COMPETITIVE INTELLIGENCE (CI)



According to the Society of Competitive Intelligence Professionals, competitive intelligence (CI) is the legal and ethical collection, analysis, and distribution of information regarding the competitive environment and the capabilities, vulnerabilities, and intentions of business competitors. It is the process of monitoring the competitive environment for the purpose of supporting decision-making by senior management.

George Barto, a Cl expert, offers a similar definition: "Competitive intelligence is the process and practice of gathering and disseminating information on marketplace requirements, on competitors who provide solutions for those requirements, on how well these competitors perform, and on their future strategies. And all of this information must be evaluated in the light of its implications for your company."

While Cl has its roots in military and political intelligence and espionage, it does not entail engaging in clandestine and illegal activities. Ethically, Cl in business means only gathering information that is publicly available. For example, when someone who once worked for a competitor is hired and interviewed, it is unethical to ask that they to violate a confidentiality agreement. However, they can be quizzed about information that could be otherwise obtained as a matter of public record or that is generally known outside the company. While it is ethical to scan a company's web site for information, it is not ethical to attempt to hack into its computer system. It is generally considered unethical, if not illegal, to attempt to obtain a company's proprietary information. In some cases, internal documents can be misleading, such as when a company decides not to follow its five-year plan.

WHAT COMPETITIVE INTELLIGENCE
DOES

CI promotes an understanding of the factors that influence business competition and market competition. It enhances a company's competitive strategies based on competitor activities and market conditions. It provides a way to understand a market and helps companies develop and refine competitive strategies. Companies use Cl to better understand a competitor's view of the marketplace.

Cl helps companies fight blind spots, including areas where they don't know how markets work, what customers want, what competitors are doing, and what the future holds. It helps companies stay up-to-date and eliminate outmoded notions and ideas about how things work. Ultimately, Cl empowers companies to respond quickly and effectively to changes in the marketplace. It drives business decisions regarding markets, products, prices, and marketing plans in order to gain a competitive advantage.

SOURCES OF Cl INFORMATION

Competitive intelligence can be gleaned from a variety of external and internal sources. It is distilled and analyzed by Cl specialists and turned into competitive intelligence. External sources of information include annual reports, articles, news stories, announcements, conference proceedings, corporate web pages, consultants and other outside experts, customers, and more. Listed below are some typical sources and the kind of information they can provide a Cl specialist.

THE INTERNET.

Company web sites offer a wide range of information in a form that is easier to access than comparable printed documents. They often include insights into a firm's business practices, information on new developments, and details on strategies and tactics. They can provide details on the firm's management, its vision, and where the company is going. Statements made by the CEO often reveal the company's goals and objectives and how it plans to reach them.

Other information to be gathered from the Internet home pages of competing firms includes detailed product descriptions and applications. In some cases background information is available on how the firm has analyzed its market and what assumptions it has used in developing its marketing plans. New product offerings may also be detailed.

A firm's commitment to quality may also be spelled out on its web pages, with details on how it measures quality, what problems its customers have encountered with its products, and what steps it is taking to ensure quality among its products.

Information about plants and investments is sometimes available at corporate web sites. Details on capacity, capital investment, and utilization may be revealed, along with the types of equipment to be found at each location.

In some cases companies attempt to hide the corporate structure and the organization of their business units through frequent reorganizations or business groupings. Corporate web sites can be checked to see if the firm includes specific information there about its business units and operations.

Web sites often include employment advertisements, which can reveal where the competition is directing its product development and sales efforts. These announcements can also be scanned to see how well the competition is filling its staffing requirements.

ONLINE DATABASES.

PR Newswire and other sources of business announcements and news stories provide a way to keep up with competitive product developments and other information. These are available through several online databases over the Internet or by subscription. Government web sites and databases contain information about such areas as patent filings, environmental filings, and management changes. Articles appearing in trade publications and journals are often available in electronic form through online databases.

CONFERENCE PROCEEDINGS.

