE SOCIAL SCIENCES AND COMPETITIVE INTELLIGENCE As has been argued throughout this book, competitive intelligence stems from the qualitative, intuitive, and subjective traditions that derive from the traditions of espionage. As such, competitive intelligence has long offered an alternative to scientific/quantitative methods of analysis that long dominated business re- search. A number of qualitative traditions have emerged within business re- search; however, they sought to look at broad and general patterns and codify the qualitative insights of diverse people in systematic ways. These trends created a niche for qualitative methods from the social sciences such as ethnography. The methods of ethnography tend to focus on the insights of the individual researcher (or research team). The ethnographic method, fur- thermore, focuses unique circumstances, not broad patterns. This style of re- search closely reflects the needs of competitive intelligence professionals. As a result, they have much to offer the profession. In many cases, competitive intelligence professionals function as individual researchers who are assigned to pursue a specific research project. Competitive intelligence is typically viewed as an alternative to more formal analysis and investigation. The ethnographic method provides a method that fits in with the traditions of qualitative and subjective analysis that are usually embraced by the competitive intelligence profession; embracing it expands the range of options available to competitive intelligence professionals. This method is especially useful because it focuses broad and long-term patterns of response that impact people and organizations. Much of the work of competitive intelligence has tended to be ad hoc and tactical. By exploring long-term structures/patterns of response and how they operate, the work of competitive intelligence can begin to influence long-term strategies, not merely short-term tactics. By uncovering specific and recurring patterns in the behaviors of organizations (as well as what causes them), com- petitive intelligence professionals can most effectively serve their clients. In a parallel way, the ethnographic method is concerned with specific circum- stances, not with broad patterns that are disclosed by studying a random sample. Even though the specific occurrence may provide clues regarding general pat- terns of response, the ethnographic method is geared around understanding spe- cific circumstances and why they occur. As a result, the phenomena studied by competitive intelligence analysts and ethnographers are directly parallel. Since marketing researchers have adapted the ethnographic methods to the needs of business, competitive intelligence professionals can benefit from examining and building upon this tradition. While these parallels point to significant uses of ethnographic methods within [...]... envisioned, reverse engineering is a technical activity It involves gaining examples of a particular product and then dismantling them in order to better understand how they were made and/ or how they operate Having gained this technical knowledge through the dismantling process, the firm may be in a position to devise ways to make a clone of the product and, thereby, compete in the marketplace If the firm does... Benchmarking 3 Reverse Engineering 4 Crisis Management By analyzing these tasks in terms of the qualitative social sciences, the practitioner value of these tools and concepts will be demonstrated Shadowing/Surveillance The concept of shadowing/surveillance essentially involves observing an organization in order to gain a better understanding of how it works, thinks, and 128 Competitive Intelligence and. .. revolution demanded a rethinking of the way in which people related to society and to each other The humanities played a major role in the process of reexamining the world and people’s relationships to it Two complementary positions emerged: one focuses on the power and dominance of culture and society, the other centers upon the individual Karl Marx devoted his life to studying massive and impersonal... in business research and in competitive intelligence THE QUALITATIVE VISION OF THE HUMANITIES The humanities view people, their behavior, and their institutions in ways that overtly and consciously transcend purely rational, scientific, and quantitative analysis These disciplines do so in an organized, systematic, and objective way that benefits from well-established analytic traditions; humanistic research. .. by the General Electric Strategic Planing Grid Cash Cows According to Portfolio Analysis, Cash Cows are mature products that are currently profitable but may be on the brink of decline, although the firm is a dominant force in that market Crisis Management Crisis Management is the discipline of determining, beforehand, what problems may occur in the future and then determining methods of mitigating them... the autonomy of specific people and the power of individual thought and action As a result, more sophisticated revisions of determinism added an individualistic component that tempers the deterministic vision and, thereby, more accurately reflects reality The alternative paradigm, in contrast, begins by emphasizing that even in the collective and industrial world, individual differences and the distinctiveness... anticipates the techniques of later humanists (and marketing thought that builds on their work) which examine why certain products (i.e., examples of literature) have an impact on their audiences while others are ignored In the 18th and 19th centuries, the industrial revolution triggered a profound transformation in the way people viewed the world and themselves Indeed, the dilemmas that accompanied the industrial.. .The Qualitative Social Sciences and Competitive Intelligence 127 competitive intelligence, they must be tailored to the circumstances of the profession Due to practical and ethical considerations, it is not often easy for competitive intelligence professionals to apply the ethnographic method in its entirety This is because entering organizations and interacting within them in ways that... oriented researchers tend to assert) fuzzy-minded and lacking in rigor and intellectual respectability Basically, the humanities view people (and the world in general) as being so complex and multifaceted that the methods of science and quantitative analysis are unable to grasp mankind, its behavior, and its artifacts in all their complexity Scientists often pride themselves on their refusal to examine... are being bought By alerting the sales staff of this structuring of power and decision making within the organi- The Qualitative Social Sciences and Competitive Intelligence 129 zation, the presentation could be directed toward financial issues (terms of the sale, payment schedules, lease versus purchase arrangement, etc) In the case of the second firm, the production people may have the upper hand when . behavior being investigated and become an active participant. The rationale for doing so is that, in the process of interaction, the researcher gains an intuitive understanding of the behavior being. ex- amine patterns of consumption involving events including holidays such as Thanksgiving. These scholars and their research have demonstrated the value of using the techniques of the qualitative. respond in authentic and genuine ways and not merely answer the queries of the investigator, the ethnographic method views people in the actual act of buy- ing and consuming products. Even if the