BEST PRACTICES IN MANAGING A CI FUNCTION

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BEST PRACTICES IN MANAGING A CI FUNCTION

• June 6, 2007

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GOALS AND OBJECTIVES

• Provide an overview of competitive intelligence,
  what it is and what it is not
• Description of how competitive intelligence is
  used within an organization
• Competitive Intelligence Usage Survey Results
• Instruction on the basics of a competitive
  intelligence process
• Overview of best practices from our experiences
  with clients in managing a competitive
  intelligence function

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AGENDA

• What is Competitive Intelligence
• The Uses of Competitive Intelligence
• Competitive Intelligence Usage Survey Findings
• The Competitive Intelligence Process
• Best Practices in Managing the Function

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WHAT IS COMPETITIVE INTELLIGENCE?
Competitive Intelligence
Knowledge and foreknowledge of the competitive
environment the prelude to decision and action.
Competitive Intelligence Process
The organizational means by which information is
systematically collected, analyzed, processed and
disseminated as intelligence to managers who can
act on it.
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WHAT COMPETITIVE INTELLIGENCE IS NOT

• Traditional competitive studies
• News clipping service
• Databases / data warehouses
• Market research
• Knowledge Management
• Unconnected pieces of data

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CHALLENGES IN CI

We are drowning in information but starved for
knowledge.

John Naisbitt
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CI TRANSFORMS DATA/INFO INTO INTELLIGENCE


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INTELLIGENCE IS EXTERNAL
(I)t can be argued that the information
revolution has caused managements to be less well
informed than they were before . . . (T)he most
important changes affecting an institution today
are likely to be the outside ones, about which
present information systems offer few
clues. Peter Drucker, A Survey of the
Next Future, The Economist, 11/3/01
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COMPETITIVE INTELLIGENCE IS NOT LIMITED TO
COMPETITORS
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AGENDA

• What is Competitive Intelligence
• The Uses of Competitive Intelligence
• Competitive Intelligence Usage Survey Findings
• The Competitive Intelligence Process
• Best Practices in Managing the Function

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USES OF COMPETITIVE INTELLIGENCE

• Defensive
• To provide early warning of new competitors or
  disruptive technologies
• Offensive
• To spot new markets or opportunities ahead of
  competitors
• Short-Term
• To determine how a key competitor will price or
  position a new product or service
• Long-Term
• To forecast the viability and attractiveness of a
  future market
• Intelligence is forward-looking, predictive, and
  actionable

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INTELLIGENCE IS ANTICIPATORY

On the ice, everyone goes to where the puck is.
Me? I go to where the puck is going to be.

Wayne Gretzky
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AGENDA

• What is Competitive Intelligence
• The Uses of Competitive Intelligence
• Competitive Intelligence Usage Survey Findings
• The Competitive Intelligence Process
• Best Practices in Managing the Function

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SURVEY SAYS
More than 7 our of 10 companies claim to have an
organized CI function . . .
. . . But most say they do not have the means,
interest, or understanding to use it properly.
Source Ostriches and Eagles Competitive
Intelligence Usage and Understanding in US
Companies, Outward Insights, February 2005
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ROADBLOCKS TO EFFECTIVE CI
Source Ostriches and Eagles Competitive
Intelligence Usage and Understanding in US
Companies, Outward Insights, February 2005
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AGENDA

• What is Competitive Intelligence
• The Uses of Competitive Intelligence
• Competitive Intelligence Usage Survey Findings
• The Competitive Intelligence Process
• Best Practices in Managing the Function

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HOW TO CREATE INTELLIGENCE THE CI CYCLE

• Most corporate intelligence programs consist of
  four broad functions
• Planning and direction management and oversight
  of intelligence to ensure a demand-driven,
  needs-based program.
• Information collection exploiting secondary and
  primary (human) sources for information,
  observations, and insights.
• Analysis interpreting information, drawing
  conclusions, identifying implications, and making
  strategic recommendations.
• Reporting disseminating finished intelligence
  products, in time, to those managers with the
  responsibility and authority to act on the
  information.

Planning Direction
Needs
Decision Makers
Information Collection
Analysis
Other Users
The Intelligence Cycle Each step is necessary
and adds value
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KEY INTELLIGENCE TOPICS FOCUS THE CI GROUP TO
DELIVER THE HIGHEST VALUE INTELLIGENCE

• KITs are high-level business concerns upon which
  management must take action
• Define KITs based on the critical decisions that
  must be made
• Provide direction to the competitive intelligence
  effort and overall strategy
• Improve the quality and timeliness of decisions
  prevent surprise through early warning

Definition
Management Role
Purpose
Benefit
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SAMPLE KEY INTELLIGENCE TOPICS

• What are the strengths, weaknesses, and future
  strategic intentions of our major competitors?
• What new, or non-traditional, competitors could
  enter our key markets?
• What new technologies are emerging that could
  impact our business?
• What are the emerging legislative or regulatory
  changes that could have a significant impact on
  our customers, products, and services?
• What MA or JV activity might be on the horizon
  and what are its implications for our companys
  products and services?

