Berkshire Hathaway made some interesting moves recently.
The company continued to boost its investments in the US homebuilding sector, despite
ongoing challenges in the housing market, increasing its stake in homebuilder Lennar by nearly
30%, establishing a stake in D.R. Horton, and completing a $8.5 billion acquisition (including
debt) of homebuilder Taylor Morrison.
It would be presumptuous for me to theorize exactly what Berkshire sees in these investments,
but given its reputation for long-term thinking, the moves raise an interesting question: What
are they seeing that others aren’t?
In fact, that’s exactly the question that all CEOs in the luxury home market should be asking.
Our first piece, The New Rules of Premium Growth, looked at companies who are succeeding in
a flat market. We believe that the new competitive advantage isn’t necessarily spending more.
It’s learning faster.
And the first of four behaviors that distinguish these companies is simple: Build a Better Radar.
Historically, businesses and the agencies that advise them have made strategic decisions and
built go-to-market plans by looking primarily backward. We evaluated last year’s sales,
historical category trends, our own customer research, and competitive reports. Those aren’t
necessarily bad; but increasingly, they aren’t enough.
The emerging competitive advantage is the ability to leverage technology to look around
corners and to combine what happened yesterday with signals about what might happen
tomorrow.
Today, brands are able to monitor consumer sentiment in near-real time and search behavior in
order to identify emerging interests before they appear in sales reports. They can analyze
competitor messaging, media activity, product launches, and trade channel activity at a scale
that would have been exceptionally expensive, if not nearly impossible, just a few years ago.
Intelligence platforms – what I am calling your “radar” – can synthesize thousands of disparate
signals and analyze patterns that might otherwise go unnoticed. Moreover, intelligence
platforms can help separate the signal from the noise in terms of the abundance of data points.
Building a better radar offers us the ability to see patterns in material that has always been
there, but we just haven’t made the connections. We aren’t trying to predict the future. We’re
simply recognizing change sooner and moving quickly in order to act on it.
What if you could see that affluent consumers in key markets are researching outdoor kitchens
more than they have all year? Or that the conversation around one of your competitor’s flagship appliances
has shifted dramatically because of increasing service or product complaints? Or that a key competitor
appears to be reducing media spend in a market where your dealer network is particularly strong.
Individually, these are data points, but collectively, they can become actionable intelligence.
And intelligence becomes particularly valuable in a flat market because every point of share must come from somewhere else.
We are increasingly able to take first-party customer data and combine it with behavioral,
demographic, psychographic, social, search, economic and geographic signals in order to
develop a much more actionable picture of where opportunity may be emerging. It gives us the
opportunity to explore who is behaving like our next best customer.
I tend to think of signals falling into a few different buckets:
– Consumer: search behavior, social conversation, sentiment, and first-party behavior
– Competitive: media activity, messaging, product launches, pricing, and promotions
– Channel: dealer activity, distribution, showroom sentiment, and reviews
– Market: housing and remodeling trends, wealth, mortgage rates, and geography
The power isn’t necessarily in one signal or group of signals. Rather, it’s what happens when the
signals begin to move together and establish patterns. I’ll give you an example: if you see
increased search activity for outdoor kitchens, that in itself isn’t very meaningful. But if they
coincide with rising affluent consumer activity in certain ZIP codes, along with outdoor
remodeling inquiries, dealer activity, and competitor pullback, now you potentially have a signal
that’s worth investigating.
Building a better radar requires a different approach to market intelligence. It can’t live in a
quarterly report that gets put on a shelf. Instead, it needs to be an always-on strategic
capability that constantly gathers signals, tests assumptions, recognizes patterns, and helps
leadership determine where to place the next bet.
Clearly, none of these tools provides 100% certainty. You still need experience, judgment, and
intuition. But your radar can make your experience and judgment even more powerful. As data
becomes increasingly available to everyone, including your competition, the winners won’t
necessarily have better access to information. But they can choose to connect the signals
faster, ask better questions, and act decisively on what they learn.
With everyone having access to information, radar turns information into intelligence, and your
experience applies judgment, allowing winning organizations to take action.
