gh-lyndonkl-claude/skills/strategy-and-competitive-analysis/resources/methodology.md

Advanced Strategy & Competitive Analysis Methodology

Workflow

Advanced Strategy Methodology Progress:
- [ ] Step 1: Deep diagnosis using multiple frameworks
- [ ] Step 2: Competitive intelligence and scenario planning
- [ ] Step 3: Integrated strategy synthesis
- [ ] Step 4: Stress-test strategy against scenarios
- [ ] Step 5: Implementation planning with adaptive triggers

Step 1: Deep diagnosis - Combine Porter's 5 Forces, Value Chain, SWOT. See 1. Good Strategy Kernel.

Step 2: Competitive intelligence - Gather data, infer strategies, scenarios. See 6. Competitive Intelligence.

Step 3: Strategy synthesis - Apply Good Strategy kernel with options analysis. See 1. Good Strategy Kernel.

Step 4: Stress-test - Scenarios, competitive response, fragile assumptions. See 7. Strategic Scenarios.

Step 5: Adaptive planning - Triggers, decision points, pivot criteria. See 7. Strategic Scenarios.

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1. Good Strategy Kernel Deep Dive

Diagnosis: Identifying Critical Challenge

Common mistakes:

• Too vague ("need to grow", "market is competitive")
• Symptom not cause ("low sales" vs "wrong target segment")
• Multiple unrelated issues (laundry list, not THE challenge)
• Aspirational goal as diagnosis ("want to be market leader")

Crafting strong diagnosis:

1. Gather multi-source evidence: Customer data (churn, NPS, win/loss), market data (growth, TAM, trends), competitive data (pricing, features, share), financials (CAC/LTV, margins), internal (capabilities, constraints)

2. Find root cause (5 Whys):

   • "Revenue growth slowing" → "Customer acquisition slowing" → "CAC doubled" → "Paid channels saturated, organic declining" → "No differentiation, price competition, high churn"
   • Root cause: Lack of differentiation in commoditized market → poor unit economics

3. Validate with stakeholders: Sales, product, finance must agree on core challenge

4. Test specificity: Can you explain in 2-3 sentences? Specific enough to rule out certain approaches? Identifies leverage point?

Good examples:

• "CAC ($500) exceeds LTV ($300) in SMB segment due to 60% annual churn, making growth unprofitable"
• "Squeezed between low-cost offshore competitors ($10/unit) and premium players ($100/unit), our mid-market positioning ($50/unit) lacks differentiation"

Guiding Policy: Strategic Approach

Strong guiding policy characteristics:

• Directional not prescriptive (approach, not detailed actions)
• Addresses diagnosis directly
• Creates advantage (moat or leverage)
• Rules things out (says what we WON'T do)

Diagnosis	Guiding Policy	Why This Works
CAC > LTV in SMB, high churn	Vertical specialization (healthcare) + product-led growth	Higher LTV in healthcare, compliance creates switching costs; PLG reduces CAC
Squeezed between low-cost and premium	Blue Ocean: compete on speed/convenience not price/features	New dimension competitors haven't optimized
Weak network effects, multi-tenanting	Platform strategy: integrate with others, become "hub"	Can't beat multi-tenanting, embrace and add value

Testing guiding policy:

• Specificity: Does it rule out certain actions?
• Leverage: Exploits capability, market gap, or competitor weakness?
• Coherence: Can you imagine 3-5 mutually reinforcing actions?
• Defensibility: Why can't competitors easily copy?

Coherent Actions: Mutually Reinforcing Steps

Coherence = actions support guiding policy + reinforce each other + no contradictions

Example: "Vertical specialization in healthcare"

• Build HIPAA compliance (supports verticalization)
• Create healthcare templates/workflows (supports specialization)
• Hire healthcare domain experts (supports credibility)
• Target healthcare conferences (supports go-to-market)
• Partner with healthcare ecosystem (reinforces positioning)
• Result: All five together create "healthcare specialist" positioning (more than sum)

Common failures:

• Laundry list: 10 unrelated initiatives, no synergies
• Contradictions: Cost-cutting + premium feature investment
• Vague: "Improve customer experience" (not specific)
• Orphaned: Actions don't support guiding policy

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2. Porter's 5 Forces Advanced Application

