i want it fast, factual, actionable '-tailoring ... · pdf file'i want it fast,...

'I want it fast, factual,actionable '-TailoringCompetitive Intelligence to

Needs

IN RECENT YEARS WE HAVE seen a fundamental shiftin the way managers view competition. Whether, likeIntel, the company is striving for industry dominanceor, as in the case of DEC, the struggle is essentiallyone for survival, it has becomerincreasingly apparentto managers that the ultimate test of strategic successis that of the performance of the enterprise relative tocompetition.

As top heavy management structures are de-layered in an endless series of corporate restructur-ings, as organizations downsize (or 'right size') in aneffort to cut costs, improve productivity, streamlineoperations, and regain competitive advantage, and assome firms seek to radically transform themselves byreengineering their core business processes,managers at all levels are learning, many for the firsttime it seems, that business is first and foremostabout competition; about winners and losers in themarket place.

This is how Hammer and Champy describe the'new' business reality:

Three forces, separately and in combination, are drivingtoday's companies deeper and deeper into territory thatmost of their executives and managers find frighteninglyunfamiliar. We call these forces the three Cs: Customers,Competition, and Change. Their names are hardly new, butthe characteristics of the three Cs are remarkably differentfrom what they were in the past.'

Managers have come to realize that being very goodat what you do is no longer good enough; that if theircompanies are to survive they must rigorously and

relentlessly pursue, and achieve, 'three concurrentgoals: customer satisfaction, market domination, andincreased profitability'.2 Even those firms that haveintroduced programmes built around 'empower-ment', Just-In-Time (JIT) manufacturing, 'learning

Pergamon Long Range Planning, Vol. 27, No. 1, pp 12 to 24. 1994Copyright © 1994 Elsevier Science Ltd

Printed in Great Britain. All rights reserved0024-6301/94 S6 00 + 00

5

Executives'Douglas C. Bernhardt

Today even corporat iants ha've ben awakened fromslumbering mp bye ntyi forces ofglobal coptin eeniicaupheaval,. ivoa.tl encymarkt! aidnew, and moreaggressive, c tition;allcomind t signal the end of.the good bldday se hahit s ofDEC, GM,I-BM, NEC, M..it.Pilips Elec"nicsY; ;w. .. ers: :;.-:

, ̂" ,..,V. ^, &4.. . .A'pr-^^ve,:O 0 5

;Inn ose res ine thewm petitiwe- nmjianritstumble fintoeach ofea' raste scamefor yet atierinook wards,'before .the;n et decisi.oni to restliireu. or fine-tunethe organation a its offeings BifthiSs not enough.

jln ordert fot tendeffe l einentwinning c iti ties ir n st have in

placea foalhais to ccrocesssanaWse,and dsmiatcm tie t C etitiveinteaigenceegnaSe aers Ad rndwhat theCompeotincanadWilo,^^ad wendwhere it

^. arii·w t com aeteiIinteligence is,whiy it epes lsa eyexlement in *te strategicmanagemernt sm of the-companyand how it worksMp g ^I,, W , * ;* v A -

-

organizations', 'teams', Total Quality Management(TQM) and other fashionable management conceptsare finding that unless these approaches translateinto sustainable competitive advantage the battle islost. In short, managers in the 1990s have redis-covered the central truth of Porter's observation that'Competition is at the core of the success or failure offirms'.3

IBM UK provides one example of how a growingnumber of firms are responding to today's competi-tive challenges, and the profound impact this ishaving on the role of managers. The company hasreorganized its home sales operation 'in a federationof some 30 separate businesses, each with the powerto fix its prices and settle its costs'.4 This means'business managers alone will be responsible for theirprofits, costs, and their customers' satisfaction'.5 Inother words. throughout IBM's UK organizationmanagers are now explicitly accountable for thecompetitive performance of their own business units.The bureaucracy which once sheltered IBM execu-tives from the external environment, including com-petitors, is a thing of the past. IBM managers, in thetradition of their officer counterparts in the Britisharmy, are expected now to lead from the front.