Conference proceedings can provide useful snapshots on how markets are developing. They offer the opportunity to find out what the competition is doing. Conferences are often sponsored by professional associations or academic institutions, which are also good sources of information.

Customers and vendors can be quizzed about what competitors are doing. Some Cl specialists even pose as potential customers of competitors. A competitor's sales and marketing staff can be a valuable source of information. Salespeople often leak information about forthcoming new products, including scheduling information and product specifications, with the hope of gaining a sale. At trade shows, virtually anyone expressing a sincere interest in a firm's products can gain information about its products, including sensitive details. By posing as a potential customer, a CI specialist can enter into a purchase negotiation and drag out the process until he or she has obtained the desired information.

Posing as a customer begins to move competitive intelligence into the realm of corporate espionage, where different techniques are used to obtain information about competing firms. These methods include obtaining information using covert means and taking advantage of a competitor's carelessness regarding data security. For example, corporate spies can gather sensitive information by going through a firm's trash and retrieving draft versions of important documents that have been discarded, or by eavesdropping on sensitive telephone or casual conversations. Other discarded paper documents that may reveal a competitor's plans include travel tickets, credit-card receipts, invoices, shipment manifests, appointment calendars, and internal company correspondence. Telephone records can also reveal a lot about what an individual or an organization is doing and in some cases are easy to obtain.

In addition to external sources, CI specialists can obtain valuable information from internal sources, including in-house databases and the knowledge of staff members.

MANAGING CI

Companies can establish a CI resource program to turn the wealth of available information into competitive intelligence that can support corporate decision-making. Such a program requires support of top management, which must be responsive to external information. Typically, it is more difficult to establish a CI program in a small or medium-sized company, where the owner or founder of the company is regarded as the ultimate authority, than in a large organization.

It is easier to set up a CI program by looking at what types of decisions the CI will support, rather than starting with the sources of information. By examining the decision-making process and finding where there are information gaps, the company can then determine what kind of information is needed. Before implementing a CI program, companies need to review their own competitive strategy as well as those of their competitors, then decide what intelligence is needed to fill any knowledge gaps and define the actions that should be taken by the CI program.

For example, companies need to monitor core technologies. A company that is not alert to changing technologies runs the risk of losing its competitive edge. By identifying those technologies that are of strategic importance to the organization, CI can focus its resources on those areas.

Another way to establish and define a Cl program within an organization is to tie it to a specific project. This empowers individuals to use company resources and provides clear objectives with which decision-makers can identify.

It may be helpful to bring in an outside consultant to conduct an intelligence audit. The consultant will assess the company's CI capabilities and identify ways in which they can be improved. The consultant can also provide coaching to individuals responsible for the CI program. If budgetary constraints do not allow for an outside consultant, the intelligence audit can be conducted by individuals within the company.

Some CI departments may consist of only one person, while others include a large staff. According to the Academy of Competitive Intelligence, there is no direct correlation between money spent and CI effectiveness. In larger organizations it is not uncommon to have several CI staffers and a large selection of information sources. In smaller companies the CI function may be handled by a single individual. It is more important to focus on how the CI process is structured and what type of leadership it has, than on how many resources are devoted to it.

Cl TECHNIQUES

Selecting the right person to lead a firm's Cl efforts and be responsible for them is critical to the success of the CI program. The individual should have a thorough understanding of the company and its market. Personal contacts can be very important, as well as the right mental outlook and necessary business acumen. Turning information into intelligence often requires an unconventional mix of skills, including the ability to think creatively and deal with ambiguity.

Familiarity with databases and other secondary sources is helpful, but the key is being able to use that information—which is also available to competitors—to uncover bits of intelligence about competitors and the market. CI often requires asking questions directly of competitors at trade shows and other events, and being able to come up with the right questions is of paramount importance.

CI specialists will typically have to organize bits of information and other details, then identify what information is useful based on their own knowledge and experience. CI specialists also fill specific requests for information and follow internal guidelines regarding what kinds of information will be most useful.