When to Use

Best for: Industry attractiveness, profit potential, market entry/exit decisions Not for: Operational decisions, short-term competitive moves, internal strategy

Each Force Deep Dive

Force	High = Bad (Low Profit)	Low = Good (High Profit)	Strategic Response if High
Competitive Rivalry	Many competitors, slow growth, low differentiation, high fixed costs	Few competitors, fast growth, high differentiation	Differentiate or achieve cost leadership
New Entrants	Low barriers (easy to enter)	High barriers (capital, scale, brand, regulation, network effects)	Build moats (switching costs, network effects)
Substitutes	Strong alternatives, low switching cost	Weak alternatives, high switching cost	Innovate faster, bundle, lock-in
Buyer Power	Few large customers, low switching cost, price sensitive	Many small customers, high switching cost	Increase switching costs, differentiate
Supplier Power	Few suppliers, unique inputs, high switching cost	Many suppliers, commodity inputs	Vertical integration, alternative suppliers

Scoring Industry Attractiveness

Force	High/Med/Low	Weight	Score (1-5, 5=attractive)	Weighted
Rivalry	[Assessment]	30%	[1-5]	[X]
Entry Barriers	[Assessment]	20%	[1-5]	[X]
Substitutes	[Assessment]	15%	[1-5]	[X]
Buyer Power	[Assessment]	20%	[1-5]	[X]
Supplier Power	[Assessment]	15%	[1-5]	[X]
Total		100%		[Avg]

Interpretation: 4-5 = Highly attractive | 3-4 = Moderately attractive | 2-3 = Challenging | 1-2 = Unattractive

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3. Blue Ocean Strategy

Core idea: Create uncontested market space (blue ocean) vs compete in existing market (red ocean).

Strategy Canvas

X-axis: Factors industry competes on (price, features, service, speed, convenience) Y-axis: Level of offering (low to high)

Example: Cirque du Soleil

• Eliminated: Star performers, animal shows, multiple arenas
• Reduced: Ticket price (somewhat higher but not luxury theater prices)
• Raised: Artistic theme, refined environment
• Created: Multiple productions, theatrical themes

Result: Circus + theater + artistic performance = new market (adults paying premium, not families with kids)

Four Actions Framework

1. Eliminate: Factors industry takes for granted to remove?
2. Reduce: Factors to reduce below industry standard?
3. Raise: Factors to raise above industry standard?
4. Create: Factors to create that industry never offered?

Application steps:

• Map current competitive factors
• Identify industry assumptions
• Look across substitutes and buyer groups
• Apply Four Actions
• Test new value curve (differentiated? Lower costs? Higher value?)

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4. Playing to Win Framework

Two core choices:

1. Where to Play

Dimensions: Geography, product category, customer segment, channel, vertical, value chain stage

Choosing:

• Start narrow (beachhead), expand later
• Choose markets where you can win (have or can build advantage)
• Explicit about where NOT to play

Example: Stripe (early)

• Where to Play: Online developers building internet businesses
• Where NOT: Offline merchants, enterprises, legacy systems

2. How to Win

Porter's Generic Strategies:

Strategy	How	Risk	Examples
Cost Leadership	Scale economies, process efficiency, automation	Price wars, inflexible, quality suffers	Walmart, Southwest, Amazon
Differentiation	Innovation, brand, service, features, design	Competitors copy, insufficient premium	Apple, Tesla, Airbnb
Focus (niche)	Cost or differentiation in narrow segment	Niche too small, competitors enter	Ferrari (differentiation focus)

Key: Pick ONE strategy (avoid "stuck in the middle"), ensure capabilities support choice, build reinforcing moat.

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5. Value Chain Analysis

Purpose: Identify where you create value, where to build cost or differentiation advantage.

