Competitive Intelligence:
What is It & Its Status
Concept of Competitive Intelligence (CI) (1)
What is Competitive Intelligence?
Competitive Intelligence: A systematic and ethical program for gathering,
analyzing, and managing external information that can affect your company's
plans, decisions, and operations (SCIP : Strategic and Competitive Intelligence
Professionals)
Competitive intelligence is the gathering and analysis of information from
human and published sources about market trends and industry developments that
allows for advanced identification of risks and opportunities in the
competitive arena. (Ben Gilad, PhD )
Competitive Intelligence is a process which gives insights
into what might happen in the near future to support
business decisions
Conduct Intelligence to:
Gain a Competitive Advantage
Concept of Competitive Intelligence (CI) (2)
Competitive Intelligence is NOT Competitor Intelligence
Competitive Intelligence is NOT only for global companies,
large companies BUT also for SMEs
Competitive Intelligence uses open sources, public domain
information NOT spying (breaking laws and use of illegal
means to gather information)
Intelligence NOT Information NOT Data
It has action-oriented implications for managers
Importance of Competitive Intelligence
Knowledge economy, global competition, shorter product life cycle
increase OPPORTUNITIES and discover &manage RISKS for
enterprises. CI is important because it meets companys intelligence
needs in one of these three functional categories:
STRATEGIC DECISIONS AND ACTIONS, including the
development of strategic plans and strategies.
EARLY-WARNING SYSTEM, including competitor initiatives,
technological surprise, and governmental actions.
DESCRIPTIONS OF KEY PLAYERS in the specific marketplace,
including competitors, customers, suppliers, regulators, and potential
partners
CI Process and Tools (1)
Objective: Explain the Competitive Dynamics
What are the industry drivers?
Which of the five forces is/are the dominant in the market?
AL
C
I
IT
EC
O
Bargaining
Power of
Suppliers
Competitors
Competitors
Competitors
PO
Barriers to
Entry
N
O
M
IC
Bargaining
Power of
Customers
Competitors
LO
NO
CH AL
TE GIC
Substitutes
O AL
I
C R
SO LTU
CU
CI Process and Tools (2)
CI Process and Tools (3)
Sources of information:
Public domain information such as
newspapers, journals
radio, television
internet, information databases
company publications
official publications by government authorities
reports, statistics,...
Intellectual Property documents
Waterline
The most valuable and, often times, most
damaging information can be found below the
waterline.
The fact is however, that most firms are not
receiving below the waterline intelligence.
CI provides both above and below the waterline
intelligence,
Above The Waterline
Information that your competitors don't mind you
seeing:
Press Releases
Website Announcements
Industry Newsletters
Analyst Reports
Below The Waterline
C I that your competitors don't want you to see
Pricing Details
Sales Prospect Lists
Strategic Partners
Marketing Programs
Top Sales People
R&D Plans
Reseller Channels
Acquisition Targets
Competitive Threats
Patent Submissions
Unhappy Customers
Product Deficiencies
Trademark Infringement
Lawsuit Filings
Who is a competitor in business?
Other organizations offering the same product
or service now.
Other organizations offering similar products
or services now.
Organizations that could offer the same or
similar products or services in the future.
Organizations that could remove the need for
a product or service
Why monitor competitors?
By knowing our Competitors we may be able to
predict their next moves,
exploit their weaknesses
and undermine their strengths.
Customer's usually know the differences between
companies - their good points and bad points. They
know that company A is cheaper than company B and
that company C has a better after-sales service. For a
business to operate in a market and not know the
same, and more, is tantamount to giving up the battle
without even starting.
As Frederick the Great said:
It is pardonable to be defeated, but never to be
surprised
Why Competitive Intelligence?
No business is an island. For success, the business will need to deal with
customers, suppliers, employees, and others. In almost all cases there will also
be other organizations offering similar products to similar customers. These
other organizations are competitors. And their objective is the same - to grow,
make money and succeed. Effectively, the businesses are at war - fighting to
gain the same resource and territory: the customer. And like in war, it is
necessary to understand the enemy:
how he thinks;
what his strengths are;
what his weaknesses are;
where he is vulnerable;
where he can be attacked;
where the risk of attack is too great....
and so on. And like in war, the competitor will have secrets that can be the
difference between profit and loss, expansion or bankruptcy for the business.
Identifying these secrets is thus crucial for business survival. But all this is not
new...
Competitive Intelligence
Competitive intelligence is the practice of examining the external
competitive environment direct rivals, clients, economic/regulatory
matters, and more to support the development of more resilient,
robust strategy and tactics. The intelligence outcome is meaningful,
actionable, and provides an insight about change and future
developments and their implications to the company.
Effectively, CI improves tactical and strategic decision-making
through understanding the competitive environment.
Competitive intelligence must also be distinguished from
competitive information gathering, which is a component of CI,
but lacks analysis and meaning the essence of intelligence. This
includes company profiles or news items, which inform about a
competitor, but without analysis or context provide little
meaning and insights to support strategy and decision-making.
Why Intelligence?
