As strategic frameworks go, this is as close to spy work as you'll get...💼
Four Corner Analysis is designed to help you understand another business, their intent and strategy. Competitive analysis is a key part in how you grow within a market, it can inform your own strategic decisions as you battle for market share and provide insight into the KPIs you should measure.
Let's take a look at how Four Corners can help you understand the competitive landscape...
What is Four Corner Analysis?
Four Corner Analysis is a framework used to understand a competitor’s intent and capabilities and, ultimately, to work out their strategy.
The Four Corners in the model are:
- Motivation Drivers
- Current Strategy
- Management Assumptions
What are the Drivers in Four Corner Analysis?
The Drivers of a business are the factors that motivate it to move forward, their goals, objectives and ambitions. It could include financial goals and KPIs such as profit or revenue, market goals such as growth rate or geographic expansion, or perhaps more personal goals such as an exit or particular lifestyle for the owners.
Some helpful questions include:
- What market do they operate in or want to be in?
- Who are their stakeholders and what objectives would they have?
- How would they respond to the threats and opportunities you face?
- What’s their current market position and thus what will they be doing?
Drivers are ultimate the reasons behind a competitor’s actions in a marketplace and so are critical in understanding their current and future strategic movements. It’s helpful to compare and contrast these Driver points to their actual performance and position in order to determine the speed and rate that change may occur.
What is the Current Strategy in Four Corner Analysis?
This part of the model looks at the competitor’s existing strategy. Unlike the other parts of the model, the Current Strategy is based on clear evidence. The current strategy would
Remember this is their actual strategy, which may be different to what they state is their strategic plan. There are several areas to look at in order to establish a current strategy including:
- Behaviours and language
- Press releases and announcements
- New hiring and job postings
- Geographic footprint
- Content production
You’re ultimately looking to answer the question of what your competitor is doing and what results it is achieving for them within this corner of the analysis. As with Drivers, keep in mind the success the competitor is having with the strategy as a clue to if it’ll change quickly.
What are the Management Assumptions in Four Corner Analysis?
This is an interesting one as you’re starting to list how you believe the competitor sees themselves in the marketplace. How a management team perceive their own business and position will influence their behaviour.
Consider the following:
- What do their perceive as their position, strengths, or weaknesses?
- What do they think of you and the other competitors?
- Do they know their market share?
- How sophisticated are they as a team?
- Do they tend to lead the market or follow?
Areas such as management LinkedIn profiles, activities within the marketplace, any published news or reports, and their Current Strategy vs their former strategies should assist you in pulling together a list of assumptions.
What are the Capabilities in Four Corner Analysis?
Capabilities relates directly to the ability the business has to execute their strategic plans. It’s a really important part of your analysis because a company may have large, threatening drivers but no capability to deliver, and that’s very different to a company that has smaller ambition but are highly effective at executing.
Some helpful questions include:
- What are their strengths?
- What are their weaknesses?
- What is their track record of execution like?
- What do their customers say about them?
- What are their current results indicating?
- What assets do they have to allow certain behaviours?
It can help to approach this as if you’re looking at the Strengths and Weaknesses in a SWOT Analysis.
For example, if a company is well funded then they can run a number of price promotions in an attempt to attract customers, whereas if a company is bootstrapped they may not be able to move so easily.
Keep in mind you’re looking at their potential capability, regardless of their strategy.
What are the advantages of Four Corner Analysis?
The advantages of Four Corner Analysis are:
- Provides clarity to the business around competitors activity
- Improves the management team of a company by looking externally
- Aids your decision making by understanding what competitors may be doing
What are the disadvantages of Four Corner Analysis?
There are some limitations of this approach including:
- It’s just an estimate or guess
- It’s time consuming as each competition needs the analysis done
- It works better for direct competitors rather than indirect
What frameworks work well with Four Corner Analysis?
Four Corner Analysis is a framework you’d use on multiple competitors so would be complemented by the following activities:
- Five Forces Analysis to look at the market you and the competitors operate in
- Bowman’s Strategy Clock to establish competitive positions
- Perceptual Maps to map out you against your competitors
Finally, consider how your own SWOT compares to the Four Corner Analysis you produce.
What is an example of a Four Corner Analysis?
Let’s take an example of a technology company that does one off projects. They may have drivers to increase profits by 30% and to exit in 5 years, their current strategy is around single projects, their customer satisfaction is high and their technical capabilities excellent. In a Four Corner Analysis it might look something like this:
So taking all of that into account, a sensible future strategy would be to transition from bespoke projects to their own SaaS product with reoccurring revenues.
Who invented Four Corner Analysis?
Michael Porter developed the Four Corner Analysis, the same Michael Porter who developed Porter’s Five Forces, Generic Strategies, Value Chain Analysis and more… an impressive array of strategic tools!