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INVESTING IN DEVELOPING ESSENTIAL CI FUNCTIONS
YIELDS COMPETITIVE BENEFITS
Primary Benefits
Essential Functions
Provides Early Warning of Opportunities Threats
Analyze Forecast
Collect Data
Supports Strategic Decision-Making Process
Supports Tactical and Operations Decisions
Prepare Report Disseminate
Assesses and Monitors Competitors

• Supports Strategic Planning Strategy Processes

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RECOMMENDED CI SKILLSETS

• Communications
• Verbal
• Written
• Presentation
• Project Management
• Planning
• Implementation
• Monitoring

• Leadership People Management
• Strategic Thinking
• Coaching
• Team Building
• CI Specific
• Ethics and Legal Guidelines
• Research Planning
• Tradeshow Management
• Analysis Techniques

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CHECKLIST OF SUGGESTED ANALYTICAL TECHNIQUES USED
BY CI TEAM
Competitor and Industry Analysis SWOT Analysis Porters 5 Forces Model Four Corners Analysis Competitor Benchmarking Competitor Response Modelling WIN/LOSS Analysis Value Chain Analysis Forecasting Early Warning Indicator Development Hypothesis-based Tools War Gaming Scenario Planning Financial Financial Forensics
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AGENDA

• What is Competitive Intelligence
• The Uses of Competitive Intelligence
• Competitive Intelligence Usage Survey Findings
• The Competitive Intelligence Process
• Best Practices in Managing the Function

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BEST PRACTICE 1 COMPETITIVE INTELLIGENCE IS
ALWAYS LEGAL AND ETHICAL
Exploit new employees for proprietary information
Misrepresent ourselves
Use illegal methods
We will not ...
Conduct false job interviews
Misuse consultants or agents
Compromise customer proprietary information
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BEST PRACTICE 2 IDENTIFYING USER NEEDS IS
CRITICAL TO THE OVERALL SUCCESS OF PROGRAM

• CI users are engaged regularly to understand
  their intelligence requirements
• These requirements are used to focus CI efforts
  and resources
• Efforts are focused primarily on issues
  management has identified as threatening
• But, CI has an obligation to alert management to
  emerging issues
• Management regularly shares its actions and
  decisions with CI producers

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THE FLIP SIDE OF BEST PRACTICES COMMON MISSTEPS
TO AVOID

• Failure to focus Get me everything you can on
  our competitors.
• Not linking CI to decisions
• Placing the CI team too far from decision makers
• Focusing only on competitors
• Neglecting early warning
• Letting ad hoc tactical requests overwhelm the CI
  effort
• Confusing the intelligence function with market
  research or knowledge management

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TO SUM UP

• Competitive intelligence is about providing
  actionable intelligence, not repackaged data
• Competitive intelligence is successful when it is
  driven by managements top business needs and
  decisions
• While all organizations are different, there are
  some common elements to successful CI programs
  including ongoing dialogue with management, a
  focus on Key Intelligence Topics and adherence to
  ethical and legal guidelines
• The competitive intelligence process should be
  structured around the intelligence life cycle
  planning and direction, information collection,
  analysis and reporting

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The Intelligence to Anticipate. The Strategy to
Lead. TM Karen Rothwell, Director krothwell_at_outwar
dinsights.com 1-888-447-5501 www.outwardinsights.
com info_at_outwardinsights.com
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KEY FINDINGS FROM OSTRICHES AND EAGLES SURVEY
(CONT.)
Insurance differed from the survey norms in the
following areas 1. Most likely to make
intelligence an integral part of its strategic
planning process (100 vs. 85 norm), the best of
all industry groups. 2. More likely to make CI
an integral part of operational or tactical
decisions such as business development/sales (86
vs. 78 norm) and strategic decisions such as RD
planning and execution ( 71 vs. 55). 3. More
likely to use CI to anticipate and thwart
competitor strategies (71 vs. 64 norm). 4.
Most likely to integrate likely competition
reactions into plans for launching new products
and services most of the time (72 vs. 40 norm),
the highest of all the industry groups.