Competitive intelligence
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A broad definition of Competitive Intelligence is the action of gathering, analyzing, and applying information about products, domain constituents, customers, and competitors for the short term and long term planning needs of an organization. Competitive Intelligence (CI) is both a process and a product.1 The process of collecting, storing and analyzing information about the competitive arena results in the actionable output of intelligence ascertained by the needs prescribed by an organization.

Key points of this definitions:

  1. Competitive Intelligence is an ethical and legal business practice. (This is important as CI professionals emphasize that the discipline is not the same as industrial espionage which is both unethical and usually illegal).
  2. The focus is on the external business environment.2
  3. There is a process involved in gathering information, converting it into intelligence and then utilizing this in business decision making. CI professionals emphasize that if the intelligence gathered is not usable (or actionable) then it is not intelligence.

A more focused definition of CI regards it as the organizational function responsible for the early identification of risks and opportunities in the market before they become obvious. This definition focuses attention on the difference between dissemination of widely available factual information (such as market statistics, financial reports, newspaper clippings) performed by functions such as libraries and information centers, and competitive intelligence which is a perspective on developments and events aimed at yielding a competitive edge.

The term CI is often viewed as synonymous with Competitor analysis but Competitive Intelligence is more than analyzing competitors — it is about making the organization more competitive relative to its existing set of competitors and potential competitors. Customers and key external stakeholders define the set of competitors for the organization and, in so doing, describe what could be a substitute for the business, votes, donations or other activities of the organization. The term is often abbreviated as CI, and most large businesses now have some Competitive Intelligences functions with staff involved often being members of professional associations such as the Society of Competitive Intelligence Professionals.

The Society of Competitive Intelligence Professionals (SCIP) is an organization for those who are interested in learning more about Competitive Intelligence. Established in 1986, it provides education and networking opportunities for business professionals, and provide up to date market research and analysis. “Members of the SCIP have backgrounds in market research, strategic analysis, science and technology.”³

Contents

Historic development

There is surprisingly rich literature associated with the field of competitive intelligence, which is best exemplified by the detailed bibliographies that were published in the Society of Competitive Intelligence Professionals refereed academic journal called The Journal of Competitive Intelligence and Management 3456 Although elements of organizational intelligence collection have been a part of business for many years, the history of Competitive Intelligence arguably began in the U.S. in the 1970s, although the literature on the field pre-dates this time by at least several decades.6 In 1980 Michael Porter published the study Competitive-Strategy: Techniques for Analyzing Industries and Competitors which is widely viewed as the foundation of modern Competitive Intelligence. This has since been extended most notably by the pair of Craig Fleisher and Babette Bensoussan, who through several popular books on competitive analysis have added 48 commonly applied competitive intelligence analysis techniques to the practitioner's tool box.78 In 1985, Leonard Fuld published his best selling book dedicated to competitor intelligence.9 However, the institutionalization of CI as a formal activity among American corporations can be traced to 1988, when Ben and Tamar Gilad published the first organizational model of a formal corporate CI function, which was then adopted widely by US companies.10

After the Cold War ended, many U.S. (ex-) intelligence officers aimed at a career in the private industry including Frederick Rustmann, Jr. Rustman, founded CTC International Group, in 1992 a supplier of "Competitive Intelligence;" and wrote the book, "CIA, Inc: Espionage & the Craft of Business Intelligence." Some individuals may consider Rustmann an expert in the competitive intelligence industry, although the individuals honored as Fellows and Meritorious Award winners by the Society of Competitive Intelligence Professionals would arguably be the most definitive list of "experts" in the field.11 Supporting this last view, in an article about training CI practitioners,12 Ben Gilad and Jan Herring, two early pioneers in the field and co-founders with Leonard Fuld of the first accredited professional training institute in CI, The Fuld-Gilad-Herring Academy of Competitive Intelligence, claim that accumulated industry knowledge is the most crucial element in the performance of CI practitioners, which suggests that a correlation between experience in covert government intelligence work and understanding of the role, tools and techniques of intelligence in commercial settings may be less than clear.

