A journey of a thousand miles begins with a single step

 Lǎozi 老子

I simply had lunch with Shenwei, one among my ex-students who had simply taken a job in a mid-sized consulting agency.  After a little bit of catching up I supplied he was wanting a bit misplaced. “I simply obtained handed a undertaking to assist our agency enter a brand new trade – semiconductors. They need me to map out the house so we are able to determine the place we are able to add worth.

Once I requested what they already knew about it, they tossed me a tall stack of trade and inventory analyst studies, firm names, web pages, blogs. I began studying via a bunch of it and I’m drowning in information however don’t know the place to start out. I really feel like I don’t know a factor.”

I instructed Shenwei I used to be pleased for him as a result of he had simply been handed an superior studying alternative – the right way to quickly perceive after which map any new market. He gave me a “straightforward so that you can say” look, however earlier than he might object I handed him a pen and a serviette and requested him to jot down down the names of corporations and ideas he examine which have something to do with the semiconductor enterprise – in 30 seconds. He shortly got here up with an inventory with 9 names/phrases. (See Mapping – First Go)

“Nice, now now we have a begin. Now give me a couple of phrases that describe what they do, or imply, or what you don’t find out about them.”

After a couple of minutes he got here up with a serviette sketch that seemed like the image in Mapping – Second Go. 
Now we had some progress.

I identified he now had a starter checklist that not solely contained corporations however the starting of a map of the relationships between these corporations. And whereas he had a couple of information, others had been hypotheses and ideas. And he had a ton of unanswered questions.

We spent the following 20 minutes deconstructing that sketch and mapping out the Second Go checklist as a diagram (see Mapping – Third Go.)

Notice that even with simply the sparse set of data Shenwei had, within the backside right-hand nook of his third mapping go, a relationship diagram of the semiconductor trade was starting to emerge.

As the knowledge fog was starting to carry, I might see Shenwei’s confidence returning. I identified that he had an actual benefit that his project was in a identified trade with numerous obtainable data. He shortly realized that he might hold including data to the columns within the third mapping go as he learn via the studies and web pages.

My suggestion was to make use of the diagram within the third mapping go as the start of a wall chart – both bodily (or just about if he might hold it in all in his head). And each time he discovered extra concerning the trade to replace the connection diagram of the trade and its segments. (When he identified that there have been current diagrams of the semiconductor trade he might copy, I prompt that he ignore them. The purpose was for him to know the trade properly sufficient that he might draw his personal map ab initio – from the start. And if he did so, he would possibly create a a lot better one.)

When lunch was over Shenwei requested if it was OK if he checked in with me as he discovered new issues and I agreed. What he didn’t know was that this was solely step one in a ten-step trade mapping course of.

Epilog

Over the following few weeks Shenwei shared what he had discovered and despatched me his more and more refined and up to date trade relationship map. (The 4th  mapping go confirmed up 48 hours later.)In change I shared with him the information that he was on step one among a ten step trade mapping program. Different the following few weeks he shortly constructed on the trade map to reply questions 2 via 10 beneath.

Two weeks later he handed his management an trade report that coated the ten steps beneath and contained a complicated trade diagram he created from scratch. A far cry from his unique serviette sketch!

Six months later his work on this undertaking satisfied his firm that there was a big alternative within the semiconductor house, they usually began a brand new apply with him in it. His work received him the “greatest new worker” award.

The Ten Steps to Map any Trade

Fundamental Trade Understanding

1. Diagram the trade and its segments
   1. Begin with something
   2. Construct your studying by successive iteration
   3. Who’re the important thing suppliers to every section?
   4. How does this trade feed into the bigger financial system?
2. Create a glossary of trade distinctive phrases
   1. Are you able to clarify them to others? Are there analogies to different markets?
3. Who’re the trade consultants in every section? For the whole trade?
   1. Financial consultants? E.g. trade analysts, universities, suppose tanks
   2. Expertise consultants? E.g. universities, suppose tanks
   3. Geographic consultants?
4. Key Conferences, blogs, web pages, and so forth.
   1. What are the perfect opensource information feeds?
   2. What are the perfect paid assets?

Detailed Trade Understanding

5. Who’re the market leaders? New entrants? In income, market share and progress price
   1. Within the U.S.
   2. Western nations
   3. China
6. Perceive the expertise flows
   1. Who builds on prime of who
   2. Who’s important versus who may be substituted
7. Perceive the financial flows
   1. Who buys from who on this trade
   2. Who buys the output from this trade.
   3. How cyclical is demand?
   4. What are the demand drivers?
   5. How do corporations inside every section get funded? Any variations in capital necessities? Ease of beginning, and so forth.
8. If relevant, perceive the personnel circulate for every section
   1. Do individuals transfer simply between their segments or up and down via the whole trade?
   2. The place do they get skilled?

Forecasting

9. What’s modified within the final 10 years? 5 years?
   1. Diagram the previous incarnations of the trade
10. What’s going to alter within the subsequent 5 years?
    1. Any huge perception on disruption?
    2. New entrants?
    3. New expertise?
    4. New international suppliers?
    5. Diagram your mannequin of the trade in 5 years

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