Competitor Intelligence -The Essential Challenge Donald Barber, Quest Management Systems

The nature of competition is evolving in response to globalization, mergers and acquisitions, and changes in regulations and trade barriers. This evolution is increasing the importance on using competitor informa- tion in today’s business world. Using competition infor- mation may have once been an opportunity to gain an advantage, but it is now essential.

The right information Does this essential use of competitor information mean that the challenge is to find more information about our competitors than they in turn are finding about us? The answer to that question is a resounding NO!

The real challenge is finding the right information, turning that information into competitor intelligence (CI) and using this intelligence to create a competitive advantage. I use the term right information because not all information about competitors is useful. We can collect reams of competitor information which may provide little real value. An example may be:

Competitor A operates a facility in a small rural community. As a method of gathering information on Competitor A, your company subscribes to the local newspaper. In one of the papers you note that Company A’s annual picnic was a great success- fun was had by all.

Although this information is about Competitor A, it is of little value to your organization.

An example of valuable information, taken from the same source, may be:

After reviewing several publications of the same local newspaper, you notice an article saying that Company A played host to executives from Com- pany B (possibly one of your major customers) with whom Company A had never done business.

This is certainly pertinent information about your com- petitor. You have successfully weeded out the right information from the plethora of information available about your competitors.

The right people Now that you have collected the right information, how do you turn i t into CI? You begin the process by getting the information to the right people. The right people are those in your company who are the decision makers- the executives that can take action.

You must also get the right information to the right people at the right time. The right time actually includes a lead time. The decision makers need the information in time to take proactive or preemptive action against your competitor. Once you get the right information to the right people at the right time, you have created CI.

Complicating obstacles This process sounds incredibly simple. But in reality, it has been unnecessarily complicated by how American companies have historically done business. Some examples of how American companies’ business prac- tices have complicated the CI process include: . More is better. This mode of thinking creates a data- rich and information-poor environment. This environ- ment happens when any and all information about competitors is collected. The large amount of informa- tion gathered under this type of environment often hides, or makes virtually inaccessible, the few impor- tant factors which can be processed into CI.

The “more is better’’ approach to competitor informa- tion also handcuffs a company’s most precious resource -its people. Too often we find our high value people spending most of their time gathering, organizing, and routing competitor information. They should be dedi- cating their time to analyzing it and turning it into CI. . Number orientation. Historically, American com- panies and business schools have overemphasized the value of financial analysis techniques to track com- petitors. Often the most enlightening and strategically important information is in non-numerical form. These rumors, observations, or estimates of your competitors‘ business take a variety of forms including text, graph- ics, and video images or pictures. However, because of the years spent being number oriented, American com- panies do not focus on this “soft and fuzzy” information. They often do not have the systems capable of organiz- ing and communicating it throughout the company.

Poorly defined or rigid lines of communication. Too often valuable input to the company’s decision makers is not available to them because the individuals with the information do not know the decision maker needs it or how to get it to them. The decision makers do not know what information is available or what ques- tions to ask to get it.

Competitor profiles How do you overcome these complicating obstacles and carry out an effective CI process within your company? Let’s start with refocusing the company from a “more- information-is-better” organization to an organization which focuses on collecting and organizing information into competitor profiles. Competitor profiles consist of specific information factors tracked or maintained to support management’s decision and analysis needs (planning, budgets, acquisitions, etc.). These factors are the Essential Elements of Information (EEIs) about your competitors. They provide the foundation upon which to build your CI process. Many companies need to collect EEIs such as:

Competitive lnlelligence Review 23

strengths and weaknesses promotional strategies key management and their related backgrounds product teardowns financial statements organization charts These sample EEIs can represent many forms of

information-text, numeric, charts, pictures. The flex- ibility to handle multiple forms of information must be included in your CI process. If you intend to use a computer system to aid CI, it should accommodate this diverse data.

By identifying a set of EEIs, you have provided a focus for your entire organization to use when collect- ing, organizing, and analyzing competitor information. This focus prevents a data-rich and information-poor environment from forming. It creates the basis for benchmarking your competitors. Additionally, your high-value employees spend more time performing analysis and less time collecting files of data.

Now you have built the base for the CI process. How do you move your company away from pure numerical analysis to collecting and analyzing the soft and fuzzy information? This is relatively simple. You use your EEI definitions as an information gathering tool. Query your internal and external competitor information sources for information relevant to the EEIs. Over time, you will be amazed at what a focused research effort will uncover.

Pay particular attention to your existing internal sources and find new internal sources to support this process. You will find that most of your competitor information exists within the organization.

Return favors to your internal sources. Give them access to the collected information from all of your sources. This can be done through a weekly or monthly update report or by providing access to a CI system which supports multiple users.

Two suggestions to perform this process:

Communication lines Even if you are successful in defining your EEIs and getting your organization to analyze significant subjec- tive information, you still must tackle the lines of communication. How do I get the right information to the right people at the right time? First, you must identify who the right people are within your organiza- tion. This can be done while you're identifying your EEIs. During the EEI identification process, and after- ward as well, continually ask the questions: . Who in your organization would be interested in this

= Who can create action as a result of this information? You will want to structure your communication lines

to provide the information to both sets of individuals. You can use periodic reports or existing CI systems which support various forms of information dissemina-

type of information?

tion. Define a feedback loop from any point of the communication line to allow necessary refining and refocusing.

Defining your EEIs, opening up your organization to new forms of information, and identifying and restruc- turing the lines of communication are integral to turning your competitor information into CI. Once you have completed these processes, you have the beginnings of a CI system.

The system may be manual in nature or you may choose to implement an available CI software system. Whichever the case, the key is to use the system. Do not let your work lie dormant. Maintain the momentum that you have built in defining the system. Using competitor information may have once been an opportunity to gain an advantage, but now it is essential. ct

A bout the Author Donald R. Barber is a Vice-president of Quest Management System, a Management Consulting and Software Development Company specializing in Business Intelligence system and related consulting. Prior to joining Quest Management Systems, Don worked at General Motors and Price Waterhouse. Don is a CPA and holds a BA from Michigan State University He can be contacted at: 2301 K Big Beaver Road, Suite 318, Troy, MI 48084. El: 313-643-4555.

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