Intelligence in competing Chris West

<Learning Curve> >Growing importance of acquiring competitive intelligence > Key areas of competition > Path to competitive intelligence >Factors that influence the growth of competitive intelligence

In a battle where lives are at stake, it is essential to know the terrain over which the battle will be fought, who the enemies are, their mentality and their resources at disposition. It is preferable to know their intentions and it is extremely useful how they intend to achieve them and when and where are they likely to launch an attack. In fact, the more information the military have at their disposal, the greater are their chances of winning. In today’s business too, the same level of criticality can be applied, as the financial penalties of losing can be severe. Thus the case of acquiring competitive intelligence for today’s business has become indisputable
Whenever there is more than a single source of product or service, competition is inevitable. Companies take as many steps as they can to insulate their activities from aggressive competition but they invariably have to engage in some form of battle with each other, in order to obtain a share of customers’ business. As strategies become more sophisticated, the information on which they are based must be better targeted and more relevant. In competitive markets, the quality of the competitive strategy is now as important as the customer strategies in determining company performance. All strategies require information and the competitive strategies are no exception.
This is why there is an existing and growing need for competitive intelligence.
Competing is as natural as breathing and although the competitive process is not always enjoyable, winning is one of the most pleasurable human sensations. The desire to be a winner and to become a winner makes the effort and the pain of competing worthwhile. Although many companies would prefer not to compete, since doing so absorbs resources and reduces margins, but then they realize that competition is almost inevitable and methods of dealing with competitors are integral part of their business strategies.
Competitive intelligence is the process by which companies inform themselves about every aspect of their rivals’ activities and performance. It is an essential ingredient, not only when planning marketing campaigns, but also production programs, human resources, finance and all other corporate activities that competitors can influence either directly or indirectly.
Although majority of the organizations accept that competition is inevitable, they would prefer a position that makes competition unnecessary. Considerable resources are thus devoted to the efforts which will result in products and services which are clearly differentiated from those of the competitors and may be perceived by the customers to be unique - in other words, companies are always tying to find their niche and thus enjoy some kind of monopoly, virtual though it may be. Traditionally, the companies have tried to differentiate themselves from their competitors by:
>Production technologies
>Product features
>Raw materials used
>Price Levels
>Discounts and rebates
>Distribution Channels
>Delivery methods
>Delivery speed and recovery
n Promotional methods
n Perceptions created for the brand
n Service offers
n Location advantages
n Company culture
n Staff
Many of these are visible and therefore obvious to competition; others that are invisible drivers of an end result, which is itself visible. For example, unique production technology or a unique source of raw materials can result in production cost advantages that translate into competitive prices.

Where Do Companies Compete For Intelligence?
There is a wide spread and wholly understandable impression that the primary form of competition is that which takes place between companies for customers - in other words, the main competitive arena is the marketplace. However, in the context of competitive intelligence it is important to recognize that this is very far from the actual case. Today, companies compete across the full spectrum of their activities.

Why Do Companies Compete For Intelligence?
With the growing awareness among the customers about the products and services that they procure and with the increasing amount of information in a knowledge-led economy, companies have no other options but to compete - compete for intelligence about their competitors. However, the major forces that push the companies forward for competition and gathering competitive intelligence are:
> Higher financial performance demands placed on the companies. Increasing financial demands of owners and shareholders have resulted in an injection of the killer instinct. The managements of companies are required to meet evermore ambitious targets and they certainly can’t afford to fail
>Diversifying for the need to protect and enhance the future growth of the businesses. If a company enters an existing business as a new player then the competition is automatically intensified.
>Globalization or geographical diversification by reaching out into new countries thus intensifying the competitive environment
>Technology; challenging the incumbents into new markets and thus radically altering the competitive environment
>Outsourcing key processes to those who are organized to carry them out more effectively and at a lower cost can improve competitiveness by permitting companies to focus on their operations.
>Improved information flow; a number of companies have been able to operate in markets, partially protected by ignorance. However, the advent of long-term improvements in communications has gradually eroded such protection. The advent of the Internet and the rapid acceptance of it across the globe have made this even more prominent.

The Applications for Intelligence
The intelligence in the marketplace, within which the competitive battles are fought and are commonly called market or business intelligence, provides the essential background to all strategies and technical decisions. It indicates the marketing and promotional tools that the competitors can use successfully to fight their battles and the messages to customers that are likely to produce the most positive outcome. Nevertheless, most important of all of these, it provides the forward view to technology, customer preferences that forewarns of significant change, thereby providing a basis for a strategy that differentiates companies from their competitors and permits some radical outflanking maneuvers.
Out of the various factors for which a company may be competing, curiosity, emulation and anticipation emerge as the most important factors. Emulation is a more worthy application for competitive intelligence as it recognizes that all companies have something to learn from their competitors - even if it is only that they have nothing to learn. The learning process can cover the full gamut of a competitor’s operations and its usefulness is recognized most readily:
*When a company has encountered a problem that is having difficulty in resolving with its own resources, it may want to know how its competitors are tackling this problem.
* When existing or new competitors have launched an initiative that appears to be successful
*When competitors appear to be using a higher level of technology, achieving higher levels of productivity or performing better financially
The most advanced application of competitive intelligence is that which enables companies to recognize current and future competitive threats and to device strategies that will naturalize their effectiveness and gain, some form of competitive advantage. The advanced users of competitive intelligence tend to be:

