The PIMS (Profit Impact of Market Strategy) of the Strategic Planning Institute is a large scale study designed to measure the relationship between business actions and business results. The project was initiated and developed at the General Electric Co. from the mid-1960s and expanded upon at the Management Science Institute at Harvard in the early 1970s; since 1975 The Strategic Planning Institute has continued the development and application of the PIMS research.
The comprehensive profiles of over 3,000 strategic experiences constitute this unique data pool. The items of information were collected by PIMS' trained professionals working directly with participating companies to assure data integrity. The data covers the important characteristics of the market environment, the state of competition, the strategy pursued by each business and the results obtained. For more on data collection click here.
Taking a data-driven, empirical approach, PIMS has provided insights that have had a profound impact on business strategy thinking. PIMS principles are taught in most business schools; PIMS data has been used in dozens of academic articles; and PIMS theory guides the thinking of senior executives in major companies around the world.
PIMS today is much more than the research study from which it originated. PIMS is
- a database
of business strategies, used to generate benchmarks and identify winning strategies.
- a set of data-derived business strategy principles to guide strategic thinking and strategic measurement.
- a methodology
for diagnosing business problems and opportunities,
and for measuring the profit potential of a business.
The PIMS database forms the core of all services delivered by The Strategic Planning Institute.
The database is a collection of statistically documented experiences drawn from thousands of businesses, designed to help understand what kinds of strategies (e.g. quality, pricing, vertical integration, innovation, advertising) work best in what kinds of business environments. The data constitute a key resource for such critical management tasks as evaluating business performance, analyzing new business opportunities, evaluating and reality testing new strategies, and screening business portfolios.
The primary role of the PIMS Program of the Strategic Planning Institute is to help managers understand and react to their business environment. PIMS does this by assisting managers as they develop and test strategies that will achieve an acceptable level of winning as defined by various strategies and financial measures.
The PIMS database allows for the identification of those critical strategic factors that enable a business to achieve an improved sustainable position. The years of research on the PIMS database and on other cross-sectional databases of business units show quite clearly that profitability is strongly linked to strategic position. The R square of .65 of a regression of ROI on 18 key strategic variables indicates that strategic positioning is the major determinant of business success.
Those businesses that position themselves to win the strategy game through a sustainable advantage also win the performance game. PIMS can also serve as a screen such that a business's future direction, a competitor or a potential acquisition can be evaluated and benchmark performance levels can be measured.