Leveraging Competitive Intelligence
This article will discuss some specific tactics that should be considered for leveraging an existing competitive intelligence function. One of the major challenges you will face is how to balance competitive intelligence within the organization.
For example, a highly centralized competitive intelligence function will facilitate focus and strong strategic decision-making. On the other hand, a very decentralized competitive intelligence function will promote better operational decision-making. In any event, there is a need to establish some structure for competitive intelligence to work.
Competitive intelligence is often structured around the ability to analyze and transform data into intelligence. In order for this process to work, you need to place competitive data into a structure that accounts for relevant relationships. Competitive intelligence is the process of taking small chunks of information and building a "big picture" scenario for directing strategic and operating decisions. This requires focus on critical areas, such as customer research, monitoring the strategies of the competition, benchmarking performance against the competition, etc.
Competitive intelligence is also leveraged by making sure you understand the competition. One way to better understand the competition is to categorize the competition based on some unique attribute. This will make it much easier for everyone to clearly understand how the competition functions. For example, one competing company may be growth oriented while another competing company is financially oriented in its thinking. Another way to categorize the competition is to identify their core competencies. Most companies are very aggressive about defending their core competencies. Other companies may need to be categorized based on vertical integration.
Another way to better understand the competition is to understand what measurements they use. This will give you insights into how adept the company is at managing value-creation. Try to determine what value drivers are most important to your competition. The objective is to distinguish the competition by some attribute that allows everyone to understand what makes the competition tick.
Competitive intelligence not only identifies the competition, but it also looks into emerging competition that enters the marketplace given a change in regulations, technology, etc. For example, deregulation can trigger a new wave of competition. All of sudden your competitive advantages are under extreme assault. Competitive intelligence needs to go beyond an understanding of the competition. It needs to help you understand the external environment that you are operating in.
Competitive intelligence is often viewed as a tool for maintaining marketplace share. However, competitive intelligence should be leveraged by directing the organization out of the marketplace; providing guidance on an appropriate exit strategy. As barriers to competition erode away, more and more companies will enter the marketplace. Your organization should not restrict competitive intelligence to maintaining market share. You may reach a point where you need to consider an exit strategy as values decline. Competitive intelligence will ascertain some of the problems associated with staying in the competitive marketplace. For example, a strategy to compete based on price may not work in the long run.
Another challenge facing competitive intelligence is how to balance timely information with reliability. Unfortunately, each and every source varies in relation to timeliness and reliability. Here are some examples:- Secondary Research (fast, easy, reasonably reliable)
- Interviews with Industry Experts (fast, not very reliable)
- Market Surveys (time consuming, very reliable)
- Focus Groups (in-depth, somewhat unreliable)
- Employees (good source, but not very reliable)
- Customers (excellent source, but requires careful thought)
A final point on leveraging competitive intelligence concerns building a competitive intelligence database or more specifically, a data warehouse. The Data Warehouse will allow you to leverage all of the data residing in your operating systems. The objective is to consolidate the relevant data into one system for better decision-making. Several gaps will need to be filled in order to make competitive intelligence complete. And don't forget to measure the impact of competitive intelligence on your organization. Evaluating the competitive intelligence effort will help ensure that it is a value-added type of activity.
Written by: Matt H. Evans, CPA, CMA, CFM | Email: email@example.com | Phone: 1-877-807-8756
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