Frequently Asked Questions
1. What is the #1 rationale for using IndustryBuildingBlocks.com?
· We uniquely provide line-of-business (five forces level) industry information for the global economy.
(We are able to provide significantly better global industry information because we leverage the ideas of Michael Porter in developing a clear understanding of the economy in terms of the Top 16,000 global industries. Most other providers of industry information are based on the U.S. government's NAICS 2012 codes of 1,066 "industries" - most of which are really industry groups. In our opinion, Porter's five forces methodology beats the methodology used by OMB and the U.S. Census Bureau hands down - especially if you need the information for making real business decisions, rather than for academic "statistical purposes" for which NAICS was designed.
2. What are the Key Value Drivers for the IndustryBuildingBlocks.com service?
· The key value drivers for IndustryBuildingBlocks.com, which can vary by client, include:
- Dramatically improved line-of-business-level industry information
- Increased strategically-relevant information for better decision making
- Reduced market research costs
- Reduced time delay in accessing good industry intelligence when needed
- Holistic view of all relevant industries
3. Can you explain why your industry classification system is so different from the norm?
· NAICS is the dominant industry classification system in use today; it replaced the SIC industry classification in 1997 for all U.S. government departments except for the Securities Exchange Commission. Most other country-developed industry codes, as well as the UN's International Standard Industry Classification, all appear to have copied the hierarchical structure of the original 1939 SIC codes and, more significantly, none of them leverage the landmark work of Michael E. Porter and his five-forces analysis.
· It's correct to say that NAICS and IBBCS are totally different because NAICS is stuck in the past history of SIC codes structure and because IBBCS is a global industry classification system that leverages Porter's landmark theories in terms of how to correctly define industries (by weighing the five forces).
4. What does the user get for the subscription fee?
· The user gets online access to approximately 16,000+ industry information dashboards. (The information is presented using TIBCO's Spotfire Business Intelligence and Analytics cloud-based offering.) See general dashboard format here. There is no guarantee of any additional services, but if you let us know what industries or companies you are most interested in, we will do our best to ensure those areas are well covered.
5. The term "industry" - how do you define it?
· We find that when most people use the term "industry" they use the term loosely to mean anything from an industry sector to a true industry. We use the term in concert with Michael Porter's ideas; and we have used Porter's five forces methodology over 16,000 times to objectively determine what the real industries are that make up the global economy. (See Porter's book "Competitive Advantage" chapter 7 for a good how-to discussion for drawing industry boundaries; and see page 354 for examples of true industries, like: "Napkins", "Paper towels", "Tissues", etc. Each of these "industries" and 16,000 additional industries are represented in the IBBCS.)
Porter's definition of an industry is: "An industry is a market in which similar or closely related products are sold to buyers" - and one needs to understand the five forces of an industry and weigh the structural components to best define industry boundaries. This can sometimes require a lot of hard work including thinking; although once the analysis is completed, the answer is usually viewed by others as so obvious they wonder why any analysis was required at all. Fortunately for most business executives who do not have a lot of time learning methodologies, just viewing a list of correctly-defined industries often provides an ah-ha-I-get-it experience.
6. Can you provide a list of correctly-defined "Industries" in the IBBCS?
· Aluminum Can Manufacturing
· Antimicrobials Manufacturing
· Aviation Reinsurance
· Backhoe Loader Manufacturing
· Billboard Display Advertising
· Bone Marrow Transplant Services
· Bridge Construction
· Budget & Economy Hotels
· Business Jet Manufacturing
· Call Center Outsourcing Services
· Capital Markets Legal Services
· Carbon-Offset Retailers
· Checking Services
· CNC Machining Services
· Coating Effects Manufacturing
· College Football
· Color Visualization Software
· Combat Radar Systems
· Comedy Movie Development
· Commercial Truck Insurance
· Compostable Dishware
· Corporate Relocation Services
· Dental Imaging Equipment Manufacturing
· Diabetes Medication
· Discount Brokerage Services
· Fitness Equipment Stores
· Frozen Pizza Manufacturing
· Grade School Textbooks
· Graduate Schools of Business
· Gutter Cleaning Robots
· Hybrid Bus Manufacturing
· IPO Equity Underwriting
· Kebab Ovens Manufacturing
· Lipstick Manufacturing
· Luxury Bed Manufacturing
· Mainframe Manufacturing
· Manufacturing Flame Retardants for Polymer Processing
· Orange Juice Manufacturing
· Ovarian Cancer Drug Manufacturing
· Pasta Maker Manufacturing
· Payroll Software
· Pet Grooming Services
· Plasmid DNA Production
· Premium Vodka Manufacturing
· Professional Baseball
· Shareholder Proxy Services
· Silver Ore Mining
· Ski Boot Manufacturing
· Sky Diving Instruction Services
· Solar Panel Manufacturing
· Soybean Seed Production
· Space Exploration Software
· Tugboat Services
· Upscale Seafood Restaurants
· Wafer Processing Systems
· Wholesale Funds Transfer Services
· Wine Distribution Services
7. What do you say to those people who use Hoovers and companies like them?
· In our opinion, companies like Hoover's are great for what they do, which has a lot to do with re-formatting company-provided data. The company data is generally at the corporate level, and almost never at the line-of-business level. Hoover's 900+ "industries" are, in our opinion, really industry groups. In short, we see Hoover's as perfectly complementary to what's available via IndustryBuildingBlocks.com - we only sound like substitutes because the word "industry" is used loosely for sector information as well as line-of-business information. Hoover's has the former; we have both.