In 1986 the Society of Competitive Intelligence Professionals was founded in the U.S. and grew in the late 1990s to around 6000 members worldwide, mainly in the U.S. and Canada, but with large numbers especially in UK and Germany. A number of efforts have been made to discuss the field's advances in post-secondary (university) education, covered by several authors including Blenkhorn & Fleisher,13 Fleisher,14 Fuld,15 Prescott,16, and McGonagle,17 among others. Although the general view would be that competitive intelligence concepts can be readily found and taught in many business schools around the globe, there are still relatively few dedicated academic programs, majors, or degrees in the field, a concern to many in the field who would like to see it further professionalized.14 These issues were widely discussed by over a dozen knowledgeable individuals in a special edition of the Competitive Intelligence Magazine that was dedicated to this topic 18. However, there are several experts in the field who claim CI is not a bona fide academic subject, and fresh graduates of business or "intelligence" degrees find it hard to land CI positions in companies who look for in-depth industry knowledge.1219 The majority of CI professionals employed in the field are experienced managers who receive specialized training through the various professional programs offered by the likes of SCIP and the Fuld-Gilad-Herring Academy of Competitive Intelligence.

Global developments have also been uneven in competitive intelligence.20 Several academic journals, particularly the Journal of Competitive Intelligence and Management in its third volume, provided coverage of the field's global development.21 For example, in 1997 the Ecole de Guerre Economique (School of economic warfare) was founded in Paris, France. It is the first European institution which teaches the tactics of economic warfare within a globalizing world. In Germany, Competitive Intelligence was unattended until the early 1990s. The term Competitive Intelligence first appeared in German literature in 1997. In 1995 a German SCIP chapter was founded, which is now second in terms of members in Europe. In summer 2004 the Institute for Competitive Intelligence was founded, which provides a post-graduate certification program for Competitive Intelligence Professionals. Japan is currently the only country that officially maintains an economic intelligence agency (JETRO). It was founded by the Ministry of International Trade and Industry (MITI) in 1958.

Accepting the importance of competitive intelligence, major multinational corporations, such as General Motors, Eastman Kodak, and British Petroleum, have created formal CI units. Importantly, organizations execute competitive intelligence activities not only as a safeguard to protect against market threats and changes, but also as a method for finding new opportunities and trends.

Principles

Organizations use competitive intelligence to compare themselves to other organizations ("competitive benchmarking"), to identify risks and opportunities in their markets, and to pressure-test their plans against market response (war gaming), which enable them to make informed decisions. Most firms today realize the importance of knowing what their competitors are doing and how the industry is changing, and the information gathered allows organizations to realize their strengths and weaknesses.

Usually the type of intelligence organizations are interested in is similar and falls into three categories:

• Strategic • Tactical • Operational

The actual importance of these three categories of information to an organization depends on the contestability of its markets, the organizational culture, and personality and biases of its top decision makers, and the reporting structure of Competitive Intelligence within the company.

Strategic Intelligence (SI): focus is on the longer term, looking at issues affecting a company’s competitiveness over the course of a couple of years. The actual time horizon for SI ultimately depends on the industry and how quickly it’s changing. The general questions that SI answers are, ‘Where should we as a company be in x Years?’ and 'What are the strategic risks and opportunities facing us?' This type of intelligence work involves identification of weak signals and application of methodology and process called Strategic Early Warning (SEW), first introduced by Gilad,222324 followed by Steven Shaker and Victor Richardson,25 Alessandro Comai and Joaquin Tena,26 27and others. According to Gilad, 20% of the work of competitive intelligence practitioners should be dedicated to strategic early identification of weak signals within a SEW framework.

Tactical Intelligence: focus is on the short term. Generally, the type of information that you would need to support the sales process in an organization. Investigates various aspects of a product/product line marketing: • Product - what are people selling? • Price - what price are they charging? • Promotion - what activities are they conducting for promoting this product? • Place - where are they selling this product? • Other - sales force structure, clinical trial design, technical issues, etc.

With the right amount of information, organizations can avoid unpleasant surprises by anticipating competitors’ moves and decreasing response time. Examples of Competitive Intelligence research is evident in Daily Newspapers, such as the Wall Street Journal, Business Week and Fortune. Major airlines change hundreds of fares daily in response to competitors’ tactics. They use information to plan their own marketing, pricing, and production strategies.

Resources, such as the Internet, have made gathering information on competitors easy. With a click of a button, analysts can discover future trends and market requirements. However competitive intelligence is much more than this, as the ultimate aim is to lead to competitive advantage. As the Internet is mostly public domain material, information gathered is less likely to result in insights that will be unique to the company. In fact there is a considerable risk that information gathered from the Internet will be misinformation and mislead users.