But to lead from the front is a dangerous endeavourunder the best of circumstances. Even great generals,with superior forces, better weaponry, more effectiveorganization, and more efficient communications andlogistics do not engage in offensive operationswithout first collecting and assessing informationabout enemy capabilities, disposition, and intentions.To do otherwise would be suicide. Equally for today'sglobal enterprise, the consequences of formulating orimplementing business strategy without the benefitof actionable competitive intelligence are no lesssevere.

No executive today can be unaware of the extent towhich the complexity, the intensity, and the verynature of competition is changing, or the acceleratingrate at which change now occurs. It is also unlikelythat today's manager would disagree with theproposition that, in order to create and sustaincompetitive advantage, he or she must become betterat understanding the competitor's 'future goals,current strategy, assumptions [held about itself andthe industry], and capabilities'. 6 Put another way,most managers now recognize that their organiza-tions must become much better at gaining and usingcompetitive intelligence (CI).

Unfortunately, despite the growing need of com-

panies for more accurate, more strategically relevantinformation about the future direction, plans, andintentions of emerging and existing competition, myexperience suggests that what headway Europeanfirms are making towards the development of formalcompetitive intelligence programmes is, with a hand-ful of exceptions, largely incremental, and thereforeinadequate. As Hammer and Champy observe, 'Incre-mentalism is ... the surest way to fail atreengineering'. 7 It is also the surest way to fail atcompetitive intelligence.

The effective competitive intelligence programmeserves as a catalyst for radical change, and istherefore likely to meet organizational resistancefrom executives who jealously guard their carefullynutured information turfs. Thus, if the competitiveintelligence programme is to be effective-if it is toadd measurable value to the bottom line performanceof the firm-it requires continuous top managementsupport including the resources that attach to suchsupport.

DefinitionCompetitive intelligence is at once both a process anda product, rooted firmly in the notion that 'Increasedunderstanding of competitors' strengths and weak-nesses ... leads to more effective strategy formula-tion'. Competitive intelligence thus ranks as 'one ofthe most important strategic tools that managerspossess'.

We can use the following as a two-part workingdefinition of competitive intelligence:

1. An analytical process that transforms disaggre-gated competitor, industry, and market data intoactionable strategic knowledge about the competi-tor's capabilities, intentions, performance, andposition; and it is

2. The end product, or output, from that process.

Senior managers in large scale companies arequick to point to market research resources (bothinternal and external), to strategic planning pro-cesses, and to competitor analysis activities that.while perhaps not 'perfect', appear to get the jobdone. Yet among most European based firms 'Thereare very few fully integrated [competitive intelli-gence] systems, i.e., CI programmes integrated withother information activities in the company'. 9 In other

Long Range Planning Vol. 27 February 1994

6

words, and contrary to the conventional wisdom,most European managers do not participate in, orbenefit from, an ongoing, systematic processdesigned to produce actionable strategic knowledgeabout the capabilities, intentions, performance, andposition of competitors. At a time when competitivepressures have never been so great, and show nosigns of weakining, this is pure folly.

The main aims of this paper are four-fold; to

E Offer an explicit description of the competitiveintelligence activity.

O1 Suggest how competitive intelligence should beorganized.

O Review some of the collection and analyticaltechniques that are available.

0 Explain the benefits and results that firms mayexpect.

The Competitive IntelligenceActivityIt is well known by managers and scholars alike that'A first step in understanding the position of anorganization is to examine it against competitors orrivals it faces'.'0 This means answering questionssuch as:

O What are the competitor's objectives?

O What are the competitor's comparative strengthsand weaknesses?

O How has the competitor performed to date?

] What is its current strategy?

In many instances the firm will develop its strategywithout clear answers to these questions; perhapsbecause managers believe the information cannot beobtained, or possibly because there is no organiza-tional mechanism in place to collect, evaluate, anddeliver it.

In matters of intelligence, companies can learnmuch from the experience of the state and themilitary. The United States Central IntelligenceAgency (CIA) describes the intelligence process, orcycle, in terms of five interdependent phases(Figure 1). The phases are:

1. Planning and direction (or 'tasking')

2. Collection

3. Processing

4. Analysis and production

5. Dissemination

I will consider each phase in turn.