Narrowing the field

Adopting a broad definition of competition has a major disadvantage that it can throw up a large number of companies to watch. Studying hundreds of companies is clearly an impractical proposition and that too on a regular basis, and therefore needs to be some mechanism by which the competitors are placed in a priority order. Within the ranks of the direct and indirect competitors this can be usually determined by reference to the following points: >Size >Management >Aggression >Technology >Product >Customer Base >Geographical Proximity >Success >Profits >Profile >Recruits

*Companies active in businesses in which the competitive landscape is evolving rapidly and subject to major change
*Companies active in businesses that require heavy investments and long-term developments program in order to remain credible players
*Aggressive players seeking rapid gains in the market share
*Dominant players with major positions to defend
*Players that have recognized that they are seriously vulnerable to attack
Not surprisingly, the major users of competitive intelligence tend to be in information technology, healthcare (especially pharmaceuticals), financial services and e-commerce.
Competitive Intelligence as a Formal Activity
Having access to information on competitors is not the same as a structured competitive intelligence programme. In order to predict the development of competitive intelligence, it is necessary to understand the forces that make companies take the analysis of their competitors so seriously that they engage in intelligence programs initiated and run by staff members with formal responsibility for the collection, dissemination and use of competitive intelligence. In terms of the use of competitive intelligence, companies seem to move through a series of stages as illustrated in the following figure.
The first stage of competitor-awareness is entered soon after a company is formed or even before, when the startup is being planned. Being competitor-aware means that the key competitors are known and that there is some knowledge - usually incomplete and certainly unverified - about their products, their prices, the clients they have succeeded in winning businesses from, the market sectors they service and the staff they employ. These types of companies use the data that it holds other than for occasional ad-hoc tactical exercises, such as competitive pricing decisions, or as an input to a business plan that has to be submitted to an external organization.
As the companies grow, they tend to become competitor-sensitive - both in terms of the damage that the competitors can inflict on their businesses and the need to win orders by competing more effectively. Unfortunately, being competitor-sensitive does not always increase the demand for information on competitors. An alarming proportion of competitor-sensitive companies continue to rely exclusively on informal information flows through their sales forces, business contacts and scans of the trade press, rather than a structured intelligence programme. When they do step outside the informal information channels, the prime motive is usually emulation. They seek to copy what they perceive to be the best of their competitors’ practices. There is nothing wrong with emulation as a business process, providing it is factually-driven, using techniques such as reverse engineering and competitor benchmarking, but it represents a very limited application for data that can be derived about the competitor’s activities.
A competitor-intelligent organization devotes serious resources to studying their competitors and anticipating their actions. This includes identifying competitors’ physical and intangible resources, studying their organizations and their methods in as much as detail as is practical and developing knowledge of their strategies and potential game plans. The competitor-intelligent organization is set up to anticipate competitors’ activities. It is continually aware of the threats posed by competitors, the nature and seriousness of those threats and what needs to be done to counteract them. It recognizes the need to look forward and predict the likely responses to actions it is proposing to take itself. It is also aware that the most serious threats may arise from companies that are not yet active in its business sector and may come from new entrants. A brief about the conditions, which apply in the three stages of competitive development, is as follows:
Factors Influencing the Growth of Competitive Intelligence
The progress from being competitor-aware to competitor-intelligent is dependent on the probability of the competitive intelligence being used. This again, depends on the following factors:
*The need to have a competitive strategy

Competitor	Data Collection	Applications	Organization	Systems for managing CI
Aware	Informal	Curiosity	None	None
Sensitive	Informal / formal	Emulation	Marketing management information officer	Marketing information system
Intelligent	Formal	Anticipation	Competitive Intelligence manager	Manual or computer based CI systems.

*The ability to use intelligence once it is gathered to contribute to the bottom line
*The ability to study the competitors
The perceived need for a competitive strategy is determined by the level or intensity of the competition in the market serviced by the company. Around the world, there have been a series of developments or events, which have resulted in a major intensification of competition between the organizations. These, in summary, are:
*Privatization
*Deregulation
*Liberalization
*Global marketing
*Periods of economic recession
The need for competitive intelligence derives directly from an organization’s competitive strategy and from a wide variety of tactical situations in which the organization squares up to competition on a daily basis. At a strategic level, intelligence is used to define:
*How an organization can be positioned (or repositioned) in order to win business from the competitors
*The likely responses that the competitors will make when challenged by a new market initiative
'*Future changes in the shape and structure of the competitive environment that may enhance or detract from the organization’s ability to sell
Positioning against the competition requires a clear understanding of each competitor’s own stance in the marketplace and their apparent objectives. All markets are made of a mixture of
*Competitors that seek to lead, in terms of technology, innovation, service and price, and others that are content to follow
*Competitors that seek to dominate in the market-share rankings and others that exploit favorable niches
*Competitors that are aggressive attackers and competitors who defend the territory that they have already won
*Competitors that rely on their size and those that exploit the nimbleness that is a common consequence of being small
Within this environment, the company must select a competitive strategy that it thinks is best suited for it. The fundamental objectives of competitive intelligence are to avoid surprises and gain competitive advantage. These can be achieved only if the future actions by competitors can be predicted. However, the companies must keep in mind that forward-looking strategic intelligence is easier to discuss than it is to explain. The analysts must take into account management statements, personalities and objectives of the management that run the competitors, changes in the ownership structures and other changes that may result in the change in the objective of a competitor and change the way in which it may respond to the market environment.

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