8. How do you get all the industry product segments, the industry buyer segments, the channel segments, etc.?
· Hard work over ten years. The results of all analysis - everything - has been entered into the system by hand. This effort is really just one massive project doing the same industry analyses and company analyses one after another after another. Fortunately, about 75% of the information doesn't actually change all that often. Cheerios has been around a long time. Buyer types for PCs or mainframes don't change that often. Substitutes for wholesale funds transfer services don't change that often. Now that we have complete version 1.0 of the global economy, we are now adding mergers as they happen, new products as they are announced, smaller companies not in the global 1,000, etc.
9. How did you come up with the Industry Sectors?
· Each of the 16,000 global industries that are defined in the Industry Building Blocks Classification System [TM] has its own unique (five forces) industry structure. The industries are not tied to a single fixed hierarchy - which gives the user significantly more capabilities to select and group and analyze the portions of the global economy of interest. (The fixed hierarchical structures used by NAICS, SIC, and the UN's ISIC codes are fixed - that's it.) Within the context that the 16,000 industries can be grouped in an unlimited number of ways, and we can change the industry sectors overnight without making a bit of difference to the 16,000 industry analyses, the current Industry Sectors were named and based on the following three priorities:
1. Most logical for the Clients to understand
2. Based on how companies operate (For example: most IT companies like IBM and HP manufacture IT hardware as well as provide software and business and IT services - so these products and services are logically grouped in the same industry sector.)
3. Usability (For example: there are 19 industry sectors because of feedback that the color pie charts get too crowded with 20 or more slices.)
10. Do you have a listing showing the level below the Industry Sectors that you provide?
11. What sources do you use in your research?
· Although we use a very wide variety of sources, company annual reports and company websites typically account for at least half of the information we collect. (Websites are usually a rich source of products and services offered; and especially since Sarbanes-Oxley, annual reports for public companies are rich with information about themselves and the industries they compete in.) We use many traditional and digital business and industry news sources to keep up with mergers, acquisitions, product launches, etc. Given that we cover all global industries, it is literally true that every we read about presents an opportunity to discover an industry we have overlooked or to add more information about an industry in our database.
12. Are the industry size estimates global, or for the US?
· All industry size information and, in fact, all information, is purely global. There is nothing about the information provided that is U.S. specific, except that the site is currently only in English and all dollars are shown in millions of U.S. dollars.
13. How do you estimate industry revenues?
· Our mission begins with holistically defining the world's economy by industry for the Top 16,000 industries. Estimating industry revenues begins with an estimated guess, and this guesstimate continually improves as additional competitors are added. For most industries, we have observed that by the time the seventh or eighth competitor is added, the industry size estimate feels reliable. Significantly, we use a mathematical check that ensures that our numbers are, in fact, very reasonable. We check that a company's total revenues should closely match the sum of the revenues of all of its lines of business. For example, if a $60 billion dollar company like Caterpillar competes in 215 lines of business, the sum of the company's revenues in those 215 lines of business should be very close to $60 billion. In addition, when we analyze the revenues of a company like Caterpillar, or IBM, or Johnson & Johnson, we certainly sort the lines in business in terms of estimated revenues (meaning, we not only strive for the total revenues to match, we strive to ensure that the main lines of business show the highest revenues, etc.).
14. The Industry Sectors you list look a lot like the Industry Sector Subgroups you have in the LinkedIn group "Corporate Planning & Global Industry Segmentation" - is that on purpose?
Other Questions Asked Once
15. Why are you so passionate about Porter; there are many other methodologies out there?
· Porter's concepts are taught at more MBA schools around the world than any other methodology - it has stood the test of time. There are lots of other methodologies that add to Porter's concepts at the edges, but Porter's works are so comprehensive and holistically sound - they should be the starting point for anyone new to strategy and marketing. If you only have time for one of Porter's many great books, I suggest "Competitive Advantage." And if you don't have time to read the whole book, chapters one and two provide the core concepts.
16. Does the IBBCS cover non USA regions?
· The Industry Building Blocks Classification System [TM] assumes each industry is a global industry. (For each industry, we have estimated industry revenues by 10 global regions, one of which is the U.S., which we can easily add to the dashboard if a client requests it. Our work in this area is very light - and mostly to satisfy one client's request to provide these estimates to feed their sales quota system.)
17. Why don't you provide a free cross-reference table to and from NAICS and SIC codes and your industry listing?
· For 25 years part of our taxes went to update SIC and then NAICS codes - that's why they are free to all. Correctly analyzing the economy (for example, using Porter's methodologies) is hard work. Consulting companies will happily charge you a hefty fee to analyze some sector of the economy at the five forces (line of business) level. Or, if you have lots and lots of free time and want to use freely available data that have not been analyzed and converted into intelligence - go for it.
18. Are specialty chemicals covered in your reports?
· Yes. Special chemicals cover a very wide area. We have over 100 industries in the specialty chemicals area.
19. Is it true you have a lot of company line-of-business information not in the cloud, and that you provide customized consulting with superfast turn-around times?