Planning and DirectionBefore any competitive data or information is col-lected, the intelligence consumer (usually the policy-maker) must first articulate an explicit intelligenceneed. In practice, the intelligence requirement cannotbe said to exist without appropriate answers to threebasic questions:

1. What do we need to know?

2. Why do we need to know it?

3. What decision is to be made, or action taken, oncewe know it?

Because the main purposes of competitive intelli-gence are to underpin and enhance strategic decision-making at the business unit level-the level at whichcompetition occurs-the answers to these questionsmust be framed within a context strategically rele-vant to the firm. As Robertson observes, 'one cannotformulate intelligence requirements until politicians[managers] formulate policies'." Competitive intelli-gence serves to 'highlight the critical gaps in theknowledge of decision makers, illuminate the keyuncertainties, clarify the ambiguities to the extentpossible, and provoke debate whenevernecessary'"2-it prompts the most central of ques-tions: how are our competitors trying to beat us? andtherefore, how are we going to beat them?

In reality, however, the ever changing complexityof big-particularly global-businesses means that'The policymaker cannot possibly be aware of all theproblems and challenges likely to confront him, so itis precisely one of the tasks of intelligence to alert himto the dangers and opportunities that he may face'. 3

Intelligence must warn management 'of the troublebefore it occurs'.14 In one sense, then, the CompetitiveIntelligence Co-ordinator, or Manager, must be ableto anticipate, as well as respond to, intelligenceneeds.

Managers should also be clear about what competi-tive intelligence is not. It is not a surrogate for tasks

Tailoring Competitive Intelligence to Executives' Needs

7

FIGURE 1. The Intelligence ProceS...::,; '." '; '; .. X' - ; f:^'"

which properly fall within the domains of the Competitive intelligence is a discrete process.corporate library or market research department; it is generating a unique product, which from the outset isnot market intelligence per se (e.g. the focus of tailored to the particular requirements of the intelli-competitive intelligence is often on financial, R & D, gence consumer.or technical issues; market research is more likely to Ultimately a successful product is one that consis-involve problems and issues associated with the tently (and profitably) meets customer expectationsprofitable marketing of the firms product and service and needs. Intelligence is no exception. It is theofferings); and it is not to be confused with, nor is it a intelligence consumer-the policymaker-whosub-component of, the firm's environmental scanning determines, sometimes explicitly, sometimes impli-system. Scanning systems provide early warning of citly, the intelligence that is needed, what thecompetitive threats that may exist. The task of intelligence priorities are, and, finally, judges thecompetitive intelligence, on the other hand, is to quality and usefulness of the intelligence product.determine whether or not the warnings are valid, to The competitive intelligence product is the outputprobe further if they are, to evaluate the strategic resulting from the intelligence process (or cycle) thatimpact (if any) on the firm, and to make estimates and enables policymakers to make informed decisions assubmit recommendations. a prelude to action. The competitive intelligence


8

process, like any 'core business process "creates"value by the capabilities it gives the company forcompetitiveness'.'5

Each intelligence project involves meticulous plan-ning and careful management. For example:

L Intelligence needs and objectives must be clearlyand explicitly defined (to the mutual 'satisfaction'of consumer(s), researchers, and analysts).

L Various responsibilities (for collection, analysis,etc.) must be delegated to executives, researchers,and analysts.

C] Financial and other resources must be allocated.

[ Consultants, if they are involved, must be briefed.

[ Time scales need to be agreed upon.

0 Preliminary information sources should be identi-fied.

The competitive intelligence process is a focused,intellectually exhausting, user driven activity, andmust be managed accordingly.

Collection and ProcessingCollection 'involves the gathering of the raw inform-ation from which finished intelligence will beproduced'.'6 It is the research phase of the intelligenceprocess.

Most texts on the subject of competitive intelli-gence deal at considerable length with the issue ofsecondary-mainly published-data and inform-ation sources. The list of such 'open' sources isinfinite-annual reports, government documents,directories of every description, newspapers, statis-tics, trade journals, 'on-line' database services, etc.-and will typically account for 80 per cent or more ofthe data and information input. But the intelligenceyield from secondary sources relative to that gainedfrom primary-mainly human-sources is negligible.The intelligence product which serves as a spring-board for managerial action-i.e., it is actionable-isgenerated mainly from information collected fromreliable primary sources. If a number of well placedsources, independently of each other, and in differentoffices (and possibly countries) provide the sameresponse to a particular question, the information islikely to be true.

