Competitive Intelligence

The first thing that you need to know is that CI will not be able to help your company unless and until it changes the way it looks at its industry, the world and its position in it.

 

CI can only help those companies willing to look at their industry and the world strategically, making decisions that are unique and unlikely to be copied by other companies. Using CI to look for industry best practices, for example, will only allow your company to be a copycat of one of your competitors – it does not make you unique or stronger or successful.

 

The standard areas that CI has been used to develop strategic policies involve such issues as:

 

-          Innovation and product development

-          Customer service management

-          Operations planning and control

-          Purchasing, supplier and distribution development

-          Quality management

-          Attraction, development and retention of people

 

But these are unique times in human history and the old paradigms no longer apply.

 

For example, if your company uses petroleum-based products or is highly dependent on petroleum-based fuels, then the future looks quite bleak. Whether you accept the concept of Peak Oil or believe strongly in the abiotic origin of petroleum, you cannot escape the fact that petroleum is getting harder to find and extract, and is often found in very small deposits. Some sources of petroleum, like the tar sands in western Canada or shale oil, need large amounts of energy and resources (water, natural gas and other chemicals) to create useable oil; and the process is incredibly destructive of the environment. And one day it may become economically unfeasible to drill for oil. Your company may take measures to use less petroleum but the best such a policy can do is delay the day of reckoning.

 

In this scenario, CI can be used to look for and evaluate technologies or resources that can replace petroleum as a source of fuel and raw materials (like plastic). There are many creative and under-funded companies and research centres in the world that may be developing the technologies and resources to take us into the next stage of human history. Investing in such companies can make your company the leader in the post-petroleum era economy.

 

With commitment from the senior executives and all other stakeholders, a resourceful company use CI for both profit and the benefit of humanity to develop the cheap, plentiful and clean energy that is already in high demand.

One of the frustrating things end-users of Competitive Intelligence have to deal with is that they often get information that they know already, either instinctively or through experience. The CI department may be very good, providing the information sought by senior management regarding competitor pricing and discount strategies, hiring strategies, product development and distribution strategies, etc. Yet the feeling persists that something more can and should be done with the information they’re getting, especially during the current economic downturn.

 

This issue is one that has bedevilled many CI professionals for decades: They deliver the information that senior management has asked for and yet there is a great deal of dissatisfaction with the impact of the CI provided and the perceived value of CI is diminished.

 

I suggest that the fault lies with both CI professionals and the end users. CI professionals should make a greater effort at analyzing data with the goal of providing innovative ideas for senior managers and other relevant end users. The end users on the other hand, should be open to, and encourage the application of, analysis and ideas that may very well change the structure of the company, the products and services it provides, and the markets its serves.

 

Here are two examples:

 

A.    Price Wars

 

If your company is engaged in price wars involving a great deal of discounts, then you may be trapped in a race to the bottom. In price wars, there will always be someone who sells lower than you. If customers are perpetually offered discounts, then the discount price becomes the list price.

 

In this case, the best strategy might be to target the high-end, high value segment of the market, and leave the competition to fight over the scraps of the low-end, low-value segment. Another possibility might be developing unique products and services demanded by the market which your competitors can not and will not provide, thus creating new markets and new demands.

 

This may require developing overseas markets and strategic partnerships. CI professionals should think in these terms without fear and end users should be more accepting of innovative thinking.

 

B.     Improving Ease of Use

 

If you have a number of highly-valued clients providing the majority of your sales, it makes no sense to annoy them by charging them for minor products and services which do not add much to your bottom line or customer satisfaction. It is better to take the high road and provide those services free of charge. Why should you lose major clients because you annoy them by charging for trivial services?

 

Clients, whether consumers or commercial enterprises, should find it easy to do business with you. If pricing or organizational changes are required to make your company easier to work with, then that is what the CI professional should advocate and end users should be open to accept.

 

CONCLUSION

 

Senior managers, as end users, should encourage “outside the box” analyses from their CI professionals in order to get full value from their CI departments. Competitive Intelligence is most useful when it is seen as a proactive force within a company in partnership with key decision-makers.

 

Competitive Intelligence can be a source of idea generation for product innovation, not just for dry analysis of current market conditions

The issues that will likely confront your senior management likely centre around the following areas:

Clients and Competitors

Senior management will be concerned about keeping key clients. Keeping in mind Pareto’s Law (the 80/20 rule), it is likely that 20% of your clients represent 80%of the revenues. In some cases the ratio is more extreme. Therefore, it is essential to know how changes to the economy (including globalization), technology, demographics, are effecting your clients. Is your company keeping up with the changes your key clients are facing? What are your competitors doing to challenge your standing in the eyes of your key clients?

Another thing to keep in mind: Are some of your key clients losing the battle against foreign competitors or the changing economy, and are thus facing extinction? Are you missing opportunities to develop relationships with growing companies that could potentially be key clients of the future?

Products and Services

What are the key specifications to your products, services, price points that attract and keep your best clients? What are your main competitors doing to challenge your company? Are there any developing technologies or new competitors that could disrupt your industry? Are your products and services competitive enough to enter new markets?

Also, there may be alternatives to your products and services that you may not be aware of but have been successful in other parts of the world. Do you have the capability of understanding what is happening elsewhere without having to wait for the English or French translation?

Growing and Dying Markets and Market Segments

Markets, whether domestic or foreign, are in a constant state of flux. Increased prosperity in one segment or sudden immiseration elsewhere can disrupt your company’s revenues if your company makes the wrong decisions.

In extreme cases, companies may need to change their business model beyond recognition in order to grow and prosper. Nokia (which started as rubber and heavy cable manufacturer before transforming into a wireless telecommunications giant) and 3M (which started off as a mining company and manufacturer of sandpaper) are two well-known examples.

As a CI Manager, you should be aware of growing markets overseas and developing market segments in your home country. This will enable you to be an advocate for product and service innovation to profitably serve those markets. You should also be aware of declines in markets as well, so that you can be an advocate for extricating your company from developing products and services (and markets) that will not bring in sales revenues.

CONCLUSION

As a CI Manager, you should be ready to take an active role in developing a deep understanding of existing and potential clients and competitors; current and emerging markets; and the current and developing products and services that can attract important clients. Competitive Intelligence is based on hard facts, common sense and an awareness of opportunities and dangers.