As a result, although the Internet is viewed as a key source, most CI professionals should spend their time and budget gathering intelligence using primary research — networking with industry experts, from trade shows and conferences, from their own customers and suppliers, and so on. Where the Internet is used, it is to gather sources for primary research as well as information on what the company says about itself and its online presence (in the form of links to other companies, its strategy regarding search engines and online advertising, mentions in discussion forums and on blogs, etc.). Also, important are online subscription databases and news aggregation sources which have simplified the secondary source collection process.

Organizations must be careful not to spend too much time and effort on old competitors without realizing the existence of any new competitors. Knowing more about your competitors will allow your business to grow and succeed. The practice of Competitive Intelligence is growing every year, and most companies and business students now realize the importance of knowing their competitors.

According to Arjan Singh and Andrew Beurschgens in their 2006 article in the Competitive Intelligence Review, there are 4 stages of development of a competitive intelligence capability with a firm. It starts from Stick Fetching, where a CI department is very reactive to World Class where it is completely integrated in the decision making process.

Differentiating Competitive Intelligence from Similar Fields

Competitive intelligence is often confused with, or viewed to have overlapping elements with related fields like market research, environmental scanning, business intelligence, and marketing research, just to name a few.28 Some have questioned whether the name of "competitive intelligence" is even a satisfactory one to apply to the field28 In a 2003 book chapter, Fleisher compares and contrasts competitive intelligence to business intelligence, competitor intelligence, knowledge management, market intelligence, marketing research, and strategic intelligence29

The argument put forth by former SCIP President and CI author Craig Fleisher29verification needed suggests that business intelligence has two forms. In its narrower (contemporary) form has more of an information technology and internal focus than competitive intelligence while it broader (historical) definition is actually more encompassing than the contemporary practice of CI. Knowledge management (KM) is also viewed as being a heavily information technology driven organizational practice, that relies on data mining, corporate intranets, and mapping organizational assets, among other things, in order to make it accessible to organizational members for decision making. The differences between CI and KM were described as KM's more inward focus, heavier use of information technology, and lesser components of qualitative analysis, (non-digitized) human intelligence, creativity, and focus on external phenomena.

Market intelligence (MI) is industry-targeted intelligence that is developed on real-time (i.e., dynamic) aspects of competitive events taking place among the 4Ps of the marketing mix (i.e., pricing, place, promotion, and product) in the product or service marketplace in order to better understand the attractiveness of the market.30 A time-based competitive tactic, MI insights are used by marketing and sales managers to hone their marketing efforts so as to more quickly respond to consumers in a fast-moving, vertical (i.e., industry) marketplace. Craig Fleisher suggests it is not distributed as widely as some forms of CI, which are distributed to other (non-marketing) decision-makers as well.29verification needed Market intelligence also has a shorter-term time horizon than many other intelligence areas and is usually measured in days, weeks, or, in some slower-moving industries, a handful of months.

Marketing research is a tactical, methods-driven field that consists mainly of neutral primary research that draws on customer data in the form of beliefs and perceptions as gathered through surveys or focus groups, and is analyzed through the application of statistical research techniques.31 In contrast, CI typically draws on a wider variety (i.e., both primary and secondary) of sources, from a wider range of stakeholders (e.g., suppliers, competitors, distributors, substitutes, media, and so on), and seeks not just to answer existing questions but also to raise new ones and to guide action.29verification needed

In the 2001 article by Ben Gilad and Jan Herring, the authors lay down a set of basic prerequisites that define the unique nature of CI and distinguish it from other information-rich disciplines such as market research or business development. They show that a common body of knowledge and a unique set of applied tools (Key Intelligence Topics, Business War Games, Blindspots analysis) make CI clearly different, and that while other sensory activities in the commercial firm focus on one category of players in the market (customers or suppliers or acquisition targets), CI is the only integrative discipline calling for a synthesis of the data on all High Impact Players (HIP).12 In a later article 32), Gilad focuses his delineation of CI more forcefully on the difference between information and intelligence. According to Gilad, the commonality among many organizational sensory functions, whether called Market Research, Business Intelligence or Market intelligence is that in practice they deliver facts and information, not intelligence. Intelligence, by Gilad, is a perspective on facts, not the fatcs themselves. Uniquely among other corporate functions, competitive intelligence has a specific perspective of external risks and opportunities to the firm’s overall performance, and as such it is part of an organization's risk management activity, not information activities.

