Fundamentals of Competitive Intelligence (CI)

1
Fundamentals of Competitive Intelligence (CI)

• This slide presentation will outline the nuts
  and bolts behind the competitive intelligence
  process.

2
Why Competitive Intelligence?

• The only companys that dont need competitive
  intelligence are those with no competition. In a
  world of hyper-competition (lower barriers to
  entry, global marketplace, customer focus, etc.),
  few companies can abstain from some form of
  competitive intelligence. Even if you dont have
  competition, competitive intelligence will
  generate numerous benefits early warning
  systems, more accurate forecasting, business
  development, market research, due diligence, etc.

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The Essence of CI

• Competitive Intelligence is about Strategic
  Business Analysis.
• Strategic Business Analysis answers all types of
  questions confronted by business.
• In order to answer strategic business questions,
  we need intelligence and not information.

4
What is Intelligence?

• Unlike data or information, intelligence gives us
  insights into what we think will happen based on
  past behavior.
• Competitive Intelligence is forward thinking and
  the most recent information has the most
  relevancy to giving us insights into the future.
• In order to create intelligence, we must go
  through a conversion process.

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The CI Conversion Process

• By synthesizing and analyzing data, we can
  transform data into information.
• Next we apply high levels of experience and
  insights to information, transforming it into
  intelligence.
• And if we can act on the intelligence, then it
  is value added by helping us in strategic
  decision making.

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CI Conversion Diagram
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Major Goal of CI

• The main objective behind competitive
  intelligence is to create and / or maintain a
  competitive advantage against the competition.
• By using intelligence we can anticipate what
  will happen in the future and this helps us
  create / maintain a competitive advantage and
  ultimately allows us to become a market leader in
  our industry.

8
Numerous Benefits of CI

• Although competitive advantage is the main
• benefit of CI, there are numerous ways of
• leveraging CI
• Benchmarking for Best Practices
• Product Pricing
• Merger Acquisition Research
• Validate or Invalidate Rumors
• Speculating in Uncertain Markets

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Define the CI Universe

• CI Professionals often need to define a CI
  Universe so they can focus on the most important
  things first.
• A business environment map will outline forces
  that impact a company, such as social change,
  customers, new competition, regulatory change,
  etc.
• We can layer these forces to distinguish levels
  of importance for each force.

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Business Environment Map
11
CI Project Management

• For the most part, competitive intelligence is
  executed as a project. And most projects are very
  fast and tight since management needs answers
  quickly.
• Example On September 12, 2001, almost every
  American Corporation with operations in Pakistan
  went to their CI Departments and asked Do we
  need to pull out of Pakistan and what financial
  impact will this have on our company? And I need
  an answer by the end of the week.

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The CI Analytical Process

• Competitive Intelligence Projects follow
  the scientific approach to problem solving
• 1. Define the Question
• 2. Gather Data
• 3. Organize the Data
• 4. Synthesize and Filter the Data
• 5. Analyze appropriate data

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The CI Analytical Process (continued)

• 6. Prepare your findings
• 7. Draw meaningful insights
• 8. Prepare recommendations
• 9. Draft CI Report
• 10. Review and Approve Report
• 11. Issue Report
• 12. Follow-up and correct process.

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The Most Important Step
Defining the Question is critically important
since all remaining steps feed from this initial
step. Example CEO requests information on the
consumption of wine in the United States. CI
process must narrow the question down. CEO now
says he really is only interested in male
consumption of red wine in Northern California.
By defining the exact question, we create a
realistic scope for our CI Project. We can also
flip the process backwards and ask the CEO How
do you plan on using this CI information?
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CI Life Cycle

• CI Projects typically have very short cycles
• Define Question (time varies widely)
• Gather Data (two weeks)
• Organize Data (two weeks)
• Analyze Appropriate Data (two weeks)
• Prepare Findings (1 week)
• Draft Report (1 week)
• Review / Approve ( 1 to 2 weeks)

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CI Filtering

• CI Projects almost always go through some type of
  filtering process
• Some projects must be turned down to focus on
  the most strategic projects.
• CI resources may not be able to answer the
  question.
• Can the question be answered more quickly by
  another department?
• Does the question fit with the skills and
  capabilities of the CI Department?

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Sources for CI

• Most sources (70-80) for CI are secondary (not
  first hand), such as newspapers, journals, press
  releases, ads, web sites, etc. Primary sources
  (first hand) include interviews, surveys, and
  other direct research techniques.
• CI should try to enlist in-house experts. Larger
  companies should create and maintain a Yellow
  Pages of in-house experts.
• And yes, CI Professionals live by their rolodexes
  the contacts and sources for completing their
  CI Projects.

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CI Characteristics

• Competitive Intelligence should
• Link behavior and patterns so that we can gain
  insight into the future.
• Serve as an internal advisory service within the
  company.
• Not be afraid of telling the truth.
• Be accepted by management as a reality check for
  making strategic decisions.

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CI Prevention

• One of the most forgotten components within
  competitive intelligence is prevention. Dont
  forget, your competition is doing competitive
  intelligence against you. You need CI Prevention.
  For example, only put minimal information into
  your regulatory filings. Be careful how you
  release information! And best of all, dont be
  predictable in your strategic behavior.

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Getting Started

• Finally, one way to get started in the field of
  CI is to join the Society of Competitive
  Intelligence Professionals
• SCIP
• 1700 Diagonal Rd Suite 600
• Alexandria, VA 22314
• [phone]
• www.scip.org