For example, Figure 2 illustrates the approach the

intelligence researcher might take in trying to dis-cover the current status of a drug (which I shall callsunshine) under development by a major inter-national pharmaceutical manufacturer for the treat-ment of depression. The researcher has alreadyreviewed secondary information which suggestsclinical trials are in Phase II development in theUnited States-the objective is to validate theseassumptions.

The intelligence value from this series of interviewsis obvious. The researcher now knows that:

[ clinical development of sunshine is ongoing,

U Phase II trials have only recently begun, in theUnited States only,

LI there is a possibility that trials in Europe may startin the near future,

[ problems with nausea have been experienced.

Each 'finding' in this instance has importantstrategic consequences for the 'client' firm.

Another example of how competitive intelligenceworks in practice is found in the market forhousehold cleaning agents (bathroom cleaners, car-pet shampoos, dishwasher detergents, fabric soft-eners, laundry detergents, water softeners, etc.).

In this case a major European player (withheadquarters in country A wishes to improve itsunderstanding of the competitor's cost structure. Thecompany therefore decides to examine supply chainissues more closely. Part of the anlysis involvesanswering the key question: which contract packersor manufacturers supply the country B market withthe competitor's products?

A four step collection process involved 15 hours ofresearch, and 30 minutes of on-line database 'search-ing' to answer the question (see Figure 3).

The pharmaceutical industry provides one furtherexample of competitive intelligence in practice.

A European pharmaceutical company knows thata competitor plans to soon launch a drug (which Ishall refer to as wizbang) in the company's homemarket (country X), which poses a strong competitivethreat to one of the company's major products.Moreover, it appears that the competitor intends toenter the market at a lower price.

The product currently generates annual world-wide sales of several hundred million dollars, and isthe market leader for its indication. Positioning andpricing strategy require urgent reassessment.


9

INTERVIEWEE QUESTION RESPONSE

Director of Corporate I would like to talk I'm sorry ... I canCommunications to you briefly, if I only say that yes, at(New York) may, about the present early studies

clinical trials now of Sunshine areunderway in Europe taking place... butwith Sunshine. in the United States

only... not in Europe.

Investigating clinician Would you be able to We are investigatingat one trial centre in help me with some Sunshine, but theBoston information about study is an early

your Phase III trials Phase II study, notwith Sunshine for Phase III.depression ?

Vice President, company I understand you are Well... actually...R & D centre, Philadelphia about to move into we only began Phase II

Phase Ill clinical trials last monthdevelopment with ... it will be atSunshine for the least two yearstreatment of depression... before we are readyI suppose this means to submit NDAs... ityou will soon be filing depends on manyan NDA (New Drug things... but I amApplication) ? not at liberty to

discuss the matterfurther.

Medical Information Officer, I was interested to We're not reallyBrussels subsidiary learn about your involved with this

progress with the compound in Europedevelopment of ... although we doSunshine... I assume have a protocol readythis means there is ... we're waiting forno real issue with a decision from theside effects. US... but you're

right, apart from someproblems with nauseathere are no otherproblems with sideeffects I am aware of...my understanding isthat Sunshine is provingto be effective.

: 'FItuE 2L Intelligence Research fr 'sunshine'-an' ntidepres dg, "


10

- -----------

Step No. Sorce interviwed Informaion obtaine

CEO of competitor'ssubsidiary in Country B

Product managers andother executives at thecompetitor's head officeand Country B subsidiary

Database search ofthe contractpackers/manufacturers

Marketing, Sales, andTechnical managers ateach contractpacker/manufacturer

Listing of productbrand names and types, ineach major category (e.g.dishwater detergents) thecompany suppliesve- The specific productsmanufactured in Country B,and manufacturing locationsfor the products madeoutside Country Bv-- Confirmation that thefirm had no manufacturingsites of its own in Country B- responsible for marketingand sales only

v- Names and locationsof the contract packers/manufacturers

News items concerningrecent contracts

Basic financial details~v General informationabout the scope of eachcompany

Confirmation of specificproducts each contract packer/manufacturer supplied onbehalf of both the competitor,and other rivalsv- 'Packages' of informationon each company's full range ofcapabilities and product/serviceofferings

� �

' ~ , ·' ~"z~,.' ~,'~i..~:;!%'~ ~'~"- . ' ..... ~..: .. ) -."' -- M '.