After gathering information, Cl specialists then analyze and present findings. This can be done in several different ways. For example, information on competitive products can be summarized in a spreadsheet format, with profiles displayed side-by-side for quick comparison. Such summaries can be used as a quick reference for the firm's sales force, who can then better present their own products to potential customers.

Cl specialists marshal a wide range of information sources. They may set up a library within the organization as a resource center for CI efforts and for employees. Internet resources may be organized on the company's Intranet, if available. For information that is not readily available, outside resources such as market research organizations or consultants may be utilized.

MAKING USE OF COMPETITIVE
INTELLIGENCE

To be effective, Cl must reach the right people within the organization, and they must be willing to act on it. Face-to-face briefings are regarded as the best way for a Cl specialist to communicate competitive intelligence to management and others in the organization. Such briefings allow for a thorough discussion of all implications of the intelligence and give management a chance to provide feedback and ask questions. Sales forces often use Cl to improve presentations to potential customers and need to be briefed on a regular basis, especially regarding competitors' pricing practices.

Other methods of disseminating Cl within the organization include telephone calls and e-mail. Intelligence summaries may be circulated on a regular basis. They may be posted on the company's Intranet. In some cases, Cl specialists need to be proactive and disseminate intelligence findings, even when executives are not aware that they need it.

Executives are more likely to support CI efforts if their success can be measured. Performance measurement is easier to accomplish if it is done on a project basis, with the measures of effectiveness established at the outset of the project. Cl can be very effective in helping the organization avoid unnecessary or excessive costs, and these costs can be credited to the Cl program. Other measures of success can be tied to how well Cl forewarns a company of new competitive threats, whether or not to enter a new market, and how much to spend on research. Less easy to measure is Cl's ability to unlock the capabilities that an organization already possesses.

SEE ALSO : Competition ; Data Security

[ David P. Bianco ]

FURTHER READING:

'About SCIP." Alexandria, VA: Society of Competitive Intelligence Professionals, 1999. Available at www.scip.org/about .

Cohen, Andy. "The Misuse of Competitive Intelligence." Sales and Marketing Management, March 1998.

Cottrill, Ken. "Turning Competitive Intelligence into Business Knowledge." Journal of Business Strategy, July-August 1998.

Dellcave, Tom, Jr. "Insecurity: Is Technology Putting Your Company's Primary Asset-Its Information-at Risk?" Sales and Marketing Management, April 1996.

Fowler, Beth. "Spies among Us." Supervision, February 1997.

Fraumann, Edwin. "Economic Espionage: Security Missions Redefined." Public Administration Review, July-August 1997.

Gembicki, Mark, and Donald P. Withers, eds. Corporate America's Competitive Edge: An 18 Month Study into Cybersecurity and Business Intelligence Issues. Annapolis, MD: Warroom Research, 1999.

Green, William. "I Spy." Forbes, 20 April 1998.

Grund, John M. "Get Smart: Winning with Intelligence." Oregon Business, May 1998.

Hussey, D.E., and P. Jenster. Competitive Intelligence and Analysis: Beating the Competition. New York: John Wiley and Sons, 1999.

"Inside Track (Competitive Intelligence)." Entrepreneur, February 1996.

Jennings, Lane. "Government's Role in Competitive Intelligence." The Futurist, July-August 1997.

Miller, Jerry P., ed. Millennium Intelligence: Understanding and Conducting Competitive Intelligence in the Digital Age. Medford, NJ: Information Today, 1999.

Rothschild, William E. "Intelligence for the Taking." Across the Board, April 1997.

Tyson, Kirk W.M. The Complete Guide to Competitive Intelligence. Lisle, IL: Kirk Tyson International, 1998.

Westervelt, Robert. "Gaining an Edge: Competitive Intelligence Takes Off." Chemical Week, 26 June 1996.

Wilkinson, Sophie L. "Competitors Reveal Own Strengths, Weaknesses." Chemical and Engineering News, 13 April 1998.

Winkler, Ira. "Corporate Espionage." Inc., June 1997.



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