Ethics

Ethics has been a long-held issue of discussion amongst CI practitioners.28 Essentially, the questions revolve around what is and is not allowable in terms of CI practitioners' activity. A number of very excellent scholarly treatments have been generated on this topic, most prominently addressed through Society of Competitive Intelligence Professionals publications.33 The book "Competitive Intelligence Ethics: Navigating the Gray Zone" provides nearly twenty separate views about ethics in CI, as well as another 10 codes used by various individuals or organizations.33 Combining that with the over two dozen scholarly articles or studies found within the various CI bibliographic entries,34verification needed56 it is clear that no shortage of study has gone into better classifying, understanding and addressing CI ethics.

Competitive information may be obtained from public or subscription sources, from networking with competitor staff or customers, or from field research interviews. Competitive Intelligence research is distinguishable from industrial espionage, as CI practitioners generally abide by local legal guidelines and ethical business norms.35 There is a strict code of ethics followed by reputable CI practitioners, laid down by the Society of Competitive Intelligence Professionals (SCIP). This includes the stipulations that CI professionals:

  • must abide by all applicable laws - whether domestic or international. Thus bugging, bribery, and other such illegal practices would be a serious breach of the ethical code.
  • must accurately disclose all relevant information, including one's identity and organisation, prior to all interviews. This ensures that primary research is conducted ethically without misrepresentation. As such it also limits what can be done - and attempts to gain information through lies about one's identity would be viewed as industrial espionage. At the same time, the code of ethics recognises that it may not be in the interests of the research to declare the ultimate purpose for which the information is being gathered - hence it is only required to disclose relevant information to sources such as one's identity, organisation, etc. It is not a requirement to say who the ultimate client is, and so many organisations employ consultants who can be totally honest about who they are while keeping their client's name confidential. Such consultants will say that the information is being collected as part of a benchmarking or industry study, for example. What is not said is that the benchmarking study is being done only on competitors to the client!
  • must provide honest and realistic recommendations and conclusions in the execution of one's duties. Competitive Intelligence can sometimes uncover unpleasant truths that companies would prefer not knowing. At the same time, not knowing could lead the organisation to failure. CI Professionals need to communicate both the good, and the bad - strengths and weaknesses - even in cases when management would rather stay in ignorance. Further, along with the message, the CI professional should use their understandings to provide suggestions and recommendations for action. If the intelligence gathered is not used but ignored it has no value. As a result, competitive intelligence is a key discipline in enabling companies preserve and gain competitive advantage in their business environment.

Many companies are concerned about keeping their practices above board. One of the ways to ensure this is through internal training and providing employees with clear-cut, written policies (such as in the employee manual) as to what is acceptable practice.


