Developing and implementing a Competitive Intelligence (CI) program within an organization is a lot like going to counseling. You may not necessarily enjoy the process, but the insights and tools you take away from taking a good hard look in the mirror can provide invaluable growth going forward.

For those businesses that aren’t faint of heart, CI can also provide similar benefits. Using data analytics, CI helps enterprises determine how their business stacks up against the competition in terms of organizational structure, products, pricing, and marketing strategies, and then establishes appropriate steps these businesses can adopt to enable success and growth. Depending on the data, there can be many interpretations, but the one overriding distinction, not unlike therapy, is that Competitive Intelligence (CI) is strategically underutilized.

CI can be best described as bringing order to chaos. Before setting about the task of creating a CI strategy or enhancing existing efforts, however, it’s important to keep in mind there are evolving information capabilities, access to new or previously inaccessible data, and new approaches to analytics that continue to exponentially expand the possibilities.

What are the current challenges to effective CI?

  • Decide which questions to pose that will lead to actionable strategic responses;
  • Figure out which information is actually available to answer the questions posed;
  • Determine appropriate methods to capture, store, distill, and disseminate CI learning;
  • Integrate CI data with other data sources, especially legacy data;
  • Apply appropriate analytics to solidify insights and predict where things might be going;
  • Modify internal processes to socialize CI and turn using it into a natural act;
  • Allocate resources within organizational priorities to where CI investments have a positive ROI;
  • Rely heavily on internal resources, or contract out as appropriate.

The Traditional Four Faces of CI

A traditional execution of CI starts with a two-by-two matrix to address a Strategy/Tactical dichotomy and a decision to pursue either directional insight or detailed findings.  CI efforts cover a myriad range of issues, but consulting services have recently pivoted toward a preference for strategic recommendations.

Rethinking the Four Faces of CI

For many of us who are involved with competitive intelligence for a living, our thinking has evolved beyond this traditional matrix.  Lessons learned along the way—combined with new technological capabilities in Big Data—have persuaded us that the above traditional approach doesn’t accurately represent the optimal four faces of Competitive Intelligence.  In fact, it’s getting increasingly difficult (and expensive) to contract for exact metrics at a deep detail level. 

We’ve learned what will distinguish our work as data scientists in the future is actually anchoring data management and advanced analytics with a much larger focus on end-to-end strategies. CI is a mix of empirical learning and intuitive leaps, but it can be systematic.  Our four faces of CI relate to where data resources are found and how they are collected and stored.  This alternate focus reframes the questions and practices that are most logical to pursue.

Proposed Alternative Four Faces of Competitive Intelligence

Face 1: Leveraging Legacy Customer Relationships (and Employee Knowledge)

There are many ways to extract insight from resources and outcomes directly tangible with current relationships.  Moreover, big data presents opportunities to infer perspectives not previously available. Below are some of the most useful ways we can obtain competitor information that are directly within an organization’s grasp:

  • Existing customers have deep competitive insights.  Customers know competitive price flexibilities.  They are often aware of new features and strategies.  Yet, these examples scratch the surface.  The key is having a conscious CI strategy and a plan to capture learning.
  • Switching behavior (or even proper handling of other events) is a prime time to extract insights.  Industries such as financials, telecoms, and automotive retailers are just some of the companies that extract insights as new customers come on board or existing ones leave their brand fold.
  • Employees have constant exposure to CI insights, but they need opportunities to distill them and feed them into a CI system.  Alternately, employees can proactively pursue insights, given a proper focus.  Further, the opportunities at trade events and seminars are rich.  If such information gathering is socialized, behaviors will follow.
  • Sales personnel constantly face competitive realities, but they are not always incented to distill and capture what they learn.  It‘s also a question of having effective means to capture learning.  Moreover, sales people can be taught to ethically pursue extra competitive information, and the most effective information gatherers can share their practices with others. 
  • Employees who have worked for competitors are also a rich source of insights, even if they are bound by prior contracts regarding sharing specifics.  An organization can benefit from mining employee histories for direct and indirect knowledge.
  • Industry events can yield valuable information. Some competitors are willing to discuss their world at trade shows and conferences.  Some industries are not as free-flowing, but common interests abound if approached constructively.
  • Shifts in demand can signal new competitive activity.  An organization that understands the natural ebbs and flows of its sales and revenue can be alerted by unexpected changes.
  • Propensity and affinity derived from advanced analytic techniques can suggest when best customers and their look-alikes may not be reaching their potential.  Separating when new techniques and promotions do and do not work can reveal loyalty to another brand.