Primary Activities: Inbound logistics → Operations → Outbound logistics → Marketing/Sales → Service Support Activities: Procurement, Technology, HR, Infrastructure

Using for Strategy

Cost Advantage:

• Identify high-cost activities → automate, outsource, eliminate, redesign
• Find economies of scale opportunities
• Example: Dell (direct-to-consumer eliminated distributor margins, built-to-order reduced inventory)

Differentiation:

• Identify activities most valued by customers → invest, enhance
• Find unique activities competitors can't copy
• Example: Apple (design + operations + marketing + ecosystem = integrated experience)

Activity	Current Cost	% Total	Differentiation Impact	Opportunity
Inbound	$X	Y%	Low	Automate to reduce 30%
Operations	$X	Y%	High	Invest in quality
Marketing	$X	Y%	High	Invest, creates brand

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6. Competitive Intelligence Gathering

Data Sources

Public: Company websites (job listings signal priorities), social media, SEC filings, press releases, analyst reports (Gartner, Forrester), review sites (G2, Capterra), news

Primary: Customer interviews (why chose us/them?), win/loss analysis, mystery shopping (try competitor products), trade shows

Inferring strategy:

• Hiring patterns: Data scientist hiring → investing in AI/ML
• Acquisitions: Adjacent space → likely expanding there
• Pricing changes: Raised → profitability or upmarket; lowered → land grab or cost pressure
• Feature releases: Consistent theme → strategic direction
• Partnerships: Signal target customers or integrations

Competitor SWOT Template

Competitor: [Name]

• Strengths: What they're good at, where they win, source of advantage
• Weaknesses: Vulnerabilities, customer complaints, product gaps
• Opportunities (for them): Market trends favoring them, untapped segments
• Threats (to them): Regulatory, technology, competitive threats
• Likely Strategy (inference): Where they're headed based on above

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7. Strategic Scenario Planning

When to Use

Best for: High uncertainty (multiple plausible futures), long time horizons (3-5+ years), high stakes (major investments)

Building Scenarios

1. Identify critical uncertainties (high impact + high uncertainty)

   • Example: "Will regulation favor our model?" (High impact, uncertain)
   • Not: "Will sun rise?" (Certain) or "Office supplies +2%?" (Low impact)

2. Select 2 most critical → 2x2 matrix = 4 scenarios

Example: SaaS deciding enterprise vs SMB

• Uncertainty 1: Economy (Recession vs Boom)
• Uncertainty 2: Regulation (Strict vs Light)

Scenarios:

• Recession + Strict: Enterprises consolidate, need compliance → Enterprise compliance features
• Recession + Light: Price-sensitive buyers → SMB, low-cost model
• Boom + Strict: Enterprises invest in compliance → Both segments viable
• Boom + Light: High growth, less constraints → Land grab, rapid expansion

3. Develop strategy per scenario + Identify common actions (robust across scenarios)

4. Set trigger points: "If X happens → Scenario A more likely → Adjust strategy"

Stress-Testing Strategy

Questions:

• What if core assumption is wrong? (Market grows slower, competitor responds differently)
• What if competitors do X? (Price war, feature parity, acquire key partner)
• What if key resource unavailable? (Talent shortage, supplier issue, platform dependency)
• What breaks this strategy?

Fragility test: Identify assumptions strategy depends on → Rate likelihood each is wrong → If wrong, can strategy adapt or collapse?

• Fragile: Depends on many assumptions being right
• Robust: Works across multiple scenarios

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8. Common Strategic Pitfalls

Pitfall	Mistake	Fix
Goals = Strategy	"Grow 50% annually, become market leader"	Apply Good Strategy kernel (diagnosis/policy/actions)
Fluff	"Be customer-centric, innovative, data-driven"	Be specific, different from competitors
Laundry List	"Improve product, hire sales, better marketing..."	Ensure coherence under guiding policy
Ignoring Constraints	"Cost leadership AND premium differentiation"	Choose one, acknowledge trade-offs
Imitating	"Amazon did X, so we should too"	Understand WHY, adapt to your context
Consensus Mush	"Combine everyone's ideas"	Clear decision-maker, seek input not consensus
Analysis Paralysis	"Need more data"	Decide with available data, state assumptions, adapt
Planning ≠ Strategy	"Launch Product A in Q1, hire 10 in Q2"	Strategy = WHY (given challenges), plan = WHEN
Ignoring Competitive Response	Assume competitors do nothing	Game out responses, ensure robustness
Best Practices = Strategy	"Implement Agile, A/B testing"	Best practices = table stakes, not advantage

Key Takeaway: Good strategy = diagnosis (challenge) + guiding policy (approach) + coherent actions (coordinated steps). Specific, evidence-based, makes choices, addresses competitive realities.