Competitor analysis: The Analysis of Competing Hypotheses

This article is called Competitor analysis: The Analysis of Competing Hypotheses. When gathering Competitive Intelligence, there is often more than one path we can go down. To help us decide the best path, we use a tool called Analysis of Competing Hypotheses, or ACH to keep things simple.

Competitor analysis: The Analysis of Competing Hypotheses

Created in the 70s by the CIA, to reduce limitations in its analysis, ACH is proven and effective, and we find it's a great tool. At the same time, there is a lot of conflicting information out there about how it works. We've found it's often explained in a way that makes it sound more complicated than it actually is. In short, ACH works as a 7 step tool to test all the options open to us. It then judges which path is best for our clients and ourselves.

Step 1

Collect the information surrounding the problem, and start to think about what is going on and what you are going to do about it. List all the things that could be happening. No silly answers to be excluded or criticised.

Step 2

Find the evidence, assumptions and deductions for and against each theory found in Step 1.

Step 3

Put the evidence based theories into a matrix so you can compare and contrast with each. Try your hardest to disprove each hypothesis. Each hypothesis is given a number to rank them between -2 and 2 to test the evidence, assumptions and deductions* against the hypothesis. The higher the number, the more likely that evidence supports the theory.

*Deduction is the process of reaching the answer by thinking about the known facts.For instance. The Russians will support the Syrian regime because they want to maintain their influence in the Middle East and have a Mediterranean seaboard.

Step 4

Some try and put words to the numbers describe the likelihood of proving the hypothesis, but we believe words can be subjective, while numbers are not. Tot up the numbers at the bottom. 

Step 5

Write down all the findings from Step 3. And look for gaps in the evidence which proves or disproves what could be going on. 

Step 6

Remove all theories which are wrong and inconsistent. Then test your conclusions using sensitivity analysis, which weighs how the outcome would be affected if crucial evidence or arguments were wrong, misleading, or interpreted differently. The double-check the critical evidence and the consistency of essential arguments to make sure the conclusions are sound. 

Step 7 

Write down your conclusion and why you have come to your decision. Include the alternatives and back it up with the evidence which made you reject them. 


Evidence – verified source of information which proves something is known to exist or had occurred. 

Assumptions – What you take for granted? And what may blind you with your industry experience?

Deductions – The process of reaching the answer by thinking about the known facts. 

This article was called Competitor analysis: The Analysis of Competing Hypotheses and it has offered 7 steps to make sure use the tool the maximum of it's capability.

About Octopus Intelligence

Octopus is a global Intelligence service company. Answering the questions to help you grow
We help brands and investors reimagine how they can beat their competitors, make more money, be disruptive, and enter new markets, enabling them to grow faster with more certainty with Competitive Intelligence, Due Diligence and good old common sense.
We live in an increasingly uncertain, competitive and ever-shifting world. What you need is active real world strategy, where deep expertise combines with Competitive Intelligence based actions to answer the what and the how, for the now and the next.
So, we answer great questions like, what are your competitors planning to do next? And where can you win more business? So, what should your next move be? And how do you minimise risk when entering new markets or making an investment? And most importantly, how can we increase revenue and profits?


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Here are some case studies too. Also, for more information on ethics within Competitive Intelligence from SCIP
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What is Competitor Analysis?

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Competitor Analysis evaluates who your competitors are to define their strategies and understand their and weaknesses. Then compare them to your operation and product or services. Learn how to counter their strengths and exploit their weaknesses.

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