Competitive intelligence

From Wikipedia, the free encyclopedia

1 Introduction & Definition
2 Principles
3 Ethics
4 References
5 See also
6 External links

[edit] Introduction & Definition

Competitive Intelligence is the process by which business enterprises gather and analyze information on their external competitive environment. There are several other definitions, all focusing on the same principle. A second definition (from the Society of Competitive Intelligence Professionals) is "Competitive intelligence is a systematic and ethical program for gathering, analyzing, and managing Information about the external Business environment that can affect a company’s plans, decisions, and operations.

The key points in these definitions is that 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. 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.

The term 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 Intelligence functions with staff involved often being members of professional associations such as the Society of Competitive Intelligence Professionals. CI activities often use a "Competitive Intelligence Solution", usually via their intranet and internal alerts, which can also lead to Competitive Response Solution.

The Society of Competitive Intelligence Professionals is an organization for those who are interested in learning more about Competitive Intelligence. Established in 1986, they provide 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

[edit] Principles

Organizations use competitive intelligence to compare themselves to other organizations, which enables them to make informed decisions. Most firms today realize the importance of knowing what their competitors are doing, and the information gathered allows organizations to realize their strengths and weaknesses. 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 will 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.

[edit] 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. 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 identify 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.

[edit] References

Haag, Stephen. Management Information Systems for the Information Age. Third Edition. McGraw-Hill Ryerson, 2006.
Society of competitive intelligence professionals. “Society of Competitive Intelligence Professionals.” < http://www.scip.org/>
www.scip.org/pdf/languagebi.pdf