A Case for .-’; ompetitive At the Core This ar or more than a decade, there have been those who have worked to get businesses to recognize the existence and utility of active, externally oriented, intelligence gathering in their operation. This strategy was (and sometimes still is) variously called “competitive John J. McGonagle and intelligence,” gence,” “corporate intelligence,” ‘business intelli “competitive information,” or mM Colao Ret) to understand its market and competitors practitioners have now settled and to make key decisions is already public on one term —"competitive intelligence” (Cl), ‘commercial intelligence.” Most Iuly/Agust 2002 + The tformtion Monogement Journal 35Cleonsists of two facets + The use of pubic sources to develop data (raw facts) on competition, competitors andthe markt envron- ment. + The transformation, by analysis, of that data ito information (usable results) ableto support busines deci Today, there ae at least four separate types of atv, as opposed to defensive, CI. ‘Understanding Cl today requires an understanding of whats meant by “pub- le? The ter sto be taken ints road «stsense:itencompase more than stud- ies thatthe US. Department of Labor releases or whats reported in The Sey [Australia] Morning Hera. In I, ‘pub- le" not equivalent to published I is Sigiicanly broader in concept Here, “public” means all infor mation that can legally and ethically be identified, located, and. then accessed. This ranges from a document fled by a competitor as part ofa local zoning application tothe text of press release isued by a competitor's market- ing consultant describing the client's proposed marketing strategy while the marketing frm extolsthe specifics ofits contributions to the design of a new product and the related opening of a new plant. It includes the Web-castdis- cussions between senior management and securities analysts as well a the call notes created by the organizations own sales force. Itis the common principle ofthe use and analysis of publicly avail able information to assist in the effec tive management of company that links the variations of CI. How CI Works ‘The Cl process is usually divided into five basic phases, each inked tothe oth second isto.add value to ane or more pieces of data, For example, adding an interpretive statement to an article indicating why and how its contents are important tothe end user. While CI analysts provide both types of analysis, end users most frequently regard only the latter process as analysis, ‘ers by a feedback loop. These phases, making up the CI cyl, are + Exalishing CI needs: Recogniing the need for I, defining what kindof Cl is needed, and considering what type of issu (strategic tactical, mar- keting, et.) is motivating the assign rent, what questions need to be cncreed wii El, “Communicating the finished ine gence: Preparing — sometimes with reformatting — the results and then presenting them ina usable “container” and in a timely manner. The CI may have to be distributed to those who ask for it and, insome cases, others who also might profit from hav- ing it Ava recent Korn/Ferry International! University of Southern California’. Center for Effective Organizations study noted, “more than 70 percent of employes report knowledge is not reused across the company.” The inal form of the Cl, aswell a its mel ness and seurty, are important con siderations. who may be using the Cl.and how by whom, and when the CI will uti rately be used. + Calletng te raw dat: Fis, needs are translated into an action plan, This involves identifing the ques- tions and the likely sources fr col- leating the data needed to answer those questions. There should be @ realistic understanding of any sgnf- cant constraints — time, financial organizational, informational, and legal issues. Then the data sources tat are most likey to produce rel able, useful daa are identified and acquisition begins. + Braluating and analyzing raw data: ‘The data collected is evaluated and analyzed; thus, itis tansformed into (CL. Keep in mind tht there are at leat two ways in which analysis is applied. The fist isto make a selec~ tion, such as deciding which of a dozen news artes important. The + Taking Actin: Using the CI in deci sion making. CI may be used as an input to decision making or it may be the frst of several steps in an overall assessment of, for example, anew smatket Competitive intelligence, as practiced today, may be divided into four difer- ent yet overlapping types: + Siraegy-ovionted Ck provided in sup- port of strategic, as distinguished from tactical, decision making. This (CLrle means providing higher levels ‘of management with information on the competitive, economic, legal, and political environments in which an ‘organization and its competitors operate now and in the future. Italo may involve developing Cl on candi- dates for potential mergers. and 36 The Informeion Monogement Jove « July/August 2002acquisitions as well as for alliances and partnerships. Most Cl practiced inthe 1980s and early 1990s, includ- ing much of what fel into the catego- ry known then as “business intel gence” can be considered as strategy focused CI Tactcs-oriented Cl: developed. on ‘current activities and near-term plans identifiable in the marketplace. Ina teal sense, tactcs-oriented Clisa child of the computer age’s support for the detailed analysis of retail con- sumer goods sales, It encompasses rmuch of what has previously been called “market” or “sales-and-mar- keting” intelligence. Firms increas- ingly are tracking what is going on inthe trenches, that i, where com- pelitors face off for customers and ‘consumers with tatics-oriented Cl In turn, according to a Competitive Inteligence Review article by John Cain, this type of CI permits organi- zations to fine-tune marketing clfrts, including field-force support, to respond faster Technology-oriented Cl: permits a fiem to respond to threats from, os ell as to identity and exploit oppor tunities resulting fom, technical and scientific change. Technology-orient- cd Clencompasses much of what as been referred to as technology intl gence (TD) or competitive technical imelignce (CTI. Technology-or ented Cl, supporting technology strategies as well as research and development, has become a growth area within Cl. + Target-oriented Cl: about competi- tors, their capabilites, current ativi- ties, plans, and intentions. I is most often used when Cr efforts are best focused on a small number of com- peltitors that a firm faces in several market niches. It encompasses ele- ments of what is sometimes called “business intelligence” or “competi- tor intelligence” Unfortunately, the term competitive ntligence. and its historical variants have caused and will continue wo cause confusion, Two of the areas most com ‘monly confused with Clare environmen- tal scanning and business intligence. LL Morrison’ classic view of environ ‘mental scanning is that it is a method that enables decision makers both to understand the external environment and the interconnections of is various sectors and to translate this understand. ing into the institutions planning and decision-making processes. ‘Typically, as this term is used in prac tice, the emphasis is on the future, not the present, and more on data acquis tion to serve as an early warning rather than on its analysis to support a wide variety of decision-making needs. Using the divisions of CI, as discussed here, most of what is called environmental scanning would fall within strategy-ori ented and technology-oriented Cl. Bosiness intelligence is a particularly ificult term to define. At one time, it was used by some to describe competi tive intelligence and intelligence in sup- port of corporate strategy by others. Find any file Now, Information Week says its use seems to have been co-opted by those iavolved with data management and data warehousing In that case, it refers to one of three concepts * software used to manage vast amounts of data + the proces of managing that data * the output of either ofthe frst two In any case, virtually al of the report ‘4 applications and success of business intligence dei with internally oriented processes — from process control to logistics, and from sales freasting to quality contro. I is that interal-only ‘orientation that now separates business inteligence from al types of Cl How Widespread Is CR. On a global bass, Cl is in-use on «very industrialized continent Cl prac ttioners are found in virtually every form of enterprise, inchuding educa- tional and nonprofit entities. “To show the level of activity and interest in Cl, we can look to The Society of Soe The SIMPLE Records Manager ‘Managing Complexity with Simplicity ‘The SIMPLE Records Manager lions you to stable 3 proessonat records managerent program uiizing stat ofthe at tol: The softwares designed to manage both ative and archi recoes and ‘Prepare and maintain a eention schedule eal for managing ga ‘medeal goverment education surance and crpoaefes With the ey Word Search feature you can search and locate les with the touch of hey. us that SIMPLE aco anageman Softwa In eatin es nee orc OE saly/Augon 2002 The infemetion Managemen! 