In a previous blog (learn more), we provided an overview of the 6 steps to developing a winning strategy shown in the figure below. The strategic planning process starts with the development or updating of the organization’s mission, vision and values and finishes with a strategy designed to fulfill its mission and achieve its vision.

The first step in the strategic planning process is conducting a self-assessment (learn more). The purpose of the self-assessment is to gain a thorough understanding of the organizations’ strengths, weaknesses, and assets/resources available to it.

The second step was to obtain client feedback (learn more) and the importance of gaining intelligence from existing clients on their current problems and future opportunities and the value you bring to their organization.

The third step is to conduct a competitor analysis (learn more). Developing a winning strategy requires that your future products/services be better than that of your competitors competing in the same marketing space.

The fourth step is to evaluate technology trends (learn more). It is important to evaluate technology trends to develop an awareness of competing and emerging technologies that could disrupt your strategy.

In this blog, we will discuss the topic of market analysis; developing a thorough knowledge of market and industry trends. In our discussion of competitor analysis (learn more), the focus was on obtaining detailed actionable intelligence on our direct competitors. The focus of an industry analysis is to broaden that discussion on the industry as a whole to determine market trends that affect our decision making. Also, in this blog, a broader methodology will be discussed to gather relevant industry data.

There are two types of data that can provide useful information that fills in the blanks in your competitor analysis; published data and field data, sometimes referred to as secondary and primary data. Since published or secondary data is easier to obtain, there is a tendency to rely on it heavily. Primary data is gathered from interviews with industry participants and observers. It is much more time consuming and oftentimes results in conflicting data but generates the most useful information when formulating your strategy. Once again, emphasis should be placed on obtaining this industry data continuously as part of your overall knowledge management process and updated regularly.

There are numerous sources of published data. Starting from scratch, one should determine the firms in a specific industry especially the leading players starting with the industry’s Standard Industrial classification(SIC) code, from the Census Bureau’s Standard Industrial Classification Manual. Comprehensive studies of specific industries are also available that can give a broad overview as well as good sources for additional research. They tend to be comprehensive studies conducted by economists or more focused studies by securities or consulting firms. Trade associations, trade magazines and the business press can oftentimes be a good source of information provided that they are read over long periods of time so that trends can be teased out. Finally, company documents such as annual reports, SEC form 10-Ks, proxy statements, and prospectuses should not be overlooked. Also, of value are executive speeches, press releases, product literature, and patent filings.

As mentioned, generating field data or primary data is more difficult and time consuming as it involves interviewing important industry sources. Industry observers are numerous and include standard setting organizations (e.g. underwriter’s laboratory), unions, the press, local chamber of commerce, state and federal government, watchdog groups (e.g. Consumer’s Union), the financial community, and regulatory agencies. Service organizations are also a good source of information and include trade associations, investment banks, consultants, auditors, commercial banks, and advertising agencies.

Given the broad list of potential sources of information, it is important to have a strategy. Initially, try and get an unbiased view of the industry by interested third parties; those knowledgeable about the industry but do not have a competitive or direct economic stake in it. They are also a good source of direct industry participants worth talking to. Another good starting point are individuals who have been quoted in articles and speakers at industry conventions. Oftentimes it is worth the effort to get introductions to such speakers from a referral. For more detailed information on market analysis, I recommend Micheal E. Porter’s excellent book, “Competitive Strategy: Techniques for analyzing Industries and Competitors

Generating an industry analysis seems like a daunting task. It requires significant resources and time and fraught with conflicting information. This is why it is important that all of the organization’s leadership be involved in generating market data. At quarterly strategic management meetings, which I recommend, time should always be set aside to discuss and update market trends with information obtained from sales and marketing, R&D, product managers and the like.

At this point you may be wondering why an R&D manager needs to focus attention on market trends. Market and technology trends are inextricably linked. Old models relying on just technology push or market pull are becoming outdated. In developing an R&D strategy, one needs to consider not only the effect that technology will have on the marketplace, but also the way in which market trends will affect the acceptance of technology. An example from the Biotechnology industry will illustrate this point.

I asked a leading medical device expert, for an overview of the biotechnology market. In the pharmaceutical industry, biotechnology drugs have revolutionized the treatment of many diseases, including cancer, cardiovascular disease, and autoimmune disease. These drugs are often delivered parentally, either through an IV or through a subcutaneous injection, to avoid degradation in the digestive tract. To help ease the burden of injection, the delivery of these drugs has evolved from a syringe filled from a vial, to a pre-filled syringe, to an auto injector, which automatically depresses the plunger to deliver the drugs.

As the biotech industry continues to develop novel therapies to treat more and more patients, the patient experience is becoming an area of increased focus. In researching the patient experience, a number of challenges in the existing environment have been identified. For instance, a great many patients are classified as “needle-phobic” and will not accept a therapy requiring them to inject themselves. Others will rely on their doctors’ offices to administer the injection, taking up valuable resources from the healthcare system.

Additionally, as biotech discovery and development become more sophisticated, new therapeutic targets are being identified that require much larger doses of drugs. In order to deliver much larger doses, a higher volume of the drug must be delivered, or the drug must be highly concentrated, greatly increasing the viscosity. Both of these options create a much more difficult injection, increasing the duration and the force required. Existing injection systems will be inadequate for these “next-generation” biotech drugs.

As a result of these dynamics, the pharmaceutical industry is investigating the market for novel delivery technologies, including implantables and wearables. Making an injection easier is expected to significantly improve the patient experience. In the long run, these improvements may allow for some drugs which currently require an IV to be delivered by an injection by a patient at home, reducing hospitalization durations. In addition, a great deal of research is being focused on oral biologics, which will allow for the delivery of these complex molecules by a pill.

There are many more examples shown below that are worth exploring. For example,

In the health industry – Disease prevention through a healthy lifestyle; nutrition and genomics; disease cures through stem cells; personalized medicine

In the energy industry – General acceptance by governments and industry on global warming; increase in petroleum reserves due to fracking; viability of renewable energy sources such as wind and solar

In the transportation industry – Automobiles transitioning from fast horse and buggies to mobile computers; robotics changing the face of deliveries

In the food industry – The whole food movement; GMO’s beauty or beast; the role of pesticides in global food productivity

In the manufacturing industry – Robotics and 3D printing

In the construction and building industry – Smart buildings; advanced materials

In the water and wastewater industry – Desalinization; wastewater reuse

The two important takeaway lessons when developing a strategy is that you must first look at both the micro level through competitor analysis and the macro level through market and industry analysis. And second, you must factor in the interdependence between technology trends and market trends.

For a more in-depth discussion of this topic, read Leading Science and Technology Organizations: Mastering the Fundamentals of Personal, Managerial, and Executive Leadership.