European Management Journal Vol. 19, No. 5, pp.
552–559, 2001
Pergamon
PII: S0263-2373(01)00069-X
Competitive Intelligence
Adds Value:
Five Intelligence Attitudes
DANIEL ROUACH, ESCP-EAP, European School of Management, Paris
PATRICE SANTI, ESCP-EAP, European School of Management, Paris
The authors report on the growing importance of
competitive intelligence as a management practice
in the majority of leading companies. Reviewing
the history and definition of competitive intelli-
gence, they then go on to distinguish types of com-
petitive intelligence, to analyse the competitive
intelligence process, and identify five categories of
attitudes towards competitive intelligence. The
advantages of this practice are set out in the con-
clusion.  2001 Published by Elsevier Science Ltd.
Keywords: Information, Competitive intelligence,
Knowledge management
Introduction
Competitive intelligence tracks the activity of direct
and indirect competitors in a range of fields: general
business activity, business development, strategy and
tactics in different sectors or new activities
(sometimes designed to confuse and mislead), mar-
ket penetration, patent registration, research activity
and so on.
It is a kind of radar screen spotting new opport-
unities or helping to avert disasters, enabling the firm
to observe its environment. It also empowers the firm
in monitoring its own development. It is important
that business leaders are not left uninformed through
the overlooking of crucial data and information that
may appear, at first sight, insignificant.
This article presents characteristics of the competitive
intelligence concept which is an important manage-
ment practice in most leading companies. It presents
its own definition, and compares with those found in
literature on the subject. Key questions to be answ-
ered are: what are the different types of competitive
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 2001 Published by Elsevier Science Ltd.
0263-2373/01 $20.00
intelligence? How do companies practice it, and are
there examples of best practice? Research has been
undertaken in the last three years on such questions
by the authors in ESCP-EAP’s GTI Lab.1
From Information to Intelligence
Porter and Millar (1991) have pointed out in an early
article how information changes industry structure
and alters the rules of competition. Clearly, the infor-
mation technology (IT) revolution has created com-
petitive advantage by giving companies new ways to
outperform their rivals. It is especially affecting the
entire process by which companies create their pro-
ducts. It permeates a company’s value chain at every
point, transforming the way value activities are per-
formed as well as the nature of linkages among them.
It affects individual activities and, through new infor-
mation flows, enhances a company’s ability to exploit
links between activities, inside and outside the com-
pany. IT affects competitive scope and reshapes the
way products meet buyers’ needs.
Competitive Intelligence: An Old
Management Practice
Whilst it is integrated into the organisational culture
of many leading companies today, competitive intel-
ligence practices are not new. Its benefits were long
understood in the States of pre-modern Germany. In
the fifteenth century, for example, the House of
Fugger, from its base in Augsburg, disseminated
manuscript letters which provided its key officers
with a steady flow of confidential political and com-
mercial information. More modern German intelli-
gence grew in the eighteenth century, and by scout-
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001

