Competitive Intelligence: The Value and Components of a Successful Program

Companies need information. To make the decisions that guide product development, the decisions that pinpoint the path to business success, company executives and other leaders are desperate for data. Only with a strong knowledge of the marketplace, competitors, and the past can companies make optimal decisions.



Companies need information. To make the decisions that guide product development, the decisions that pinpoint the path to business success, company executives and other leaders are desperate for data. Only with a strong knowledge of the marketplace, competitors, and the past can companies make optimal decisions.

But the kind of information that is most useful and powerful for companies is not data that can be found easily. Its not the kind of information that comes after the fact, and that allows only reactionary movement. Instead, companies need competitive or strategic intelligence, exclusive information that allows analysis and prediction of the future.

Look at the business leaders today in the form of Fortune 500 companies, and youll see companies dedicated to competitive intelligence efforts. The benefits of embarking upon and maintaining competitive intelligence efforts are substantial. The simple but nearly impossible move from reactive to proactive can push a company to unheard of heights. But some executives are still leery of the concept, and some companies at a loss on how to institute their own system for their own goals.

In this article we examine the idea of competitive intelligence, as well as the benefits available to those who use it. We look at the components of the ideal competitive intelligence program, and the key aspects of a system on a smaller scale. Finally, we look at the ever-present and elusive idea of ROI as it relates to competitive intelligence efforts.

Definitions and Benefits

To truly understand the value of competitive intelligence, companies must first understand the definitions.

There are key differentiations of what competitive intelligence is and what it is not. First, strategic or competitive intelligence is not intelligence simply based on finding facts. Nor is it finding facts and information found through regular research and sources. Instead, competitive intelligence is the careful discovery of information not available to the general public. It requires expert sources, advanced information-gathering methods, as well as sophisticated analytical techniques.

Next, strategic or competitive intelligence is not tied to a certain time or place. Rather than focusing on straightforward data collection based on competitors maneuvers and products in marketplace, competitive intelligence gathers information that enables a close look at the motives and decision-making processes behind these maneuvers. This gives executives and company leaders the ability to predict future actions.

Finally, strategic or competitive intelligence is not reactionary or after the fact, like most information gathering and research. No matter how fast information is delivered to companies, and no matter the real-time technology available to execs, chances are its still based on secondary information sources available to the general public, and reports on events after the fact. Competitive intelligence, on the other hand, works to create analyses and predictions for future events.

Taken together, competitive intelligence is proactive rather than reactive. Its based on exclusive information and advanced analysis. Its outside of time and place, and focused on motivations and processes. Competitive intelligence allows companies to make the best business decisions in advance of competitive events. It allows executives to evaluate business moves in terms of potential impact, and minimize complications and unwanted consequences from competitor actions.

The benefits afforded by competitive intelligence are substantial. But for some, the risks of not engaging in a strategic or competitive intelligence program are even more compelling.

Companies without an intelligence system are forced to live out a lifespan of unpleasant surprises and crises. They are at an extreme strategic disadvantage. Relying on the same facts and information the rest of the public is relying on, information tied to time and place and without insight into the decision-making processes of the movers and shakers, information that comes after action has already taken place, means companies simply ride the wave of the marketplace without the ability to change their business outlook and impact. They must navigate an unceasing string of competitive surprises and must put forth too much effort and cost into managing crises. Money and time that could be put into creating their own competitive advantages.

Some companies take comfort in their market dominance, eschewing the need to keep tabs on the competition through competitive intelligence. Being the leading company in a particular market may mean an ability to predict others responses to actions and changes. But market dominance can quickly fade without insight into other market players. Competitive intelligence is necessary to keep aware of competitor innovation, and to proactively create new offerings. Companies that dont do this, who ignore competitive intelligence and the actions of other market players, can effectively lose their market dominance.

