How do you measure success?
Posted: August 6, 2013 Filed under: Comments on the News, Competitive Intelligence | Tags: Bloomberg Businessweek, Bottom Line Competitive Intelligence, Brad Stone, Marissa Mayer, metrics, Yahoo
August 6, 2013
As you do your own competitive intelligence or utilize CI provided by others, you will eventually run into the question, “So what’s the bottom line here? How much is the CI worth?”
Commercial aside: I could just refer you to our book, Bottom Line Competitive Intelligence, but I want to talk about it from your point of view, not mine.
There are two ways to look at this problem. The first is to try to measure things in terms of dollars, which is to answer the question “What is the dollar return from the CI?” The second is to look at what was actually done with the CI.
How do we measure the monetary value of competitive intelligence? There really two sides to that. One is to determine how much more money you made that you would not have made without it or, conversely, how much less money you avoided losing that you would’ve lost without it. The problem is that most decisions have many inputs, so crediting one input with a decision’s entire success or failure is just not right. So you try to assign a percentage to it.
Say you were 60% sure your decision would succeed, whatever that decision is. Your decision, if right, could produce $1 million in new profits. If you could increase the likelihood of success by 10% by using CI, you could assign a value of $100,000 to the CI. The same kind of calculation works in terms of reducing the costs of failure, although most people prefer not to make those calculations. Why? Because they do not like to be “negative”.
The alternative is to see if and how the CI was used and then determine whether or not the decision-making process was improved. Simply put, if the decision-making process was not improved, or if the CI was ignored, then the CI was worth nothing. If it was improved, then the CI was valuable.
For people who believe that you must measure everything, consider the recent observation by the head of Yahoo: “Just because we have a ruler doesn’t mean we have to measure everything.”