FGu 3. Collecting cm ttiintelligen four-step

The questions asked of the competitive intelligence formulation? What type of data has been submit-

consultants are the following: ted to the regulatory authorities about them?

L What is the launch date/status of wizbang for the Approximately 20 primary sources were inter-

country X market? viewed during the research process. These included:

executives in offices of the competitor firm in foura Is the competitor expecting to get a product countries; various pharmaceutical industry associ-

licence, and when? countries; various pharmaceutical industry associ-l~cence, ~anda w~hen? ations; pharmaceutical products distributors; regula-

O Does the competitor have any problems with the tory agencies; clinicians; and charitable organiza-


11

1.

4.

. 1

Step No. Source interviewed Information obtained

.. . _ .

tions concerned with the disease. The combinedresponses from these sources enabled the consultingfirm to answer all questions.

Perhaps the most revealing information was pro-vided by managers at two offices-in differentcountries-of the competitor's advertising agency.One manager, when asked if there was anything newin the pipeline, said 'nothing new at the moment...',then added that he typically is given 3 to 6 months'notice by the competitor to prepare advertising andother promotional material. The second managerconfirmed that his office was 'not working on anyproducts for the [X market] now'.

Three of the most valuable primary sources ofcompetitor information available are:

O the competitor organization itself,

U customers,

O agents and suppliers (both yours and the competi-tor's).

Using proven interviewing techniques'7 it is poss-ible to learn from competitors, customers, andsuppliers most of what the firm needs to know inorder to complete the intelligence puzzle. Some'targets' are harder to 'penetrate' than others, butnone are invulnerable. Although it often requiresscores of interviews, at times on a global basis,experienced intelligence researchers can collect fromexternal primary sources nearly every essentialelement of information they need regarding competi-tors.

Most of the intelligence that managers requirealready exists inside the firm. The problem, generally,is that no formal mechanism is in place to leverageinternal information resources. Managers and stafffrom engineering, finance, human resources, manu-facturing, marketing, R & D, and sales, all havesomething to contribute in terms of valuable competi-tive information. In addition, they can all benefit fromintelligence feedback. But someone must talk to andmotivate them. It is a key function of the CI activity toharness the power and add value to the capabilities ofthese 'knowledge assets'.

One major international aerospace manufacturerrequires that every executive travelling abroad (fromwhatever department and for whatever reason)should be 'briefed' before the trip by a member of thecorporate business intelligence unit, and on his or herreturn report back with findings related to the issuesand questions raised at the briefing. This provides

the company with a continuous stream of up to date,often vital information at no additional cost.

Analysis and ProductionAnalysis represents the 'value added' element ofintelligence. It is analysis, and the options andrecommendations which emerge from analysis, thatsenior managers use for strategy formulation anddecision-making pruposes.

Essentially analysis involves the transformation ofraw information into the finished intelligence prod-uct. Herbert Meyer, formerly vice-chairman of the USNational Intelligence Council, and an assistant toWilliam Casey (Director of Central Intelligence from1981 to 1987), suggests that 'An intelligence outfitearns its pay by choosing well-by deciding whichexperts to back or even whether to ignore them all; byresolving its own internal differences; and by sendingforward to policymakers a series of judgements,conslusions, and projections that will, in the end,prove valid'.'

Good analysis, however, is not enough. Managersmust be receptive to intelligence-especially whenthe 'news' is not what they expect, or wish, to hear.Although Roosevelt and his commanders were fullyaware of the threat posed by Japan before the'surprise' attack on Pearl Harbour, 'Simply, the thingwas thought to be impossible'.1 9

The ever present risk in intelligence is that ofoverproduction. Laqueur notes that 'The more intelli-gence there is, the more difficult it will be to establishpriorities, and the greater the danger that trulyimportant developments and events will be lost in atidal wave of information ranging from the mildlyinteresting to the irrelevant'.2 Managers do not needyet more lorry loads of 'facts' or information, theyneed an analytical intelligence product, delivered ontime, and in a format that can be easily and quicklyassimilated. Indeed, analysis for intelligence pur-poses must be 'time based'.