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A 2000-01 SCIP survey found the following job descriptions/locations for the members ofits association: sociation’ Lor analysis 37.7% Market planning, research, oranalysis 25.4% Information cent or services 2 Business development Product planningR&D 9.8% Strategic planning 8.2% Other 69% Financial planning! Counterintelligence om How Successful Are Firms That Use CI? To date, virtually all evidence of the Value and impact of Cl is aneedotal ot consists of indirect assessments, That is due, in large part, to the fulure of Cl practitioners to develop and apply effective and appropriate metrics to CL That process is slowly changi er, until it does, we must be satisfied with these measures + 1998: and pharmaceutical industries report cd that organizations that en high levels of Cl activity show 37 per cent higher levels of product quality, which i in turn associated with a 68 percent increase in business perform: ance, That was in comparison with organizations reporting low levels of product quality: Conversely, the study found that the lack ofa formal, sane tioned CI structure lel to “ess colle tion, analysis, and use of competitive intelligence” CIP-sponsored study of the cd food, telecommunications, + dly/ august 2002 1994: NutraSweet CEO Robeet Flynn publicly suid CY’ value to his compa: ry was equivalent to $50 milion That figure was based on a combina tion of revenues gained and revenues that were “not lost” to compettv +1995: A study published in Competitive intelligence Review con: cluded that companies emphasizing CC financially outperformed other ‘companies, on average. 1999: Business Week reported that Texas Instruments’ CI efforts “con: vinced management that it needed to acquire [a Cl source] quickly — and safeguard what is now-a $100 million business with enormous growth potential + 2000; A Merck executive reported recent CI efforts have been “worth $150-6200 million in inere mental global sales” and that the final figure could go as high as $400 mil- lion, according to Competitive Intelligence Magazin + 2002; A PricewatethouseCoopers study of fast- growth” CEOs revealed that *virtally all fast-growth CEOs surveyed (84 percent) view compet formation as important to the profit growth oftheir company Where Does CI Get Its Raw Datat A key maxim in Cl, derived from the history of governmental intelligence, is that 99 percent of all information that a firm typically needs to make ctitical decisions and understand its market and competitors is already public or can be systematically legally, and ethically developed from public data. That con- cept has driven Cl to develop and refine more effective and rapid ways of acces such data Hovwever, wha is often forgotten isthe fact that up to 80 percent ofall that ‘pub- lic” data can potentially be found within the enterprise itself, or developed from leads within the enterpris units have developed effective ways of Very few C1 ‘sccessing that internal data on a regular and focmal basis, so they have turned toexternal sources to develop data, which «ould be coming fo them from proper internal rather than external soures. What kind of data are we talking about? Consider this partial lis: + What ar about competitors’ products and current customers saying services, and why they are switching? What are purchasing agents saying to sales representatives about new prod: uct and service offerings not yet ‘made public? + What industry conferences have employees attended, what did they learn there, who else attended, and ate the materials that were dis tributed theret * Who in the enterprise has paid out for one time reports and studies? On what topics? Where are those reports? What do they say? How well done What product and service introduc tion or delivery rumors have produc tion personnel heard from suppliers? + Who ate our current competitors? (On what basis are they identified as opy oftheir current price lists and catalogs? such? Who ha + What do we know about competitive products and services? Do ve have samples? Where are they? Have they been reverse engineered? By whom? * Who provides the enterprise with what goods and services? Who are the appropriate people at each enterprise that the Cl professional can contact for more current data and leads to Farther interviews? CI professionals turn outward for such data because they currently are unable to access any ofthis internally on 4 cost- and time-effectve basis, There are several reasons for it, each of which can be succesflly addressed + According to Alf H, Walle’ book, Quaicaive Research in Intelligence and Marketing, most knovledge/data ‘management systems are essentially quantitative in focus, while Cl as a discipline mos often concentrates on the qualitative * Cl professionals need to be able t0 access the people who provided the data as well asthe data, Data provides ‘only te past; people can hep you see into the future. But, again, most knowl ment systems are focused on storing and manipulating Heercuts yur operations be affected if your paper records ‘were damaged or destroyed? ‘As a records manager, you want the best of both worlds: preserving the originals, while keeping easy access to information, That's where LaserFiche can help. Now you can archive documents in a central repository for instant retrieval aly August 200 LaserFiche’ Protects your Records from Disaster data, and rarely allow identification ofthe source, much less information ‘on obtaining immediate and direct access to ther, Most knowledge management sys tems are