Face 2: Getting Inside Competitor Mindsets

This entire face of CI calls for a shift in one’s own mindset.  There are two key aspects to CI mindset evaluation.  Contractors can often add value that cannot be grown at home.  They can pursue tactics as extreme as calling into competitors (ethically) or cross-pollinating successful strategies from different industries.  Also, it might be assumed that this type of information is difficult to capture systematically and quantitatively.  However, improving technology makes it possible to better quantify information and to manage unstructured data. There are concrete opportunities to see how a competitor responds to change, but many mindset insights still must involve some inference:

  • When there are changes in terms or product features, there will usually be competitive echoes.  If prices are raised without consequences, it may be due to price inelasticity, or perhaps old prices were too low in general.  Conversely, reactions to adverse changes may be evidenced slowly if there are switching barriers or if competitors respond slowly.  Structured experimentation works best, but at a minimum, listen, measure, and interpret.
  • When a competitor makes an unexpected or even an expected change, it signals their perception of a market and their position in that market.  It may also signal a change in historic strategies.
  • Competitors usually have conspicuousstrategies.  They may target lowest cost, price, value, differentiation, fast-following, industry leadership, profit maximization, market share conquest, serving emerging niches, etc.  Because it’s almost impossible to go after a meaningfully sized market without tipping your hand, this will reflect both their mindsets with their existing customers and how they approach competitors’ customers.  Also look for how competitors reinforce their strategies in their advertising and promotion activities.
  • Published information can reveal competitor mindsets, e.g., price lists.  Does a competitor offer a list price and then stand ready to price off-list?  Are there discount or bundling tendencies and when are those tactics executed?
  • While pricing mindsets can be pretty easy to gauge, a competitor also speaks volumes in where they attack other competitors and where elephants in the room go unaddressed.  These activities reveal where they feel advantaged and disadvantaged.  Another factor involves understanding when a market has niches, such as an industry that on-average values quality but then has players who are price sensitive.  Finally, it’s important to understand when hierarchies are relevant.  Satellite locations may have preferences, but may get pulled in line with master corporate contracts.

Face 3: Public Competitive Perspectives

This face of CI is comparatively straightforward, but seldom fully understood or exploited.  This opportunity requires creativity and research regarding what can be captured.  This activity also calls for empirical framing and margin inferencing.  These are inexact methodologies that can become a very powerful means to triangulate competitive strategies and levels of activity:

  • Many industries have pundits who track the industry and even individual players within an industry.  They often publish useful high level information to tantalize prospects for their deeper services.
  • Trade organizations often publish information that hints at many competitive insights.
  • Industry publications and events often afford unexpected insights.
  • Many organizations have become proficient at clever search engine use and regular internet monitoring to capture tidbits that can collectively lead to useful intuitive conclusions.
  • Competitors are cautious about what they reveal on their websites, but like their advertising and promotional activity, they must inevitably reveal useful perspectives.
  • Web harvesting and spiders combined with powerful new processing abilities have completely opened doors to capturing insights that were historically impossible to distill.
  • Exploring unstructured data via social media or literature searches affords brand new ways to understand competitors.
  • Government agencies often collect incredible levels of detail that properly gathered can offer perspective as long as there is no attempt to isolate data outside the boundaries of disclosure.
  • Any industry that has even indirect regulatory considerations usually ends up having detailed, publicly available information that is seldom used to its full potential.
  • Many industries have pooled information sources publicly available for a fee.  Credit Bureaus are a prime example of this kind of service, but many more of these sources exist than is commonly recognized.
  • Organizations can often find useful information by forging mutually beneficial partnerships with complementary players, such as suppliers and customers.  These would-be partners stand willing to afford insights as long as they can benefit from sharing their insights and data with your competitors as well.

Face 4: Full Industry Realities

This face of CI manifests in two very different ways. In our practice, we’ve actually achieved extremely detailed summaries of all of the activity within an industry. This creates a very powerful planning tool, but there are also ways to inference actionable strategies with nothing more than a general industry framework.

One way or another there is almost always a top-line estimate of the size of an industry, and the major suppliers and buyers within that industry can usually be estimated at a useful level.  The question then becomes whether top-down parsing or bottom-up estimation is the more practical approach.

Ironically, this face of CI becomes the most organization-specific, with no general one-size-fits-all strategies.  It all depends on information availability, goals of the specific organization, and the level of willingness on the part of executive stakeholders to invest in a more industry-practical and actionable-level viewpoint.

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While the practice of Competitive Intelligence continues to rapidly improve, it still flies under the radar for many businesses.  Is it time for your organization to wade in, or even dive in?  If so, do three things.  Think about the questions that would be most actionable to answer.  Develop a strategy for systematically capturing learning.  Finally, socialize attention to this critical strategic focus.  This may not come naturally, but it’s an investment worth making.

  • Ron Brooks is VP of strategic consulting at CBIG Consulting.