Researchers and Analysts
COMPETITIVE INTELLIGENCE FOR YOU
Analyze. Synthesize. Present.
A rapidly increasing number of companies are setting up a Competitive Intelligence function, and the new discipline seems to be fast emerging as one of the hottest trends in management today. To many executives, Competitive Intelligence (CI) is nothing more than what marketing or market research departments have been doing for years. It is simply a process a company uses to analyze information on its competitors, market and customers. Indeed, companies have been conducting CI for years, usually as a part of the market analysis, strategic planning or marketing function. Yet properly informed, companies can anticipate changes in the industry and make the right strategic desisions.
But many of these same companies have failed to see the difference between CI and conventional marketing. CI emphasizes the use of tools to analyze a combination of documented and anecdotal information, and ensures that significant efforts are undertaken to disseminate this information throughout the organization. As a result of the confusion between marketing and CI, and the lack of an established formal structure for creating the CI function, senior executives have been overwhelmed by the amount of raw information sent to them. This is why, in most companies, the CI function has often been viewed as nothing more than a glorified library service. However, there are compelling differences between CI and conventional marketing, and understanding them can give a company a strategic advantage. These differences will be described below, as will the best – and worst- practices for setting up and maintaining an effective Competitive Intelligence function.
COMPETITIVE INTELLIGENCE: A NEW DISCIPLINE
There are a number of formal definitions of Competitive Intelligence. The Society of Competitive Intelligence Professionals (SCIP) defines it as “the legal collection and analysis of information regarding the capabilities, vulnerabilities, and intentions of business competitors, conducted by using ‘open sources’ and ethical inquiry.” There is also a broader definition: CI is the team process of discovering, analyzing and delivering intelligence from publicly available, non-proprietary information sources for the purpose of becoming more competitive in the marketplace. Three factors have driven the emergence of Competitive Intelligence:
1 The arrival of new competitors, combined with the need to grow, has triggered a huge demand for market and strategic information. The danger of getting blind-sided by unexpected new entrants is greater than ever. The large bookstore chains did not anticipate the surge of Amazon.corn, nor did telecom operators expect that railway and energy companies would become competitors. An early warning and quick response system will be key in the 21st century Above all else, CEOs hate to be surprised.
2 Increasing industry consolidation has made it harder to know what competitors are doing from conventional, publicly available sources.It has become increasingly difficult to read the annual report of a large company and be able to draw meaningful conclusions about the new products they are developing, or to even know the revenue of a division that is a competitor. At the same time, newer, innovative sources such as Companysleuth (www.companysleuth.com) are offering more information than ever before, while the utility of traditional sources of information (e.g., annual reports) is declining.
3 New tools and sources of information have allowed non-research specialists to access information they need, and to easily analyze, synthesize and distribute it. Five years ago, only experts trained in using complex search languages could access the large, then user-unfriendly databases such as Dialog or Lexis-Nexis. Search engines and databases have now simplified ease of access and searches can be conducted in a natural language. At the same time, the costs of accessing information have been slashed: Most patent databases can be searched for free and press releases and news articles are usually available free on the Internet. There is no limit to accessing information from different parts of the world. From a terminal anywhere, an analyst can obtain press releases and technical publications in Japan, patent information from the U.K., financial reports and filings of U.S. publicly traded companies in a matter of minutes. Finally; more and more public filings are now available online and most of these are free.
Increasingly sophisticated on-line tools and artificial intelligence systems to map and synthesize competitive information are now available. For a few hundred dollars, tools will screen thousands of pages on a specific subject, extract the key words and concepts and map the results in an easy-to-read, colourful format. It will automatically summarize the document and point to the three best pages on the Web that have the most concise results of your search. These tools are far from perfect and none will replace the analysis done by teams of human analysts. But they provide more knowledge to more people in less time and at less cost than ever.
COMPETITIVE INTELLIGENCE VS. TRADITIONAL MARKETING
The fundamental difference – and advantage – of CI is its strong emphasis on analytics. The objective is much less to find the appropriate information than it is to know what to do with it. The CI team will focus mostly on sophisticated analysis techniques, for example, cost-structure comparison, profiling, and value chain, gap and stakeholder analyses. CI cuts across departmental boundaries. The CI team will interact with and contribute to most departments in the organization:
- In a European aerospace company; it provides key market information for the strategic planning process (size and growth rate) and compares it with competitors
- In a Canadian high-tech company, it provides the framework for making the right trade-off in R&D fund allocations by using a market perspective to assess the potential of each dollar invested in the technology.
- It helps the budgeting process by aligning departmental forecasts with external views of the market’s total size
- In a large telecommunication company, it helps the human resources department identify high-potential candidates, compare packages between companies, or target key individuals at competitors.
- It allows engineering to focus on aspects of product development that respond to customers’ needs
- In an international transportation company, it tracks contracts awarded to help marketing assess changes in market share and segment their markets.
CI also places a very strong emphasis on “human sources” of information. A manager of CI will focus on developing a network of experts who can help identify crucial information. Some could be outside experts, but they often include key people in the organization who have specific market knowledge, but no channel to communicate it. Recently, a Canadian electronics company was building a complete profile of its main U.S. competitor’s management team. After spending a couple of days screening publications and press releases, the analyst identified a former competitor’s employee who the U.S. competitor had hired a couple of weeks before. By spending a few hours with him, he was able to build an exhaustive picture of the company’s management strengths and weaknesses.