not setup to capture data on anything that does not involve the company. Yet company personnel from the CEO down interface daily with customers, from whom infor- LaserFiche can be a critical part of your disaster recovery plan If your original records are damaged, you can restore the entire repository in seconds, If you'd like to learn more, ask for four FREE guide to document man= agement. Call us at 800-985-8533, CLaserFicue® worwlaserfiche,convarma‘mation on competitors can be deve: coped as well s fom suppliers, ds tributors and the ik, Al of those in the supply chain, for example, can be powerful sources of CI data. + The sales force, potentially the most powerful source af data in support of CL is rarely involved with knowledge management and related. efforts The sales force sees any initiative that does not produce immediate sales opportunites as a distraction and probably irrelevant Yet according to AAPQC International Benchmarking Glearinghouse, those firms that can tap into the sales force a2 part of the Cl process have found signif cant benefits for both sides of the transaction. + Few; if any, knowlege management systems provide current information con employees. Knowing which em- ployees are members of what profes sional associations which have gone to what trade shows, where they worked before, and what they did there is something desined by many C professionals + Knowledge management systems do not record decision-making and the history of decisions. For example, none contain copies of previous strategic plans, moch les evaluations of their successes, and, more impor- tantly ther failures Knowledge man- agement systems have the potential 0 serve as the repositories of enterprise history atthe strategic as wel asthe product and service level. It is this set of shortcomings that those truly dedicated to the sucosss of knowledge management systems and other records and information manage- ment systems should address. If they can deal with ther, then Cl profession als, in turn, will be able to exploit an as- yet-untapped reservoir of competitively sensitive data, This new partnership between those focused on internal information resources (e.g. records managers) and those who concentrate corporate libraries and CI specialists) ‘on external information resources (eg, will be unrivaled. BI Joke MeGonagl isan atiorney at lan economist and managing partner of The Helicon Group. He may be reached atjim@helicongroup.com. Carolyn M, Vella is founder of The Helicon Group. She has co-authored six books on competitive inteligence. She may be reached at CMV @helicongroup.com. Wetirences Research The Society of Competitive APQC International Benchmarking Intligence Professionals Viena, VA (Clearinghouse. Strategic and Tactical ‘August 1993, Imeligence for Ses and Marketing Dioros, JL." American Productivity & Quality Scanning" In A Primer fr New Center: Houston 1959 InsiinalRssrchere MA. Budd Tim, "Competitive Technical Whitey iD, Porer and RH, emake, Intligenc at Appi Biosystems eds. The Association for Insitutional Attracting, Monitoring and Research Tallsasse FL, 1992 Exploiting Tshnology-Based PricewsterhowscCopers. “One-Third Opportunities” Competitive of Fat-Growth CEOs Place Higher Intelligence Review, 2000. Importance on Competitior Cain, fob. “Supporting Field Force Information Than One Year Ago” 27 Sales with Competitive Intelligence,” March 2002. Competitive Imeligence Magazine The Society of Compete Aprilane 1998 Intligence Profesional. vaable Cappel, James and Jey P Boone, irwainan (access 4 June 202) “Altok atthe Link Betwecn Special Report: Proven Results fr Competitive Inteligence and Sale Marksting Cl Compeitve Performance.” Competitive intelligence Intelligence Magazine. Rupes Sumner 195, “strategies for the Knowledge “The Case of the Corporate Spy” Economy: From Rhetoric to Reality.” Business Week, 26 Novernber 2001 Korn/Ferry International and the Flynn, Robert. “NutraSweet Faces ‘University of Southern California's Competition: The Crit! Roe of Center fr Eetve Organizations at CCompetive Intligence” the Marshal School of Busnes. Gompeii nligence Review, Wale I, ALF, Qualitative Research Winter i994 in Ineligence on Marketing: The Jaworski, Berard and Lang Chee New Strate Comergene. Quorum ‘Wee. “Competitive Intelligence ‘Books: Westport, CT. 2001, Creating Vale forthe Organization Whiting, Rick. “Analysis Gap” Final Report on SIP-Sponsored Informatonvek com, 22 Api 2002. ‘McGonagle, John J, and Carolyn M. Vella. Bottom Line Competitive Intligence. Quorum Books: Westport, CT. 2002, Protecng Your Company Against Competitive Inteligence. Quorum Books: Westport, CT. 1998, Page, Anthony M.""The Art and Science of Collection Management” I Advances in Applied Busines Strategy. Ben Gilad and Jan P Herring, eds. JAI Pres Inc Greenwich, CT. 1996 ‘AQ The Inlermstion Management Journal + July/August 2002Copyright © 2002 EBSCO Publishing