References

  1. ^ Prior, Vernon. "The language of business intelligence". SCIP. http://www.quantum3.co.za/CI%20Glossary.htm. Retrieved on 2006-11-05. 
  2. ^ Haag, Stephen. Management Information Systems for the Information Age. Third Edition. McGraw-Hill Ryerson, 2006.
  3. ^ Dishman, P., Fleisher, C.S., and V. Knip. "Chronological and Categorized Bibliography of Key Competitive Intelligence Scholarship: Part 1 (1997-2003), Journal of Competitive Intelligence and Management, 1(1), 16-78.
  4. ^ Fleisher, Craig S., Wright, Sheila, and R. Tindale. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 4 (2003-2006), Journal of Competitive Intelligence and Management, 2007, 4(1), 32-92.
  5. ^ a b Fleisher, Craig S., Knip, Victor, and P. Dishman. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 2 (1990-1996), Journal of Competitive Intelligence and Management, 2003, 1(2), 11-86.
  6. ^ a b c Knip, Victor, P. Dishman, and C.S. Fleisher. "Bibliography and Assessment of Key Competitive Intelligence Scholarship: Part 3 (The Earliest Writings-1989), Journal of Competitive Intelligence and Management, 2003, 1(3), 10-79.
  7. ^ Fleisher, Craig S. and Babette E. Bensoussan. Strategic and Competitive Analysis: Methods and Techniques for Analyzing Business Competition. Prentice Hall, Upper Saddle River, 2003.
  8. ^ Fleisher, Craig S. and Babette E. Bensoussan. Business and Competitive Analysis: Effective Application of New and Classic Methods, FT Press, 2007.
  9. ^ Fuld, Leonard M. Competitor Intelligence: How to Get It, How to Use It.. NY: Wiley, 1985.
  10. ^ Gilad, Ben and Tamar Gilad. The Business Intelligence System. NY: American Management Association, 1988.
  11. ^ Society of competitive intelligence professionals. “Society of Competitive Intelligence Professionals.” http://scip.org
  12. ^ a b c Gilad, Ben and Jan Herring. "CI Certification - Do We Need It?", Competitive Intelligence Magazine, 2001, 4(2), 28-31.
  13. ^ Blenkhorn, D. and C.S. Fleisher (2003). "Teaching CI to three diverse groups: Undergraduates, MBAs, and Executives," Competitive Intelligence Magazine, 6(4), 17-20.
  14. ^ a b Fleisher, C.S. (2003). "Competitive Intelligence Education: Competencies, Sources and Trends," Information Management Journal, March/April, 56-62.
  15. ^ Fuld, 2006specify
  16. ^ Prescott, J. (1999). "Debunking the Acadeic Abstinence Myth of Competitive Intelligence," Competitive Intelligence Magazine, 2(4).
  17. ^ McGonagle, J. (2003). "Bibliography: Education in CI," Competitive Intelligence Magazine, 6(4), 50.
  18. ^ (Competitive Intelligence Magazine, 2003, 6(4), July/August)
  19. ^ Gilad, Ben (2003). "CI Education - Harvard Style", Competitive intelligence Magazine, 6(4), July-August.
  20. ^ Blenkhorn, D. and C.S. Fleisher. Competitive Intelligence and Global Business. Westport, CT: Praeger, 2005
  21. ^ (Journal of Competitive Intelligence and Management, volume 2, numbers 1-3
  22. ^ Gilad, Ben (2001). "Industry Risk Management: CI's Next Step", Competitive Intelligence Magazine, 4 (3), May-June.
  23. ^ Gilad, Ben. Early Warning. NY: American Management Association, 2003.
  24. ^ Gilad, Ben (2006). "Early Warning Revisited", Competitive Intelligence Magazine, 9(2), March-April.
  25. ^ Shaker, Steven and Richardson, Victor (2004). "Putting the System Back into Early Warning". Competitive Intelligence Magazine, 7(3), May-June.
  26. ^ Comai, Alessandro and Tena, Joaquin (2007). "Early Warning Systems for your Competitive Landscape", Competitive Intelligence Magazine, 10(3), May-June.
  27. ^ Comai, Alessandro and Tena, Joaquin (2006). "Mapping and Anticipating the Competitive Landscape", Emecom Ediciones, Barcelona, Spain.
  28. ^ a b c Fleisher, Craig S. and David Blenkhorn. Controversies in Competitive Intelligence: The Enduring Issues. Westport, CT: Praeger, 2003.
  29. ^ a b c d Fleisher, Craig S. (2003). "Should the Field be Called 'Competitive Intelligence?' pp. 56-69 in Fleisher, Craig S. and David Blenkhorn [eds.], Controversies in Competitive Intelligence: The Enduring Issues. Westport, CT: Praeger, 2003.
  30. ^ Skyrme, D.J. (1989). "The Planning and Marketing of the Market Intelligence Function," Marketing Intelligence and Planning, 7(1/2), 5-10.
  31. ^ Sharp, S. (2000). "Truth or Consequences: 10 Myths that Cripple Competitive Intelligence," Competitive Intelligence Magazine, 3(1), 37-40.
  32. ^ Gilad, B. (2008) “The Future of Competitive Intelligence: Contest for the Profession’s Soul", Competitive Intelligence Magazine, 11 (5), 21-25.
  33. ^ a b Competitive Intelligence Foundation (2006). Competitive Intelligence Ethics: Navigating the Gray Zone. D. Fehringer and Hohhof, B.[Eds], Alexandria, VA: Competitive Intelligence Foundation
  34. ^ Knip, Fleisher, & Dishman, 2003specify
  35. ^ Society of Competitive Intelligence Policy Analysis on Competitive Intelligence and the Economic Espionage Act, written by Richard Horowitz, Esq.

See also

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