Tyson offers one list of questions related to timebased analysis (Figure 4).

A discussion of the range of analytical toolsavailable for intelligence purposes-of which many(e.g. Weihrich's TOWS Matrix,2 Leidecker's andBruno's discussion of Critical Success Factors,22

competitive benchmarking2 3 ) have been considered inthis journal-is outside the scope of this paper. Inany event, there is no one intelligence toolbox. The


12

FIGURE 4. Assessing competitor intelligence.-

concepts and analytical approach used when exam- in Zurich, too, circulates to many of the company'sining the competitor's strategic intent, say, will be offices world-wide a bulletin, Competitor News.different from those employed when carrying out a Generally, however, such bulletins or newsletters aresustainable growth rate analysis, or a personality of little strategic value.profile analysis of the competitor's CEO. The Special Intelligence Briefing reports intelli-

The questions to be asked at the outset are: gence of the highest strategic value. It will deal withdoes te ie c r w t to se one, or a set of, strategic issues, it will include key[] how does the intelligence consumer want to seei-fhow whasth analteligca perspe wat to se findings (with sources!), and in many cases it will

it-from what analytical perspective? highlight alternative strategies, and offer recom-l what makes sense-what is actionable? mendations. Effective intelligence briefings are deci-

sion-oriented, contain supporting information only ifrelevant to the key issue(s), and is distributed under

Dissemination strict security guidelines (which vary by firm).

Dissemination is the last step of the intelligence cycle,and involves the communication, or delivery of the Organizationfinished intelligence product to policymakers (seebox). Porter, in his work, Competitive Strategy, argues that

The intelligence product is disseminated in various in order for the firm 'To be effective, there is a need forformats. It is easiest to conceive of the formats in an organized mechanism-some sort of competitorterms of the hierarchy shown in Figure 5. intelligence system-to insure that the process [of

Monthly competitor news bulletins are another compiling data for competitor analysis] is efficient'.24

form of report generated by some competitive intelli- What Porter does not do, however, is describe howgence units-usually at the corporate level. Caterpil- this can be achieved, or the scope of such anlar, for example, publishes C1 Newsletter at the 'organized mechanism'.company's Peoria, Illinois headquarters. The Corpor' Competitive intelligence does not just happen.ate communications unit of ABB Asea Brown Boveri, Similar to other management processes, competitive


13

* Does the information relate to the current strategy of thecompetitor ?

* Does the information represent a change in strategy ?

* Does the information reflect long-term changes forthcomingin the market (or industry) ?

* Does the information indicate changes in resources devotedto the market ?

* Does the information describe personality or culture ?

* Does the information suggest changed assumptions aboutmarket (or industry) conditions ?

* Does the information have an immediate impact on yourcompany's future direction ? A potential impact ?

Source: Kirk Tyson International, Business Intelligence Seminar, 1991.

14

Kevin Sharer, Executive Vce President of MC Communications Cio 't . ir - ..'You need to understand that I don't.have enough time to do.i 'job.JIdon't have time for

academic stuff. My attention span is very short.Combine Mny lack of time and a feeling that I knowit all and you have a tough sales 'callto make. >;." ' ~

'So, how do / /ike to get in/teignce?.Jike ,to et. it.s ^ridike, facts..Factscan be a lot of things. They can be analytic evaluation of cost snt .market reseah, or whatthe salesperson tells you. Every timejiam listening':to somene;,,qsio going.throughmy mind-so what? Whenyou call on. me,.within .o minutiii'fo. . .onausionsabout whether I want to keep talking-t your or not.; -6."-' . ;

'So, I want it fast, I want if factual, .'ian teitt e.dP'. P' .u'B.;ateelbarrowand say, "Hey, look what I gbtl I.got all these Jigsaw parmp m n on 'mycarpet and sit there and try to guess withime'what sort of'prcr.1t' k ?PIasettfith puzletogether before you see me. -* . . t:^ i; t si^i ,^

'I want ift actionable, too.Thats itersing, so what7.You don e csm predictions.You've gone out, you've collected Information, you've reflected;,and . is the are 95%right in what we are doing. But here's a rrtle course 'co;rrctionw e ' c:i'iI : ^^ r.;4 . '-- . .. t .,. ·:,'.. * '* ....'.. :-'...-... *:,;t/ -.e...'- -. . :.

