What’s Competitive Intelligence and Why it’s Important 

This article is called Competitive Intelligence and why it’s important. We endeavour to explain what is Competitive Intelligence. Why Competitive Intelligence is vital and how to use it in your business. Your people may know their marketplace and their customers, but all that invaluable information could waste if you don’t collect it and collate it effectively.

Graeme Dixon looks at how competitive Intelligence could benefit your company. Does your company possess too much information on your market and competitors, but not enough time to determine what it all means? 

  • Do you want to invest in new markets or regions, but are unsure about the competitive environment? 
  • Are there new organisations entering or merging in your market or region, and you know very little about them?
  • Do you struggle to compete with your rival’s moves? Sometimes being surprised by their actions, and do you find they often outperform you?
  • When you lose out on a piece of business, do you not really understand why? Relying instead on what your business development people tell you, or assuming it’s “who you know”?

If you can relate to some of the above, then competitive Intelligence (CI) could benefit you. Smaller companies may think that CI is out of their league. But it does not have to come through an expensive or sophisticated process, using the latest software. Small companies can collect and use intelligence just as well as larger organisations.

Any size company can use CI

As a CI adviser to companies like yours, I know that some companies are committed to Competitive Intelligence. But that is not enough. You should be interested and have your competitiveness as a strategic priority. After all, it is highly likely that your rivals are utilising some sort of intelligence activity ultimately against you.

What is Competitive Intelligence? 

The term originated and was established in the USA. So definitions and terminology tend to be grand, varied and overly complicated.  However, put simply, CI allows you to avoid surprises, think more moves ahead of your rivals, and minimise uncertainty when you make business decisions. It gives you the ability to see through or stay ahead of the competition. And in many cases, can be the unspoken, hidden key to success.

The proces of Competitive Intelligence

The basic process for a competitive intelligence-gathering exercise is:

  • Secure buy-in by the senior team;
  • Create and encourage awareness of competitiveness throughout your company;
  • Develop a focused definition of the key questions you need to be answered;
  • Collect secondary information (print / web) and primary information (people);
  • Analyse the information to generate findings, isolate patterns and create scenarios;
  • Communicate the Intelligence to a relevant audience;
  • Review actions, source credibility and receive feedback.

It is important to debunk one myth. Spying on competitors is a fact of business life. But it’s not about rummaging through your adversaries’ dustbins for discarded information. Snooping on phone records and the theft of other sensitive information is illegal and a world away from the ever-growing CI industry. Activities should always be conducted ethically. 

It is also worth noting that CI is not just about your competitors. It can also give you invaluable information about demographics. The economy, other industries, technology, distributors, customers, substitutes, suppliers, government regulation, business prospects, culture and case law. 

Why is it important?

Bernard Savage, managing director of Size 10½ Boots, a business development consultancy that specialises in helping smarter professional services firms to grow, says: “The smarter lawyers now realise that being technically competent is just not enough. Marketing savviness and business development capability are key, too.”

“Intelligence-gathering is the first step. Would you go to a job interview without first finding out something about the company? So why pitch to a prospective client if you don’t know who the current advisors are. And what criteria that business has in selecting its external advisors?”

“Competitive intelligence will improve the effectiveness you have in winning new customers and improve efficiencies in client acquisition.” 

CI will transform your thinking and how you do things, and deliver a better strategic direction to your organisation. Suppose you can gather sufficient information about your rivals. Why they are doing it. Understand their business model, and isolate and take advantage of their strengths and weaknesses. In that case, you will stay ahead of the game. 

Improve productivity

CI can improve your productivity by allowing you to focus on winnable activities. And reducing the influence of rumour and industry experience. Awareness of the competition will improve cross-functional relationships, bringing teams together by getting everyone involved in the information collection and strategic analysis.

It can give you early warning of competitive threats, allowing you to make strategic decisions. Actions based on valuable Intelligence, not the latest article in the local business press. 

In short, CI offers unbiased news, views, truth and relevant analysis for your strategic and operational decision-making.

Be aware that CI will challenge some of your organisation’s beliefs. Offer the senior management team undiluted content, which might previously have been filtered for them. That is the beauty of good CI.  It provides an unbiased viewpoint that is not altered to fit a political perspective or support company beliefs.

How can you achieve buy-in?

It is essential that CI is conducted strategically, and that a great deal of work is undertaken at the start, to determine what you really need to know and why. The process does not involve many people, but it can help make your collection activities as useful as possible. To overcome resistance and gain hearts and minds, give all individuals, from partner to the administrator, ownership of objectives and actions relevant to their role. One person has to be made responsible for the project’s day-to-day running, but every job description should contain information-gathering as a critical requirement. 

