Big Ideas for Small Business Managers : Competitive intelligence doesn’t mean that you spy on the gu
26 Oct 2015 - {{hitsCtrl.values.hits}}
When you hear the phrase ‘competitive intelligence’ (CI) do you think of spies, covert activities and espionage? Do you think of expensive gadgetry and employees dressed like Tom Cruise from Mission Impossible? While these popular images might come to mind, in truth, this is far from reality. Contrary to common perceptions, CI is a ‘defined business strategy’. In fact, an estimated 90 percent of Fortune 500 companies have a well-established CI function and none of these strategies rely on espionage, covert spies or Tom Cruise.
At its core, CI is strategy companies use to make strategic business decisions. Yes, it often requires companies to explore competitors, but it doesn’t necessarily mean you need a secret spy on hand. Understanding the competition is a crucial business activity for almost any company or executive. Some companies hire outside professionals to track competitors and assess the competitive landscape on a regular basis. But it doesn’t always have to be a complicated, time-consuming and expensive process, particularly given the wealth of data that can be assembled using the Internet.
By investing even a small amount of time, businesses of any size can develop a framework for making competitive assessments, gather intelligence on business rivals, and understand how to position their brand, products and company in the marketplace. Not only can you learn best practices from competitors, but you can also learn to avoid the mistakes they make.
Research
A broader definition of CI is ‘the action of defining, gathering, analysing and distributing intelligence about products, customers and competitors in order to support executives and managers in making strategic decisions for an organisation’. You’ll notice that the definition doesn’t include anything about breaking the law, instead focusing on how companies can use information to improve.
You can find out a lot about competitors online, but in truth, effective CI goes beyond the Internet and includes people and processes. Some say the most valuable information is from human networks (i.e. people). If your company is like others, a great deal of intelligence is probably shared in the lunch room on mid-day lunch-breaks. But that doesn’t mean information isn’t found through the news media, customer and competitor interviews, industry experts, trade shows and conferences, government records and public filings. In truth, an effective CI strategy looks at all these sources for information, much like a detective investigating a crime. You have to analyse the entire business landscape to produce actionable and meaningful recommendations.
Two categories
Competitive intelligence is often grouped into two categories: ‘strategic and tactical’. Strategic CI focuses on longer-term issues such as key risks and opportunities facing the enterprise. Tactical CI focuses on shorter-term issues and provides input on items like capturing market share or increasing revenues.
Both strategic and tactical intelligence are important to an organisation, but many begin with capturing tactical intelligence because it tends to focus on the immediate issues affecting most businesses.
Whether you are engaging in strategic or tactical CI, you do need a solid process that works. A good starting point for any company interested in developing a CI strategy is the ‘Strategic and Competitive Intelligence Professionals (SCIP)’, formerly the Society of Competitive Intelligence Professionals. The SCIP website has resources that can help any company get started in CI, including a SCIP Toolkit and a complete CI “How To” guide.
Defined process
Like any business strategy or initiative, CI must have a defined process in order to be effectively implemented. Let us review a simplified rendering of the three basic elements required for effective CI.
Step No-01. Gather information about your competitors using any legal means available (as detailed).
Step No-02. Convert this information to usable data.
Step No-03. Take that data and use it to make business decisions that will keep you ahead of the competition.
For starters, your company must determine its key intelligence needs, followed by a defined process to collect, analyse and disseminate the intelligence.
To accomplish this, your company must monitor the competition; understand its goals, strategy and tactics; anticipate its actions and understand the expected impact of those actions; and implement a counter strategy. You also need the ability to convert the data you collect and translate it so it is meaningful and relevant.
For example, maybe you uncover that a competitor is releasing a new product that will compete directly with your company. Unless you can connect the dots as to how that will impact your company and industry, and define an approach to mitigate the potential loss of revenue, the information is essentially worthless. Accordingly, the last step is to take the data and use it to influence everyday business decisions that will keep you ahead of the competition.
In-house intelligence
Most middle-sized and smaller companies choose to conduct CI in-house, not only to limit costs, but also because there is a reluctance to give a third party access to internal functions. There are some benefits to doing it yourself, aside from saving money. First and foremost, some experts say that 80 percent of the knowledge you need on competitors already exists internally. You just need to learn how to tap into internal networks.
Also, if you develop CI internally you will have constant and immediate access to the data. And, most internal managers are better suited than third party professionals to articulate the kind of information they need to know about competitors. In addition, there is a higher level of trust associated with conducting CI internally. Managers are more likely to listen to results from an insider as opposed to an outside firm. However, tread lightly, because to be successful, you need to follow a ‘defined approach’.
Roadmap
As with any business strategy, before you begin a project you need a roadmap of what you want to accomplish and where you are going. Most importantly, you want to identify what you will do with the information once it’s collected. This is why experts suggest that companies follow a defined CI strategy that usually consists of four to five stages, depending on your corporate needs.
The first stage is ‘planning and direction’. It’s critical to establish the CI needs and expectations of end-users by engaging with cross-functional stakeholders across the enterprise. Involve employees in the process whenever possible, particularly those that work directly with competitors or rely on competitive data to be successful. During the planning stage, consider asking four key questions:
What is the purpose of this project?
How can we achieve our goal?
What are the deliverables?
Who are the intended recipients?
Once you identified the answers to these questions, you can begin targeting the sources that are relevant to your specific project. Since CI is an expensive undertaking for most companies, it is critical to identify what is already known about rivals and what information gaps exist. Keep in mind that experts claim 80 percent of the competitor data you need already exists internally. And remember the key to strategic CI is knowing enough about your competitors to predict what they are likely to do next, and taking action that mitigates the impact of competitors in your company.
Once you’ve clearly outlined the plan and direction of CI, you are ready to begin phase two of the process and start collecting information. Keep in mind that you’ll need to stick to the plan to ensure focus and consistency.
(Continued next week) (Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at [email protected])
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