5.Hiera.mhy .of!'ll.ge._e ' OEM. .. ... .,.~~~~~~~~~~~~~~~~~~~~~~~~~~~'"Long: Ra g P n V., ol ..- - Fe.r ay1-|


__-

. .. . . - .

intelligence involves 'a set of activities that, takentogether, produce a result of value to a customer'.2 5 Inorder to manage this 'set of activities' successfully,formal direction and co-ordination-Porter's 'organ-ized mechanism'-is necessary.

Competitive intelligence units are usually small insize (even in large of companies five staff or less is notuncommon). Moreover, effective units tend to sharethe following characteristics:

0 the head of Competitive Intelligence is a seasonedmanager, with strong analytical abilities and agood grasp of the total business. He or she alsoenjoys the explicit support of (and direct line to)top management, and understands the exercise ofpower in the organization;

J the CI unit is part of Business Development or thePlanning group; not Marketing or MarketResearch;

U the CI unit leverages the internal and externalresources of the firm to produce its output, anddoes not duplicate tasks more appropriately

carried out by more expert or larger departments(in part this requires good personal 'networking'throughout the company.

Firms that delegate part-time CI responsibilities tomembers of market research or other organizationalunits without structured, centralized co-ordinationwill fail to realize the full power and potential ofcompetitive intelligence. Competitive intelligence isas essential to the long term survival and prosperityof the firm as any other strategic activity or process.Award winning products, 'global' brands, skilledmanagers, world class manufacturing processes, andeven strong balance sheets do not, alone or in concert,guarantee the success of companies. What mattersmost is how these and other assets are utilizedrelative to the competition.

Kirk Tyson, a well known American consultant inthe field of competitive intelligence, argues thatintelligence gathering and analysis should be carriedout as close to line management and markets aspossible. Figure 6 below is a simplified illustration ofhow the intelligence function in a diversified com-pany might be organized.

FiGURE 6..The Competitive Intelligene Fr uncti on. - :.·


15

SOURCE: Kirk Tyson International, Business Intelligence Seminar, 1991.

The intelligence co-ordinator has a multi-functionrole. It includes:

U acting as a catalyst (a change agent) in thedevelopment of the organization-wide intelligencesystem,

U co-ordinating 'network' issues,

U directing and monitoring the intelligence function,

[ ensuring that the intelligence needs of the CEOand other senior managers are being met,

U providing centralized resources (e.g. externalresearch and consulting firms),

U training of intelligence personnel.

My experience, and that of Tyson's, is that effectiveintelligence programmes share several importantcharacteristics:

UL 'Networking' is conducted proactively and sys-tematically.

U An evolutionary, prototyping approach is used-the most effective competitive intelligence unitsstarted as pilot programmes.

U The intelligence consumers 'call the shots'-theyare given what they need to make decisions in aform they can use.

U The intelligence needs of individual businessunits or business development teams are co-ordinated.

U They are of flexible design, and allow for change.

U They, and the mechanized information systemsemployed, are less than ideal ('ideal' systems arenever implemented).

Needless to say, the competitive intelligence func-tion must be tailored to the specific needs, and to thecultural and organizational circumstances, of eachfirm. While there are valuable lessons to be learnedfrom firms such as 3M, AT&T, Motorola, SmithKlineBeecham, and others who are exceptionally good atcompetitive intelligence, there are no ready-madeorganizational templates available.

Benefits and ResultsThe benefits of understanding competitors and theiractivities are many. Aaker highlights four:

1. 'An understanding of the current strategystrengths and weaknesses of a competitor cansuggest opportunities and threats that well merit aresponse.'

2. 'Insights into future competitive strategy mayallow the prediction of emerging threats andopportunities.'

3. 'A decision about strategic alternatives mighteasily hinge on the ability to forecast the likelyreaction of key competitors.'

4. 'Competitor analysis may result in the identifica-tion of some strategic questions, questions thatwill be worth monitoring over time.'26

In addition, there is much evidence to suggest thatit is 'more effective to concentrate on extensive and in-depth information on one particular company with aspecific goal in mind, even long term',27 rather thancontinuous monitoring of a whole array of competi-tors. Focused intelligence efforts also achieve recog-nizable results quickly.

