Chapter 3: Competitive Intelligence

What are the key principles CI?

(a) the delivery of concise, timely information to decision makers and (b) the ability to share information across functional boundaries and provide wider access to knowledge.

Which useful functions can CI provide within an organization?

-Anticipation competitors' activities -Analyzing industry trends -Learning and innovation -Improved Communication

What is the CI Cycle?

1. Planning and direction 2. Collection 3. Analysis 4. Dissemination

Which three areas does competitive information come from?

1. Public Information 2. Internal information 3. Third Party Information

What is analysis?

Analysis is concerned with converting raw data into useful information. The process involves classification, evaluation, collation and synthesis. Once information has been processed informed judgements relating to competitors' intent can be established. The classification stage may involve tagging data as: (a) primary - facts directly from the source (e.g. inter- views, annual reports, promotional material, etc.) and (b) secondary - reported by third parties (e.g. newspaper comment, books, and analyst's reports). Data can then be prioritised in terms of importance. When neces- sary, triangulation can be used to confirm findings. This involves cross checking an item against a number of sources.

What is analyzing industry trends?

By examining the actions of groups of com- petitors within specific segments and/or market leaders it is possible to proactively establish growing trends. If management can spot the convergence of technologies and operating procedures, it is possible to 'steal a march' on competitors.

What is Dissemination?

CI needs to be tailored to meet user needs. Effective dissemination is based on clarity, simplicity and appropriateness to need. CI should (if merited) form the basis of competitive action plans. A useful test is to con- sider what are the implications of the intelligence not being passed on? If there are no real implications, it is questionable whether it is necessary. Research shows that many CI projects fail during this phase. Therefore, presentation of CI is critical. Pollard (1999) recommends developing struc- tured templates for reports, as follows: (i) information - bullet points, graphics, etc. (ii) analysis - interpretation of information (iii) implication - what could happen and (iv) actions.

What is competitive intelligence?

Competitive intelligence (CI) has something of an image problem. The term conjures up an image of elicit activities involving private detectives, telephoto lenses and hidden microphones. While such images are not completely unappealing, they are far removed from the truth. Put simply, CI is a structured, ethical and legal process designed to gather, analyse and distribute data/information relating to current and potential, com- petitors.

What is Internal information?

It is often surprising just how much information organisations already hold on competitors. The problem is one of analysis and dissemination. The sales force and customer service staff are a primary source of CI. They are well positioned to 'pick-up' CI from customers, suppliers and industry contacts. Organisations need to establish mechanisms, such as internal networks, to facilitate this process. It is also possible to set up internal sys- tems to monitor competitors

What is improved communication?

Key principles of CI are: (a) the delivery of concise, timely information to decision makers and (b) the ability to share information across functional boundaries and provide wider access to knowledge. These general concepts do much to enhance overall corporate communication and promote teamwork. Correctly applied CI concept enable staff to overcome many problems associ- ated with information overload.

What is learning and innovation?

The CI process offers tremendous opportunities to learn. CI forces managers to have an external focus. By constantly reviewing the opposition, we are better able to develop, adapt and innov- ate our own product offerings. For example, the process of reverse engin- eering - involving detailed examination of competitors' products - can provide a valuable insight into improving our own products. Scenario planning exercises, which anticipate competitors' actions, can enhance the organisations' understanding of the competitive environment.

What is the planning and direction?

The cycle begins with establishing intelligence requirements. It is important to prioritise information needs and set appropriate time- scales/reporting periods. This phase requires a detailed understanding of what business decisions are being taken and how information will be used. When prioritising information it is important to differentiate between 'targeted intelligence' - collected to achieve a specific objective - and 'awareness intelligence' - collecting general information which will be 'filtered' in order to build a general picture of the competitive environ- ment. Targeted intelligence is used to resolve specific problems, while awareness intelligence is designed to monitor the competitive environ- ment on an on-going basis. The planning process is concerned with obtaining the correct balance between the two.

What is anticipating competitors' activities?

The most obvious advantage of CI is in provision of system(s) to consider the likely action of specific com- petitors. The various strengths and weaknesses of the opposition can be considered and frameworks established to anticipate and pre-empt competitor initiatives. Early warning of competitors' actions enables the organisation to judge the seriousness of a threat and develop appropriate responses. The process may also uncover potential com- petitors who are about to target your existing customer base or indus- try activities.

What is collection?

a collection strategy is now developed. Pollard (1999) advocates translating key intelligence requirements into more specific key intelligence questions and then iden- tifying and monitoring intelligence indicators. These intelligence indica- tors are identifiable signals that are likely to precede particular competitor actions

What is public information?

information available to anyone

What is 3rd party information?

specific sources not directly connected to the competitor (e.g. market research agencies, media/journalists, credit rating organisations and consumer groups). Many electronic sources exist, providing powerful search engines enabling detailed inquires to be made. The Internet provides a vast array of free and fee paying information services.

What is the key to successful CI?

the ability to turn basic raw data into actionable intelligence. Actionable intelligence involves providing deci- sion makers with timely, appropriate information which facilitates action. Additionally, CI stresses the need to protect business activities against competitors' intelligence gathering operations.

What does the CIA offer the following guidelines relating to classification of data/information?

● Fact: Verified information, something known to exist or have happened. ● Information: The content of reports, research and analytical reflection on an intelligence issue that helps analysts evaluate the likelihood that something is factual and thereby reduces uncertainty. ● Direct information: Information which can, as a rule, be considered factual, because of the nature of the sources, the sources direct access to the information, and readily verifiable content. ● Indirect information: Information which may or may not be factual, the doubt reflects some combination of sources questionable reliability, lack of direct access to information and complex content. ● Sourcing: Depicting the manner, or method, in which the information was obtained, in order to assist in evaluating the likely factual content.

What are examples of common techniques used to provide vehicles for forecasting/speculating competitive intent?

● SWOT/portfolio analysis: The classic SWOT or portfolio analysis (e.g. Boston Matrix, Ansoff Matrix, etc. see later chapters) are applied to the competitor(s) in question. ● Behavioural traits: While not an absolute indicator of future action, it is true to say that organisational leaders tend to repeat past successful behaviour and avoid previous mistakes. Therefore, to some degree, future behaviour is likely to be predictable. Understanding the behav- iour and reactions of rival corporate leaders to given sets of circum- stances can be highly revealing of future intent. ● War gaming: In-house teams take on the simulated role of competitors for a workshop exercise. The team is provided with actual data and asked to simulate the strategies/actions they believe the competitor is most likely to follow. Their responses are then analysed in a de-brief session. Numerous advantages stem from this process, such as; identi- fying competitors' weaknesses, enhancing teamwork and identifying information 'gaps' relating to knowledge of competitors. ● Synthesis reports: Information from numerous sources is collated under common key themes. It is possible to electronically scan large amounts of text for key words (e.g. brand names, patent applications, etc.) and selectively extract/flag information. Techniques such as word and pat- tern analysis can identify underlying themes and trends. ● Mission statement Analysis: The main aim of analysis is to predict what a competitor will do. Therefore it is possible to analyse competitors' mission statements in order to establish their goals, values and generic strategies. Analysing how mission states have changed or been inter- preted over time is highly insightful. Rumours of likely activity can be checked against a rival stated mission. Does the rumour seem to equate with overall corporate aims?