Competitive Intelligence

Frontmatter

1. Competition

Abstract

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, to gain the prize or to succeed makes the effort or the pain of competing worthwhile. Competition pervades every aspect of personal, institutional and corporate activity. As individuals we spend our lives competing for success in school, in sport, for jobs, for partners and for recognition. Political parties compete for voters, government departments compete for funds, societies compete for members, charities compete for donations, tourist attractions compete for visitors and companies compete for customers. There are those for whom competition is a major reason for living; they are said to ‘thrive on competition’. There are others who, in the interest of a quiet life, would prefer to get what they want without competing for it but, in the real world, they invariably find that it is impossible to avoid confrontation and competition completely. Companies would prefer not to compete, since doing so absorbs resources and reduces margins, but they recognise that competition is almost inevitable and, whether explicit or implicit, methods of dealing with competitors are an integral part of their business strategies.

Chris West

2. Intelligence

Abstract

Competitive intelligence is the process by which companies inform themselves about every aspect of their rivals’ activities and performance. It is an essential ingredient when planning not only marketing campaigns but also production programmes, human resources, finance and all other corporate activities that competitors can influence directly or indirectly. No battle can be fought without intelligence on the opposing forces. Just as card games are easier to win when players have either seen or deduced their opponents’ hands and exams are easier to pass when the questions are known or guessed in advance, competition is easier to engage in when the current and future activities of the competitors are known or anticipated. In all competitive situations the accuracy and timeliness of the intelligence that is held may have a determining influence on the outcome of the engagement.

Chris West

3. The Development of Competitive Intelligence

Abstract

Market research has traditionally focused on the analysis of customers. This has never been to the exclusion of all other participants in markets, but ‘customer focus’ has been the distinguishing characteristic of an organisation that has embraced the marketing concept. The customer is the ultimate target of all marketing activity and understanding the customers’ activities, requirements and expectations is, and will remain, an essential ingredient for the development of marketing strategies. However, customer analysis has never been able to provide answers to all marketing questions and other participants in markets have been studied and analysed regularly. These include distributors, specifiers, advisers and competitors. Each of them is a valuable source of intelligence for those attempting to define a winning strategy, though, to date, customer analysis has taken the lion’s share of research budgets.

Chris West

4. Framework for Competitive Analysis

Abstract

The intelligence needs of any organisation must be driven by the applications for which the intelligence is to be used. This applies across the board regardless of whether it is marketing intelligence, business intelligence or competitive intelligence that is being considered. The need for competitive intelligence derives directly from an organisation’s competitive strategy and from a wide variety of tactical situations in which the organisation squares up to competition on a daily basis.

Chris West

5. Overview of the Sources of Intelligence

Abstract

Competitive intelligence can be obtained from a wide variety of sources. Some of the sources are obvious but many are obscure. Some are easy to use or access, others are extremely difficult or uncooperative. The key skills in all competitive intelligence are the ability to identify the sources that are likely to have the data that are required and the ability to extract them. At its simplest competitive intelligence can involve scanning the national and trade press for news items on competitors and maintaining a watch on their websites. At its most complex it could involve direct interrogation of competitors’ staff. The route that is chosen will depend largely on the data that are required, the importance attached to having access to the intelligence, the time and physical resources that are available and the budget. Needless to say, complex intelligence-gathering exercises tend to use more resources than those that have more straightforward objectives, though there is always scope for surprises. Seemingly simple intelligence objectives can sometimes prove unusually difficult to fulfil.

Chris West

6. Secondary Sources of Intelligence

Abstract

As explained in the previous chapter, secondary sources are normally the first to be consulted in intelligence-gathering programmes. They vary in usefulness, timeliness and accuracy but they represent a relatively low-cost and sometimes a reasonably comprehensive method of acquiring intelligence.

Chris West

7. Intelligence on the Internet

Abstract

The Internet has revolutionised the search for information. Data that once took weeks to acquire can now be available at a few clicks of a mouse. This applies to all types of information but those seeking intelligence on competitors have been particular beneficiaries of the Internet revolution. The number of websites put up by companies and devoted to news about the activities of companies is disproportionately large. It is rare to find a company of any significance that does not have a website on which it posts a description of its activities, its facilities, its product range, its partners, press releases, technical papers, job opportunities and contact points. The wealth of information available on even the most basic sites is far in excess of that which could be obtained from hard-copy brochures and catalogues and directory entries.

Chris West

8. Primary Intelligence Collection Techniques

Abstract

Primary sources of intelligence represent a means of filling the intelligence gaps left when secondary sources have been exhausted. They can provide the most relevant intelligence but are also the most difficult to access. As with secondary sources, there are internal primary sources and external primary sources, both of which should be covered. Most of those who have studied the availability of competitive intelligence have concluded that internal sources can be extremely productive but are rarely exploited fully. Obviously all of the intelligence that is required can in theory be obtained from external sources. The difficulty lies in the fact that they are rarely easy to identify and there are invariably limits to the depth of information they will disclose, particularly those sources that work within the companies being studied.