This is one of the best bi-products of a good CI-gathering project. Because seniority or job title is no barrier to participating, it acts as a fantastic team-building exercise. It also helps to build a culture of competitiveness, which can improve performance across the board. Start with varied and interesting group sessions designed to determine and develop CI awareness throughout your company. Move onto wargaming and shadow marketing planning sessions, and perhaps build specific teams to monitor particular competitors.

Keep it simple

Make sure it is simple for people to report information they have gathered to a central source. There are some excellent pieces of software on the market. Still, it would be a good start just to set up a specific email address, directed to an individual who is made responsible for collation and analysis of the information into a spreadsheet. Make use of your current librarian service, but super-charge them with intelligence skills to get a fantastic return of investment from them.  Once the project has started producing valuable results, communicate these results (and credit for the excellent work that went into achieving them) to make sure people understand their efforts have not been wasted and encourage them to continue providing information. There are many ways of reporting Intelligence; some organisations have different reports depending on the readership, to protect sources and the now-valuable Intelligence.

How can you use CI?

CI can be used in a number of areas of your organisation, and even offered to your own customers. Here are some suggestions to think about. 

Business development and marketing 

By answering questions such as how the demand for your services is currently being met. And by whom, how satisfied buyers are with those services, how credible you are. And what criteria customers use to select a supplier, you could stand yourself in better stead for success (or the avoidance of a big mistake!). Assist your business developers by preparing briefing packs for meetings and tender opportunities, varying, depending on the client or the opportunity, from a necessary briefing report to in-depth and ongoing analysis on the company and individuals. People in your company may already know a lot of this information, but if you do not actively and strategically collect it, it will stay locked away in people’s heads.

Scenario planning

You might think no one could have foreseen ‘Tesco law’, but some did; and yes, they have CI functions. By narrowing potential outcomes and building plans for them now, you can be better prepared for the impact on future business. CI allows you to future-proof themselves not only by isolating their vulnerabilities and knowing what’s ahead, but also, and more importantly, create a great place to encourage creative and innovative thinking.

These are the basic questions you should consider: 

  • What will the future of your industry look like in five to 10 years? Who will be the key players and influencers? Which industry could offer a substitute service?
  • Also what actions/positions, taken now, would increase your chances of success in the majority of these scenarios?
  • What would early warning signs be apparent when / if each of these possible futures were coming to pass?
  • What other actions/positions should you take as soon as possible if it looks like one of these scenarios is coming true?

Mergers and acquisitions

CI will not prevent a merger between your rivals from taking place, but it might help you to know about it beforehand, so you can determine what to do about it, with a focused and prepared mind. It can also help you (and your customers) make decisions about your potential acquisition candidates and investment opportunities by providing a framework for identifying, assessing and understanding potential problems, strategic and cultural fit across the associated companies, potential predators or rival bidders, and the regulatory climate. 

Corporate governance

CI provides the senior team with critical, independent information and analysis to help them understand and interpret the external marketplace, allows you to establish strategic transparency within your organisation, thereby offering safeguards against unethical, questionable or otherwise poor actions and decisions. 

New service or regional office 

Suppose you are thinking about expanding into a geographical market or a new business arena to choose or introducing a new service or product. In that case, CI can help you to understand and anticipate the moves of your rivals and key individuals in those new market segments or areas and, most importantly, the impact such moves may have on your current and future client base. 

Appointment of a new team member 

 Why wait until the interview to find the best candidate? You could improve your recruitment strategies by monitoring who the best practitioners are, where they are, and what it may take to get them in your team. 

Business planning 

To reduce the possibility of expensive mistakes, build your strategic direction, marketing plans and specific projects upon a foundation of decisions based on Intelligence, not rumours or guesswork.  

Know your sources

You have decided you want to undertake some sort of CI activities and you have isolated what you want to know. Now you need to understand how to find it out. There are two sources of information: secondary (print) and primary (people). 

Now, in terms of secondary sources, the first place you will look is probably the internet, but relying solely on the internet has several disadvantages, including the obvious one: most companies tend not to publish information that would be really valuable to you. 

You may find news on your rivals and industry, but it is likely to be very general, historical and of little use. Even if you find a source of information useful to you, it may be very time-consuming to collect; software and outsourcing collection. And specific projects will significantly reduce the time taken. Secondary sources include: 

Market Research Portals

They rarely live up to the sales hype, but can answer simple questions like the key market players and put your organisation into context. They are suitable for Intelligence, and we find a number of people purchase access in a company when one licence would suffice, and all of them do very little with the information. And in some cases, the cost of the combined access would quickly pay for a CI operation.

