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...
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:
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:
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.
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:
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.
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:
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.
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:
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.
The advantages of Four Corner Analysis are:
There are some limitations of this approach including:
Four Corner Analysis is a framework you’d use on multiple competitors so would be complemented by the following activities:
Finally, consider how your own SWOT compares to the Four Corner Analysis you produce.
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.
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!
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