Chris West

9. Market Research as a Source of Competitive Intelligence

Abstract

Market researchers often seek to distance themselves from competitive intelligence, usually on the grounds that the provision of such information infringes their code of practice. In doing so they ignore the fact that some of the most valuable information about competitors is provided by standard market research techniques and programmes. Indeed it is difficult to see how a market can be fully analysed without taking account of the competitive environment and many of today’s most effective competitive intelligence analysts cut their teeth in the market research business rather than starting out in the intelligence world.

Chris West

10. Analysis — Filling the Gaps and Stretching the Data

Abstract

Unlike market research, the analytical process in competitive intelligence is not something that begins once data collection has ceased. To obtain the best intelligence, analysis and data collection should run hand in hand until a satisfactory result has been achieved or until it is evident that no further progress can be made. Competitive intelligence analysis is used for two purposes:

• Filling gaps in the data yielded by an intelligence-gathering programme
• Drawing conclusions from the data that extend the understanding of competitors’ actions and plans

Chris West

11. Verifying Intelligence

Abstract

As with all data, competitive intelligence needs to be accurate to be useful. Unfortunately, by its very nature competitive intelligence is prone to be inaccurate. This is partly because it is difficult to obtain complete information but also because inaccurate intelligence about competitors’ activities circulates widely in all markets and is often accepted as fact. The rumour mill works hard on news about companies, particularly when the news is adverse. It therefore essential that careful checks are made to ensure that errors are minimised. It is also essential that when the checks are completed the probable quality of the intelligence is assessed and is clearly stated in any reports issued. To do this requires the use of verification procedures that are applied during the data collection process and retrospectively once the intelligence has been analysed. These procedures are particularly important for intelligence obtained from the Internet but also applies for that obtained from other secondary sources and even from primary sources.

Chris West

12. Competitive Intelligence Resources

Abstract

A key decision facing all companies developing competitive strategies is how to collect, analyse and disseminate the intelligence they require. As with market research the options are to establish a competitive intelligence department, to use external intelligence collection agencies, or a combination of the two.

Chris West

13. The Intelligence Briefing

Abstract

Obtaining competitive intelligence involves four key stages. They commence with the definition of the intelligence topics to be covered, as already discussed, and follow with a decision on who is to collect the intelligence, briefing them and obtaining a proposal, which is the internal analyst’s or intelligence agency’s response to the briefing they have been given.

Chris West

14. Controlling the Intelligence Collection Process

Abstract

Good intelligence results from an effective working relationship between intelligence users and intelligence gatherers, be they an internal department or an external agency. Each partner in the relationship must contribute the knowledge and skill that they derive from their respective backgrounds in order to get the most from the intelligence budget. Although it may be tempting to users to let the intelligence gatherers work to the brief and implement the project without interaction (or interfering), this can result in the outcome being less satisfactory. This is truest when working with outside intelligence agencies who are not party to the working culture within the commissioning company and do not have automatic or ready access to internally available intelligence.

Chris West

15. Legal Factors and Ethical Guidelines

Abstract

Ethics, or what is deemed to be good or bad in human conduct, is a key issue in all types of research activity. The part of competitive intelligence that focuses on the study of competitors is particularly prone to ethical assessment and is also subject to legal constraints. This is partly because there are many who regard it as an invasion of privacy, and therefore inherently unethical, and partly because there have been widely publicised situations in which the methods used to collect intelligence have been open to criticism. Competitor intelligence suffers from the fact that it is frequently compared with activities that do not adhere to the same ethical standards as other research activities and also that there are organisations that are prepared to break the law in order to acquire intelligence, if the price is right. These organisations are not part of the competitive intelligence community but are trading on the back of the growing demand for competitor intelligence.

Chris West

16. Processing and Distributing Intelligence

Abstract

One of the key tasks of competitive intelligence analysts is to ensure that their findings reach the staff that can use them within an acceptable time-frame. This may sound obvious but is worth stating, first, because a high proportion of intelligence is useful only for a short period of time and, second, because staff that collect competitive intelligence tend to be more security-conscious than most and have a tendency to keep the most useful data to themselves.

Chris West

17. Measuring the Effectiveness of Competitive Intelligence

Abstract

The effectiveness of all business processes and activities should be measured and competitive intelligence is no exception, especially since it is an activity that can absorb a considerable budget. Even if companies do not feel a need to demonstrate that they are spending their money wisely, competitive intelligence managers should be interested in proving that they are making a contribution to performance, if only to create some measure of protection when the next round of redundancies is being considered.

Chris West

18. Counter-intelligence

Abstract

PricewaterhouseCoopers have estimated that in 1999 the theft of proprietary information cost Fortune 1000 companies $45 billion.¹ The losses caused by successful competitive intelligence could be many times this figure since competitive intelligence is much more widely practised than theft. Counter-intelligence programmes represent a partial but essential defence against competitive intelligence and they should not be confused with counter-espionage. The civilian version of counter-espionage is used to counter the threat to businesses arising from:

• Industrial espionage using conventional and electronic techniques
• Bribery of staff
• Extortion
• Kidnapping of key executives
• Sabotage

Chris West

19. Deception and Misinformation

Abstract

The use of deception and misinformation programmes by companies seems highly attractive but must be treated with care and to be successful three conditions must be fulfilled.

Chris West

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