Managers need to increase the quality of:
1) products or services
2) strategic planning and
3) market knowledge
That results in higher business performance
Cycle of Competitive Intelligence
The process by which raw information is acquired,
gathered, transmitted, evaluated, analyzed and made
available as finished intelligence for policymakers to
use in decision-making and action."
Five steps cycle
planning and direction
collection and research
processing and storage
analysis and production
dissemination and delivery
competitive intelligence is a business process
The Intelligence Function:
The process of ethically collecting,
analyzing, and disseminating accurate,
relevant, specific, timely, foresighted and
actionable intelligence regarding the
implications of the business environment,
competitors, and the organization itself.
The Intelligence Function:
Gather information from primary &
secondary sources
Upgrade information to intelligence
incorporating analysts perspective
Generate insights and suggestions
Disseminate to decision makers who take
action that can gain a competitive
advantage for the firm
The Intelligence Process is NOT:
Industrial/Economic Espionage
Corporate Spying
Routing news clippings
Searching the Web
How Do I Know if I Need an
Intelligence Function?
Well, how critical are the questions
that keep you awake at night?
How Many Resources Are
Enough?
Well, how many key managers are
currently obtaining and using
adequate intelligence effectively for
decision making?
Strategic Intelligence:
Emphasizes the relationship between the
intelligence function and strategic decisionmaking
Business Intelligence:
Incorporates the monitoring of a wide array
of developments across an organizations
external environment, which includes
customers, competitors, suppliers, economic
issues as well as technical and regulatory
changes
Technical Intelligence:
Monitors research and development issues
Reduces risky decision making
Broadens awareness of competitive situation
Identifies business alternatives
Counterintelligence:
Protects intelligence collection activities
and protects plans, programs, and projects
from adversaries
Hire security specialists
Train employees not to give away sensitive
information
Computer usage heightens importance
Whos Doing Competitive Intelligence?
90% of Fortune 500 firms in the U.S.
9% of U.S. firms with formal processes
Chemical and telecommunications firms
Firms with high R&D expenditures
Firms that own many patents
2-3% of German firms in various industries
U.S. & U.K. firms: leading intelligence producers
How Do Leading Firms Conduct
Intelligence?
Broadcast intelligence to users
Increase number of intelligence users
View intelligence as decision critical
Intelligence is part of managers duties
Institutionalize the intelligence function
Manage corporate knowledge assets
Maintain and rely on during a recession
Primary Information Sources
(Find Experts!):
Interviews with internal experts, customers, and
suppliers
Marketplace surveys
Industry analysts
Business editors
Associations
Observations
Unpublished documents
Secondary Information Sources:
Internal and external databases
Industry and government reports
Directories
Statistical sources
Newspapers and magazines
Trade publications
Criteria Not to be Overlooked:
Balance strategic & operational needs
Adjust the function as the market changes
Determine locus of decision making
Companys structure
Corporate culture
Market environment
Common Problems:
Managers dont value intelligence
Managers consider intelligence a luxury
Inability to incorporate it into strategy
Managers believe I know my industry!
Unskilled people try to perform intelligence
Managers hoard information
The function doesnt meet the real needs and concerns of
decision makers
Intelligence is seldom used by decision makers (A.S. e.g.)
Creating the Intelligent Firm:
Adjust decision-making process & culture
Open communication lines
Sensitize firm to marketplace changes
Align intelligence to decision-making
Support the process with technology
Excellent Intelligence Service:
Clearly define intelligence needs
Use creative sources
Understand the complexity of the issues
Upgrade information to intelligence
Offer recommendations, suggestions, and
alternatives
Obtain feedback from decision makers
Motivator:
Whats in It for Me?
Motivational Issues
What are the benefits to the firm?
What are the benefits to decision makers?
What are the benefits for intelligence
professionals?
Predict & Measure the Impact of
the Intelligence Function
Determine where & how impacts will occur
Determine your competitive advantage
Assess appropriateness of costs (ref. CFO)
Measure impacts in terms of:
Time- or cost-saving
Cost avoidance
Revenue enhancement
Various Roles in the Intelligence
Process
Core Roles:
primary researchers
secondary researchers
analysts
integrators
Supporting Roles:
system builders
data builders
knowledge builders
protectors
decision makers
Intelligence Skills Come From:
Personal traits
Formal education
Mentoring
Work experience
Who actually does CI work?
Public, legal or
corporate librarians
In-house Corporate
Information Center
Analysts
Knowledge
Management specialists
Market research
specialists
SBU Managers
Financial data specialists
Business development
specialists
Strategic planners
Academicians
(Professor-types!)
Police or Military
Intelligence retirees
Other agencies involved in CI work include:
Large public relations firms
Consulting Divisions of Major CPA firms
Small independent consulting firms devoted to
conducting competitive analysis and industrial
research for clients
Professional societies such as:
The Information Industry Association
The Conference Board
The Planning Forum
trade and industry associations, and yes, even labor
unions!
The tools and techniques of CI include
Contacting Government Agencies for available data takes time
but well worth the effort.
Using Industry, Company and Investment Firms research resources
Designing and conducting surveys and interviews
Conducting drive-by and on-site observations
Participating in competitive benchmarking programs
Conducting on-going defensive competitive intelligence
Performing reverse engineering on competitors products
Searching on-line databases
