Competitive Intelligence: Needed A New Way Of Thinking About Competition

Today’s marketplace is about the landscape where competition is the predominant factor. Companies can now no longer rely on ‘market growth’ to propel their sales and profits to higher levels.  They must gain market share at the expense of competitors and prevent their enemies from raiding their own positions.  Competition thus should be the central focus of business strategy in today’s environment.  The informal, ad hoc approach to competition in general, and information gathering in particular, is no longer adequate for success in today’s crowded and aggressive marketplace.

Most companies are facing the same problem: how to improve profitability in the face of competitive forces that work against profit growth.

The outlook for the coming business environment presents the prospect of even more intense competition, so it is vital that those firms seeking a long-term market presence appreciate the significance of transferring market share from their competitors.  Those that don’t, could become tomorrow’s casualties.

Competitive intelligence can provide answers to many business questions including:

• Who are your current competitors?
• Who are your potential competitors?
• What business capabilities does your competitor possess?
• What current and impending business strategies is your competitor contemplating?
• What is your competitor’s market share?
• What are their product and service lines? How similar or differentiated are they from yours?
• How are their finances? Are their risk-taking abilities better?
• How does your competitor pipeline look?
• Are they filing for patents and getting more innovative solutions in the market?
• What are their digital and marketing strategies?
• How is their social media presence?
• What are their short-term and long-term business goals? etc.

However, a fundamentally new approach is required now:  systemized and organized for winning at the expense of competitors in the ‘Zero Sum Game’, in which someone must lose if another is to win.  It calls forth the need to address the following issues:

• Determining who are your current and future competitors, and choosing which ones to analyze in detail
• Developing a competitive intelligence system
• Understanding which data sources are available for ethical and legitimate use
• Establishing ‘who’ should gather ‘what’ information and ‘how’ it should be analyzed
• Examining competitors’ strategies
• Anticipating competitors activities, initiating competitive thrusts and finding new ways to achieve a competitive advantage
• Focusing resources so that minimal additional manpower or effort is required to undertake these tasks.

You need to understand that the frameworks provided by academics would not work here.  Competitive Intelligence is not about having an informal eye on the competition; it is not about knowing something about your competitor’s management, their plant locations, products and services, etc.

Even if they know something, the executives, however, very infrequently apply their knowledge in an organized, systematic and formal manner to achieve a competitive advantage.  Instead, they focus their attention on market issues, changing things a little here and a little there, attending to internal pressures and customers’ requirements.  In doing so, many are fighting today’s wars with yesterday’s thinking.

The challenge to increase market share implies that companies should have a ‘Competitive Orientation’ as well as a ‘Customer Focus’—perhaps it should be given even greater emphasis.  Companies those would do well to accelerate their progress in order to be ready sooner for the next stage of evolution for their firms—from being an exclusively market-driven company to becoming a competitor-oriented and market-driven company. They should be planning a transition to a more competitive enterprise.  The principal focus of this re-orientation will be the competitive intelligence and strategy development functions, which –particularly in the case of competitive intelligence—will need to be formalized and systemized in accordance with clearly defined responsibilities, timing, and outputs.

Competitive Intelligence is grounded in reality—in what is going on in the marketplace, what will be happening in the marketplace, and what needs to be done to ensure that the aggressive company increases the percentage of transactions directed in its favor.

In a way, one very critical goal of companies should be to transfer market share profitability from competitors.  A company can accomplish this by improving its position in the minds of its key stakeholders—including customers, intermediaries, employees, bankers, suppliers and stockholders.  This is the territory from which the company—like a country at war—should be seeking to rid the competitor.  But it cannot be done without a more meaningful recognition of the role of competitors.

Executives & managers would be better served by guiding themselves according to the ‘Competitive Concept’, which may be defined as --identifying customers’ needs that either are not served by competitors, or are inadequately or insufficiently addressed, and then satisfying these needs at a profit or consistently with the organization’s objectives.  This would require that firms explore the competitive battleground—the customer’s mind—for relevant needs and the degree to which competitors are satisfying them.  This would require that they develop appropriate winning strategies to counter competitive threats and transfer market share profitably from competitors to their own firms.  This is exactly the principal objective of competitive intelligence and competitor analysis—to develop strategies to transfer market share profitably.  All data gathering should be geared to this end.  If it is not, such competitive information as is generated will fall into the category of ‘nice to know’ without having much strategic impact.

The second implication is that examination of competitors should take place principally at the business unit levels and product-line levels, because these are where market share is won or lost; not at the corporate level, which serves primarily as a banking and directional board for the business unit.    To this end, corporate examination is, of course, required.  In addition, corporate level assessments are required to establish:

• What are the expectations and support available from Business units and product-lines?
• What is the level of resources available to business units and product-lines?
• What are the returns expected from the business units and product-lines?

All data gathering, information derived, the work involved in the process of competitive intelligence and the output or analyses, must lead to the development of competitive strategy, profiles of prime competitors, and the Competitive Advantage of transferring markets share consistently and irrevocably, trending towards monopoly.

Remember:  High market share is a good thing, but higher market share is even better!  Whatever the reason, it is clear that the higher the market share, the greater is the likelihood of increased profitability.

Well, competitive intelligence must feed into the ‘market and strategic planning cycles’ and result in modification to an organization’s thrust or it should result in confirmation of its thrust.  Thus competitive intelligence should not be regarded as a disjointed, ad hoc activity, but should receive the active support and co-operation from the individuals who are conducting product and business planning, typically the line management.  That makes the case for—Competitive intelligence should not be conducted in response to one apparent competitive threat or opportunity, but on an on-going basis to achieve a sustainable advantage.

One more thing, before you conduct competitive intelligence, you need to understand ‘the critical success factors’ in your industry.  It may require an astute examination of industry concentration, scale, scope and economics—including proximity to raw materials or markets—and issues such as the availability of a quality labor pool and the process of innovation and commercialization in the industry, etc.  Having identified these factors, examine how competitors are positioned in respect of each factor.

Never forget to draw the line between competitive intelligence and industrial espionage.  Remember: Competitive Intelligence is the process of obtaining and analyzing publically available data.  It is the public availability of data that distinguishes the two.  Always discuss any area of concern with your legal department.

Competitive Intelligence uses both categories of information sources (internal and external) and does not need to depend upon unethical data.  All that is needed to obtain a competitive advantage is readily available from a wide variety of legitimate sources.  No one needs to crawl through the competitor’s plant in the dead of night clutching a flashlight and spy camera!

However, it is thousand times more than just googling!