The Competitive Intelligence Program

The ideal system of strategic or competitive intelligence is marked by several characteristics and components.

o A combination of internal and external resources. Companies that rely exclusively upon an in-house team or external consultants may find a dearth of the kind of effective competitive intelligence and analysis that will be instrumental in success. In-house employees may be more cost effective, and provide the benefit of being in the company network. But bias can also be introduced, and information gathering could be limited. Utilizing external consultants can enable more thorough, comprehensive intelligence without bias and within legal and ethical strictures. A system that combines the two initiatives can be highly successful.

o An unwavering commitment to legal and ethical guidelines. Among many company executives, a perception of strategic and competitive intelligence programs is fairly negative. They view external consultants especially as illegal and unethical, regularly violating the privacy of others. While some companies do exist that operate on the level of the derided dumpster divers, many consultancies also exist that hold themselves to the highest standards, conducting their intelligence activities within the parameters of national and state laws and within the limits of ethics and good taste.

o A network of global connections and resources. Whether in-house or external, relying on intelligence gatherers from one area is bound to fail. The best intelligence is collected through familiarity and candor, which will be hindered by unfamiliar accents, inattention to cultural or local norms, and other faux pas. A global network of local professionals can ensure these mistakes dont result in faulty intelligence.

These are the characteristics to which companies should aspire when creating and maintaining a competitive intelligence program. But more often than not, when companies have limited financial and other resources, or when they have smaller goals than global market dominance, they focus their efforts on an in-house team and smaller intelligence network. The trick then becomes implementing effective training and tools in order to provide all the benefits that proper competitive intelligence can provide. The components of an efficient and effective program will include:

o Training: A successful competitive intelligence must be furnished with the right skills to find information not available to the public and analyze. Companies can select training programs based on team goals, whether a team should simply master the basics, go beyond the basics, or become experts.

o Information-Gathering Tools: An effective and trained team must have the necessary tools available to them to work their magic. These include web-searching tools, online databases, and newsgathering services. While these kind of tools are all available for free, the type of search engines, databases and news services that will have exclusive, competitive information will require investments in the forms of subscriptions and other fees.

o Analytical Tools: Ensuring a trained team with the right tools is able to take the final step and create the analysis necessary for competitive intelligence is about procuring sophisticated analytical software or methods.

Competitive Intelligences Return on Investment

Whether a company is enlisting a combination of internal and external resources to obtain competitive intelligence on a global scale, or creating an in-house team for more modest goals, the ever-present concept of ROI will be important to the powers that be. No matter how compelling the reasons for effective competitive intelligence, sometimes the best convincing will be through a demonstration of superior return on investment.

Theoretically, ROI for competitive intelligence will be measured in every competitive gain, every boost in business, that comes from staying ahead of competitors surprises and avoiding crises. But how to get concrete and offer management the kind of ROI theyll understand?

In the case of a justifying the creation and development of an in-house program, there are key ways to demonstrate ROI for each aspect of training and tools.

o Training measurement. Take stock of a teams information-gathering ability before training sessions and compare it with the speed and content found after a training session. Ideally, the information gathered after training will be much higher quality and more usable by management. An ROI report could include a skill assessment summary, costs of the training, search results, and additional information that could be found with enhanced budget and extra training.

o Research tools and measurement. Similar to the training exercise, complete a search with existing tools and complete the same search with trial versions of advanced tools that require subscriptions and fees. Logically, more information will be found with the advanced tools, information that can be used to make key decisions. An ROI report can compare the tools and results, and clearly state the benefits of the paid services.

o Analytical tools and measurement. Justifying expenses for sophisticated analytics systems is more about calling out the limits of current procedures and demonstrating how the systems can improve processes.
By demonstrating ROI through concrete means and clear experiments, management will be much more willing to invest and reinvest in the competitive intelligence program, building its power over time.

Conclusion

Through the judicious collection and use of competitive intelligence, companies can reap the rewards of becoming proactive in the marketplace. By enlisting a system that relies on extensive training, exclusive tools, and powerful analytics, and that commits to legal and ethical guidelines, companies can finally find the information theyve been desperate for in order to make the best decisions.

Author:
Dr. Andree K Bates
Eularis
www.eularis.com

For more information on competitive intelligence activities and how to strengthen the information your company has, please contact the author Dr Andree Bates at Eularis www.eularis.com