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Early Warning System (Alessandro Comai and Joaquín Tena 2007)

Early Warning System (Alessandro Comai and Joaquín Tena 2007)

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Published by Alessandro Comai
EARLY WARNING SYSTEMS FOR COMPETITIVE INTELLIGENCE
One of the main purposes of any competitive intelligence (CI) function should be anticipating changes in the environment. Any decisions based on good intelligence should take into consideration the changes that the CI process has detected in areas such as the competitive, technological, product, consumer, or geopolitical landscape. One way of anticipating and mapping the organization’s landscape is to use a structured model to identify key actors and factors
EARLY WARNING SYSTEMS FOR COMPETITIVE INTELLIGENCE
One of the main purposes of any competitive intelligence (CI) function should be anticipating changes in the environment. Any decisions based on good intelligence should take into consideration the changes that the CI process has detected in areas such as the competitive, technological, product, consumer, or geopolitical landscape. One way of anticipating and mapping the organization’s landscape is to use a structured model to identify key actors and factors

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Published by: Alessandro Comai on Jun 24, 2010
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10/21/2010

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Volume 10 Number 3 May-June 2007 SCIP
 
2007 www.scip.org 7
EARLYWARNINGSYSTEMS
FORCOMPETITIVEYOURLANDSCAPE
One of the main purposes of any competitiveintelligence (CI) function should be anticipating changes inthe environment. Any decisions based on good intelligenceshould take into consideration the changes that the CIprocess has detected in areas such as the competitive,technological, product, consumer, or geopolitical landscape.
One way of anticipating and mapping the organization’slandscape is to use a structured model to identify key actorsand factors, and then connect these actors and factors to seehow the entire network works (Comai and Tena, 2006). Thismodel allows you to study, map, and monitor changes in thecompetitive landscape to allow your decisionmakers to taketimely and relevant strategic action.
The model suggests that stakeholders (agents ororganizations with a specific role or stake in the environmentor in the decisions a company’s management and theircompetitive intelligence staff are studying) are good sourcesfor detecting changes and future events (see sidebar 1 forexamples of potential sources). The model can be transformedinto a competitive early warning system (CEWS), which canprovide a base from which the environment can be betterpredicted. An early warning system sets the framework for asystematic process of gathering and analyzing data, basedon several indicators defined by the organization andprepared after reviewing the different key actors in a specificenvironment. These indicators can prevent a business threator provide a new opportunity to the company. Mappingthe environment as well as establishing an early warningsystem requires competitive intelligence professionalsto perform certain creative exercises to establish theindicators tracked by the organization.
SOME DEFINITIONS
The concept of early warning has been defined in several ways:
Early warning intelligence provides executives with timely, valuable information about the market and competitors that enables them to make strategic and tactical decisions more quickly 
 
(Wergeles, 2005, p. 44).
 
•competitors•employees•consumers•customers(domesticandforeign)•opinionleaders•suppliers•substituteproviders•complementors•corporateallies•media(e.g.,journalists)•universities•foundations•science,research,ortechnologycenters•standardizationbodies•banks•politicalgroupsorparties•internationalinstitutions•laborortradeassociations•localcommunities•specialinterestgroups•lobbyists
SIDEbar 1: SOurcES FOr DETEcTINgENvIrONMENTal chaNgES
By Alessandro Comai, ESADE Business School and  Joaquín Tena, University of Pompeu Fabra
 
 SCIP
 
2007 www.scip.org Competitive Intelligence Magazine
“Early Warning Systems are created in order toidentify risks and uncertainties and to minimize themby continuously monitoring events that might lead toa threatening situation. By providing an early enoughwarning that a potentially harmful sequence of events has been evolving, it should be possible to take actions in a proactive manner and thus avoid the threat 
 
(GIA,2006).
“The strategic early warning process focuses on (or should say, elevates alertness to) weak, ambiguous, early signals, sometimes years before management is due to place them on its radar screen
 
(Gilad, 2006).These definitions identify two main perspectives involvedin the process. In the first perspective, environmentalchanges are primarily perceived as a risk or a source of apotential crisis responsible for behavior conflicting withthe organization’s objectives. In the second, changes in theenvironment are considered to be business opportunities.Neither perspective is mutually exclusive, and bothperspectives should be included in a competitive early  warning system that looks at both risks and opportunities.The way an organization deals with environmentalchanges and actors often decides the end result — a threatcan become an opportunity if known well in advance anddealt with properly. Some systems do not highlight bothbecause they are unbalanced and do not search for risksas well as opportunities — opportunities are seen as morepositive than risks, because they provide a better and moredesirable basis for executive rewards.Two types of early warning systems can also be observed:1.
Proactive 
 