Press releases

Thousands of press releases are published every day on the written and online sources. Very few actually become news. By reviewing press releases, you can learn essential developments regarding merger and acquisitions activity, takeovers and management changes. And new products, new financial offerings, earnings, restructures etc. What a press release does not say is sometimes just as important as the text itself.

Trademarks

Trademark activity could indicate your rivals future development activities, ownership issues, and foreign market strategies. You can also monitor how litigious your competition is and how successful they have been in their actions.

Domain names

This research area is becoming an increasingly important part of an organisations image. And organisations tend to have a number of domain names representing their products, associated companies, brands and divisions. Monitoring can reveal future strategies and related new products. Look for evidence of cyber-squatting and bad faith.

Analyst reports

Analysts are paid to gather actionable information on their industry. You can source reports and information on rivals in terms of revenue, market fluctuations and predictions, profit margins, growth, sales, expenses and earnings forecast. And you already have several excellent sources of primary information. Some of whom you talk to every day. Your employees are not only your most significant asset; they are also your most excellent source of competitive information. They may have previous experience of working with your rivals, know people in other organisations and of course have day to day dealings with your customers who have been pursued by your competitors.

Without compromising any restrictive covenants, your employees may know pricing or have a copy of your rival’s sales literature. Look within your business to draw parallels among each department working on business development. The information your business developers source during a networking event can be precious, but only if it is accessible in a useable format, analysed and acted on. 

Knowledge bearers

People in your company who have specialised skills or contacts are essential sources of information. They may not have significant interaction with anyone in the company, but these professionals tend to be the ones that say “Well no one asked me, I could have told you that without going to them”. 

Human Resources

Your Human Resources department meets fellow Human Resources professionals at CIPD events and the like. They receive valuable information every day via CVs.

Customers

If one of your rivals is cheaper or does a lousy job, you will hear about it one way or another. How useful would it be when your customer is drilling you down on price claiming that your rivals are offering to do it for 30% cheaper when you know the pricing strategy?

Suppliers

Suppliers are the people in the know within your industry. It’s in their interest to know their customers and their goings-on. They are an excellent source on your industry’s outlook, performance and trends.

Tradeshows, conferences and events

These events are an excellent source of Competitive Intelligence, especially if you find companies happy to talk about and promote themselves. Your people are trained to listen for the right Intelligence. People love talking about themselves. Don’t stop them!

Networking is an excellent source of information, provided you let people speak without causing them concern. One excellent technique is to turn off the ego switch is to come out with something wrong about your rival or a piece of industry news. Then, just watch the other guy correct you with their views. You can learn other elicitation techniques, but a simple chat over a coffee will reveal a lot of information. Information which you can then piece together and analyse, to create the basis of usable Intelligence. The information your rivals themselves would rather you didn’t know is the best Intelligence. And it’s generally surprisingly available for the taking if you know where and how to look. 

Summary

CI can be extremely rewarding for you, provided you are strategic in your approach, give it the time to develop, and you do not expect 100% of the picture. After all, if you need 100% of the information with 100% accuracy, you don’t need a CI consultant. You need a historian. What is clear is that, given the increasing competitiveness of the legal marketplace. Also, the concept of CI will increase significantly over the next decade. And what is also clear that if you do not get CI and make it a strategic priority, it will not be long before your rivals do.

Case study

A recent merger by a company and a smaller regional organisation caused a number of its competitors in the area to worry about their business and react to it. One company with a marketing manager who also conducts CI activities looked at the merger at a strategic level.

When networking, the directors were given specific topics to look out for and asked to report back any information on the key players and the merger partners. Secondary searches were undertaken, and the resultant PR was analysed. Talking to a friendly recruiter and accountant, it soon becomes apparent that it was not a merger of two strong rivals, but an acquisition of a distressed company. And some of the company’s key employees were already on ‘gardening leave’, having chosen to leave once the merger went through.

Not PR and Rumour

In the meantime, another company with an established CI function was already aware of the acquisition. And built plans of action based on the facts. Not PR and rumour. And they had just appointed the distressed company’s best up-and-coming employee. So saving thousands of pounds in recruitment fees. By the time other companies had learned about the merger, they had analysed the consequences and even assessed whether they might want to purchase the distressed company themselves.

Most local companies will have had people in their organisation who will have known about the merger or the struggling organisation. Emails may even have crossed the company about the merger, but no one was responsible for collating the information. So it was not utilised. This article is called Competitive Intelligence and why it’s important. We endeavoured to explain what is Competitive Intelligence, why Competitive Intelligence is important and how to use it in your business.

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