“It is pardonable to be defeated, but never to be surprised.”
Frederick the Great (1740-1786)
Competitive Intelligence (CI) is a proactive, opportunistic, and prospective approach that consists of strategically searching and analyzing market and organizational information, identifying threats and opportunities. According to Ken Cottrill (1998) IC identifies blindspots on consumer needs, competitors’ actions and the future of the market, aligning themselves with the company’s capabilities and translating this knowledge into short-, medium- and long-term strategies. It is not only a defensive strategy to anticipate threats in the market, it is also a way to identify opportunities, new business ideas and new ways to regenerate the organization.
Contrary to the term Competitor Intelligence, Competitive Intelligence is not merely associated with the study of competition, since it covers other topics such as products, consumers, employees, marketing, etc. That is, it covers the entire competitive environment and not just competitors. On the other hand, it is not just a market study, but a program that the organization must adopt in order to obtain strategic, unbiased, measurable, actionable, and above all reproducible information (SCIP University, 2014).
It is a continuous process of developing holistic knowledge about the external environment, namely the organization’s value chain, contributing to the organization’s cumulative learning. The ultimate goal is to generate business ideas, facilitate the decision-making process, reduce the reaction time to the market and disseminate intelligence through the company, in order to gain a competitive advantage in the market.
Performance of Competitive Intelligence
The scope of the CI can be organized in the following scheme:
Picture 1 – Elements of CI (Source: adapted from GCC Consulting)
The approach to acquiring intelligence must be made across the organization’s value chain (horizontal axis), including suppliers, competitors and consumers, and across a range (vertical axis). Stakeholders include all organizations outside the company’s value chain, but potentially linked to it, such as partners, universities, regulatory and legal entities, among others. It is also necessary to include general market trends or other critical issues that prevail for the business in question, such as macroeconomic factors, technological developments and changes in legislation. The third axis reflects the spectrum of geographies and industries to which the process can be applied, since CI implies a broad and deep analysis, simultaneously.
Organizations that invest in CI programs will be better prepared to lead the market, since the information provided enables them to work in various areas of the company. The areas that benefit from a solid CI program are mainly those of Marketing and Strategy, such as the processes of defining price strategies, market strategies, preparing mergers or acquisitions. The role of the CI is still central in the areas of R & D and development of new products, working closely with the Innovation areas, as a result of identified trends, from the study to consumers and competitors, aiming the creation of blue oceans.
The integration of Competitive Intelligence
The maturity of organizations with respect to HF can be translated by the degree of interpretation and utility given to the information collected, since intelligence is the applicability of knowledge, which in turn is the interpretation of information:
Image 2 – Increased results in the IC process (Source: adapted from Gallup.com)
The creation of CI alone does not raise the organization to a new level. This intelligence must be uninterruptedly linked to the organizational strategy and, therefore, valued by the top management, so that the strategy is constantly regenerated (Fahey, 2007).
It should also be combined with Organizational Intelligence so that the designed strategy is consistent with the organization’s DNA (culture, values, skills and competencies, strengths and weaknesses, among others).
Alongside this fusion of concepts, innovation is also part of this cycle, since it is an instrument of value creation (industry push).
Image 3 – Holistic Approach (Source: Prepared by the author)
Nowadays, companies recognize the need to develop their competitive intelligence, as evidenced by the press release from Market Wired:
“1000 of the largest US companies are planning to increase their investment in Competitive Intelligence activities from $ 1 billion to $ 10 billion by 2012. Ten years ago this investment was zero, with most investments being only associated with market research and planning strategic.”
A study by the Competitive Intelligence Foundation (2006) indicates that CI produces results at the level of: revenue growth; New products or services; Cost reduction; Reduction of time; Increase in profits; and achievement of strategic objectives. That is, CI comprises a set of strategies that translate into benefits in the following dimensions:
Picture 4 – Pereira Diamond (Source: Pereira, 2014)
In conclusion, it is possible to summarize the various advantages of betting on a competitively intelligent organization in nine points:
- Anticipating market opportunities and trends, as well as future threats, before they become obvious;
- Source of business ideas and creation of blue oceans;
- Support in decision making, reducing the reaction time to the market;
- Increasing the analytical skills of the organization;
- Identification, management and risk reduction;
- Translation of knowledge into added value for all levels of the organization, synchronously;
- Do not be exposed to blindspots;
- Increasing strategic horizons;
- Understanding current and future consumer needs.
By Carolina Monteiro,
December of 2014