implies a two-step approach. First seek and make choices about
issues 
that are relevant forthe organization’s future, and then introduce thoseissues into the system for continuous monitoring. Thecompany makes the deliberate effort toidentify relevant issues as much in advanceof their impact as possible.2.
Reactive 
managers take a
radar 
view of monitoring the environment, looking forunexpected changes that could generatea surprise. Once the surprise has beendetected, it introduces a new element intothe competitive early warning system.
 aNTIcIPaTION: ThE PurPOSE OF aNY SYSTEM
The ability to anticipate potentialenvironmental changes is key to a goodintelligence unit’s operation. A recent study shows thatcompanies do not invest sufficient resources in predictiveanalysis models (Sawka, 2006). If an organization is to be an“eagle,” it should have the “ability to recognize significantindustry shifts and assess their impact.” Anticipating eventsthat could have an immediate or potential impact on theorganization is the essence of the entire process.The time span between becoming aware of a potentialthreat and the event itself is frequently described in military intelligence warning terminology. The “warning lead time” isthe period between the issuing of the strategic warning andthe beginning of hostilities — where possible action can betaken. This period
 
may include strategic warning pre-decisionand post-decision time. After a warning is received by or from the intelligenceunit, the time before a decision is (or is not) made is thepre-decision time. Once the decision has been made, thetime before the event happens is the post-decision time (seefigure 1). In both time spans, the decision is made on theassumption that the event will occur, and it is always madefrom a future-oriented perspective.In a hypothetical situation, this definition assumes that
the intelligence function does not fail to detect early signals.these signals are well understood and there is nomisperception of them.the analysis and the decision is made on time.
cOMPETITIvE EarlY WarNINg MODElS
Several models for formalizing a competitive early  warning system have all included similar elements (seetable 1). One of the most interesting models, suggested by Gilad (2003), pinpoints three key activity areas and threeinformation routes.
early warning systems for your competitive landscape
Figure 1: The warning lead time
WarningEvent OccursDecisionPredecisionPostdecisionWarning lead time
 
Volume 10 Number 3 May-June 2007 SCIP
 
2007 www.scip.org 
 Another model by Hedin (2006) underlines early signalsand indicators as the sources of any warning system. Here,the analysis of any information produced by an intelligenceteam is transmitted directly to the decisionmakers whoactually take the action. Table 1 summarizes the differencesand commonalities between several frameworks. (Note: Thislist of models is not exhaustive.)Our competitive landscape model provides acomprehensive map through which you can establish an early  warning system. Such an alert system may fall into severalgeneric categories involving ten steps (see sidebar 2). Thefollowing section provides a step-by-step process for buildinga proactive CEWS.
1. Pinpoint te Key atos
This step is a creative activity whereby the competitiveintelligence specialists or managers at the corporate orstrategic business level assess the environment, and thedecisionmakers decide the initial focus.Should the early warning system be implemented forbusiness or for strategic operations?Is it designed for only one or for more than onedepartment?What are the organizations business priorities? An early warning system canbe applied to meet strategic needs.Several analytical techniques canhelp identify the critical issues on which the company should focus toachieve a better understanding of thecompetitive landscape. Techniquesthat incorporate creativity anddynamism into the analysis (suchas brainstorming, war-gaming,and scenarios) can contributesignificantly to establishing aproactive early warning system.To define the CEWS domains, a“Competitive Landscape Mapcan help identify the players(stakeholders) and the potentialrelationships that should bemonitored (Comai and Tena, 2006).
2. assess citi Isses
The second task is to selectand prioritize the critical issues thatrelate to the organization’s strategicposition, long-term mission, andobjectives. Define key businesspriorities for the competitive early  warning system. Once these strategicissues have been identified, the company is ready to launchan early warning process.
3. Mese cnes
 An increase in
the business environment’s complexity affects the organizations capacity to gather and obtaininformation. An early warning system assesses which trends(or factors) are changing and to what degree. The idealsystem allocates appropriate resources to those activitiesthat monitor events that change on a continuous andunpredictable basis.
SIDEbar 2: cOMPETITIvE EarlY WarNINgSTEPS
1.Pinpointingthekeyactors2.Assessingcriticalissues3.Measuringchanges4.Evaluatingpotentialopportunitiesand/orthreats5.Buildingindicators6.Identifyingsignsofchange7.Linkingsources8.Planningtheradar9.Communicatingintelligence10.Takingstrategicaction
TablE 1: cOMParISON bETWEEN cEWS MODElS
Stage Authors
Shelfer (2003)Bernhard(2003)Gilad(2004)Hedin(2006)Identifying Riskyesyesyes-Prioritizing Risks--yes-Assessing Threatsyesyes--Indicators -yesyesyesRisk ManagementPlanyesyes--IntelligenceMonitoring-yesyes-Alerts (Gilad) /Information (Hedin)--yesyesAnalysis---yesActionyes-yesyesRe-evaluation or Feedbackyes-yesyes
early warning systems for your competitive landscape

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