In 1992, under the sponsorship of SCIP 28 in theUnited States, an empirical study on the role ofcompetitive intelligence in corporate strategy andperformance was begun. Although as this paper iswritten the final report has yet to be published,preliminary findings were made available early in1993. The researchers, Professors Jaworski and Wee,found 'solid evidence that the extent of competitiveintelligence activities leads directly to:

U more positive relationships among the internalfunctional areas of the firm

U higher quality strategic plans

U increases in the SBU's knowledge of their market/business environment'. 29

Competitive intelligence, in other words, drivesbusiness performance by increasing market know-ledge, internal relationships, and the quality ofstrategic plans. 30 Competitive intelligence is, in short,a net contributor to the firms 'bottom line'.


16

_CL_�L_

References

(1) M. Hammer and J Champy, Reengineenng the Corporation, Nicholas Brealey Publishing, London(1993)

(2) H J. Johansson. et aJ, Business Process Reengineering, John Wiley & Sons, Chichester (1993)

(3) M E. Porter, Competitive Advantage, Free Press, New York (1985)

(4) The shake-up of Big Blue's army, Financial Times, London, 7 July (1993)

(5) Ibid

(6) M. E. Porter, Competitive Strategy, Free Press, New York (1980).

(7) M. Hammer and J. Champy, op cit

(8) A S Walleck, J. D O'Halloran and C A. Leader, Benchmarking world-class performance, TheMcKinsey Quarterly, 1991 Number 1.

(9) E. H. Brenner, Competitive Information Programmes, EUSIDIC Research Report (1991)

(10) G. Johnson and K. Scholes, Exploring Corporate Strategy, 3rd edn, Prentice Hall International(1993).

(11) K G Robertson. The Study of Intelligence in the United States, in Comparing Foreign Intelligence,ed R. Godson, Pergamon-Brassey's, McLean, VA (1988)

(12) G W. Hopple, Intelligence and Warning Lessons, In Military Lessons of the Falkland Islands War,ed B W. Watson and P M Dunn, Arms and Armour Press, London (1984)

(13) W Laqueur, World of Secrets The Uses and Limits of Intelligence, Weidenfeld and Nicolson,London (1985)

(14) Ibid.

(15) Johansson, et al, op cit (2)

(16) Central Intelligence Agency, Factbook on Intelligence (Septembet 1991)

(17) For a detailed explanation of these techniques, see Kirk W. M Tyson, Competitor IntelligenceManual & Guide, Prentice Hall, Englewood Cliffs, NJ (1990)

(18) H E Meyer, Real World Intelligence, Grove Weidenfeld, New York (1987)

(19) Captain Eric Nave, The Times, Obituaries, 17, 12 July (1993)

(20) W. Laqueur, op cit (13)

(21) H Weihrich, the TOWS Matrix-A Tool for Situational Analysis, Long Range Planning, 15 (2),55-66 (1982)

(22) J. K Leidecker and A V Bruno, Identifying and Using Critical Success Factors, Long RangePlanning, 17 (1), 23-32 (1984)

(23) Y K. Shetty, Aiming High Competitive Benchmarking for Superior Performance, Long RangePlanning, 26 (1), 39-44 (1993).

(24) M E. Porter, op cit (6)

(25) M Hammer and J. Champy, op. ctt (1)

(26) D A Aaker, Developing Business Strategies, 3rd edn., John Wiley & Sons, New York (1992).

(27) E H Brenner, op cit (9)

(28) Society of Competitive Intelligence Professionals, 1700 Diagonal Road, Suite 520, Alexandria,Virginia 22314 In Europe. SCIP (Europe), c/o DSM, PO Box 6500, NL-6401 J. H. Heerlen, TheNetherlands.

(29) B. Jaworski and L. C Wee, Competitive Intelligence and Bottom-Line Performance. CompetitiveIntelligence Review, 3 (3/4), 23-27.

(30) Ibid

Douglas Bernhardt is Man-aging Consultant at Busi-ness .Research Group, aGeneva based "competitiveintelligence consulting andresearch firm' and authorof the book Perfectly LegalCompetitor Intelligence: Howto get i use it and profit

.from it' (Fnancial Times/Pitman Publishing, 1993).


17

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