ing the European Continent the Germans discovered
they could compete with British and French firms by
applying foreign scientific advances to their own
industrial processes. They rapidly developed their
own base of education and research as a foundation
for technological innovation. By the late 1800s, they
held international rights to many formulae and pro-
cesses, particularly in chemicals.
Japan was also early endowed with a grasp of the
importance of competitive intelligence. With the
American invasion of 1854, the country opened up to
external influences after two centuries of self-
imposed seclusion. In 1868, Emperor Meiji (the
‘Enlightened’) encouraged policies of community,
nationalism and modernisation with the intention of
enabling Japan to compete with the West by absorb-
ing the latter’s best practices. Emperor Meiji was an
earlier adherent to global competition and strongly
against any ‘not invented here’ syndrome. Following
the end of World War Two, Japan converted its mili-
tary espionage capability into a system of economic
intelligence, for example, in the early 1950s, tens of
thousands of market researchers were sent around
the world to assess the potential of the photographic
market which was to be a major breakthrough for the
country. It is the country to have created a national
system of intelligence when more liberal economies
have been unable to integrate national and business
interests. Japan and intelligence have grown hand-in-
hand. As far back as 1868, the pledge of allegiance
to the Imperial Kingdom called for every subject to
gather information about the rest of the world. The
system is mature and effective. Information serves as
the axis and central structural support of the
nation’s companies.
More generally, the competitive intelligence
approach benefits from other more recently-
developed concepts like Knowledge Management,
which most larger companies have institutionalised.
Defining Competitive Intelligence
The authors give their own definition of the Competi-
tive Intelligence concept. They believe Competitive
Intelligence has the following characteristics: it is an
art of collecting, processing and storing information
to be made available to people at all levels of the firm
to help shape its future and protect it against current
competitive threat: it should be legal and respect
codes of ethics: it involves a transfer of knowledge
from the environment to the organisation within
established rules.
Although information is at the centre of the concept
of competitive intelligence, the latter covers wider
objectives than just the gathering of this information.
❖ Fuld (1995) describes what intelligence is not:
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001
FIVE INTELLIGENCE ATTITUDES
It is not reams of database print-outs. It is not necessar-
ily thick, densely-written reports. It is most certainly not
spying, stealing, or bugging. Put most basically, intelli-
gence is analysed information.
❖ Kahaner (1996) emphasises the need to distinguish
between information and intelligence:
Information is factual. It is numbers, statistics, scattered
data about people and companies. Intelligence is infor-
mation that has been filtered, distilled and analysed.
Competitive intelligence requires knowing precisely the
differences between information and intelligence. Intel-
ligence, not information, is what managers need in
order to make decisions.
❖ Achard and Bernat (1998) point out that competi-
tive intelligence managers have a role in enriching
data throughout the information cycle — to trans-
form information into exploitable intelligence
which can be used by decision-makers. The infor-
mation cycle is as follows:
Bringing value to information and being able to
transmit it is the major purpose of intelligence initiat-
ives.
❖ Drucker (1998) puts this succinctly and links it to
knowledge. Drucker defines information as data
‘endowed with relevance and purpose’, and states
that, in order to survive, companies must build
systems capable of fostering and optimising added
value. They need to be more knowledge-based.
They should include specialists to direct and disci-
pline their own performance through organised
feedback from colleagues, customers and clients
and headquarters, who can transform their data
into information.
The Scope of Competitive Intelligence
❖ Deschamps and Ranganath Nayak (1995) categor-
ise three types of competitive intelligence:
1. Market Intelligence. This is needed to provide a
road map of current and future trends in cus-
tomers’ needs and preferences, new markets
and creative segmentation opportunities, and
major shifts in marketing and distribution.
2. Competitors’ Intelligence. This is needed to evalu-
ate the evolution of competitive strategy over
time through changes in competitors’ structure,
new product substitutes and new industry
entrants.
3. Technological Intelligence. This is needed to
assess the cost/benefit of current and new tech-
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FIVE INTELLIGENCE ATTITUDES
nologies and to forecast future technological
discontinuities.
For the authors, competitive intelligence can be wid-
ened from these categories to include strategic and
social intelligence. Strategic and social intelligence
includes regulation, financial and tax, economic and
political issues, as well as social and human
resource matters.
This fourth category of competitive intelligence parti-
cularly observes and analyses trends in social behav-
iour. All four categories are linked.
Various aspects of the Competitive Intelligence con-
cept are summarised in Figure 1.
The Competitive Intelligence Process
In this section, we see how knowledge management
and information technology can be processed to add
value to competitive intelligence. The views of sev-
eral writers are assembled to describe the process,
although they place different emphases:
❖ Gates (1999) believes that information is the key to
competitive differentiation — how it is gathered,
managed and used. Competitive intelligence is
supported and driven by technology:
For the first time, all kinds of information: numbers,
text, sound and video, can be put into digital form that
any computer can store, process and forward. We have
infused our organisations with a new level of elec-
tronically-based intelligence.
Figure 1 Aspects of Competitive Intelligence
554
But Gates observes that even companies that
have made significant investment in information
technology, have not got the results they
expected:
The gap between what companies are spending and
what they are getting stems from the combination of
not understanding what is possible and not seeing the
potential when you use technology to move the right
information quickly to everyone in the company.
❖ The second writer, Fuld (1995) believes that com-
petitive intelligence should build on and around
the culture of an organisation. Intelligence sys-
tems — despite the computer-based applications
this concept conjures up — are very much a
human issue.
❖ Kahaner (1996) states that competitive intelligence
is a total process, not just a function in the com-
pany. He conceives the competitive intelligence
process to be made up of four steps:
Planning and direction
Collection of data
Analysis
Dissemination
These can be examined in more detail.
Planning and Direction
The intelligence action is defined and launched, start-
ing the process. It is important to understand the
user’s need; upon this depends the success of the pro-
cess. The time-frame is also important, as it will
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001

determine the allocation of resources and which
types of collection processes to use.
Collection
This step involves collecting the raw data to turn into
usable intelligence.
❖ The authors distinguish three types of data:
1. ‘White Information’ (open-source information).
It can be found publicly in databases, news-
papers, etc., and more recently on electronic
databases and the Internet.
2. ‘Grey Information’. This covers private domain
information such as trade shows or publications
that are ignored by competitors. Salesmen col-
lect such intelligence on competitors by visit-
ing firms.
3. ‘Black Information’. It includes illegally-
obtained data, e.g., through computer piracy or
telephone wire-tapping.
As illustrated in Figure 2, category 1 represents some
80 per cent of information collected, and grey infor-
mation is 15 per cent.
Analysis
The core element of the process; it turns seemingly
unconnected information into intelligence.
It is both an art and a science. As illustrated by
Joseph Rodenberg in Figure 3, it represents the final
part of a pyramid through which the added value
of information is increasing from simple information
gathering to intelligence production.
Figure 2 Classification According to Information Types
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001
FIVE INTELLIGENCE ATTITUDES
Dissemination
The analyst suggests possible courses of action and
distributes it to end users. Fuld (1995) would like to
include a fifth step: storing and delivering the infor-
mation in this step together with the implementation
of security measures.
❖ Ashton and Stacey (1995) add a sixth step in the
process of competitive intelligence: auditing the
system’s performance.
Five Types of Competitive Intelligence
Attitudes
Competitive Intelligence is conducted by analysts
whose vigilance ranges from ‘lookout’ (alert with a
view to reacting) to ‘hunter’ (who knows what he’s
seeking with a view to acting).
B. Goffinet of Roussel Uclaff, describes Competitive
Intelligence analysts in a vivid metaphor:
A corporation can be compared to a naval fleet. The vessels
are kept shipshape, must sail together in precise formation,
staying on course to arrive safely in harbour (the corporate
project). These vessels must avoid hitting reefs or icebergs
hidden in the fog, being dazzled by false lights or carried
off course by currents. They need precise and reliable navi-
gational instruments. Each boat has a lookout in the crow’s
nest who must signal useful information to the rest of the
crew. He must indicate favourable land sighted to enable
task forces to disembark. The lookout’s mission is to pro-
vide information collected outside the vessel.
The authors have identified five types of analysts atti-
tudes towards competitive intelligence.
1. Warrior attitude
An offensive stance. The intelligence analyst is
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Figure 3 The Intelligence Production Process

very pro-active in managing the competitive intel-

ligence process, and continuously on the look-out
for opportunities.
Corporate examples are:
(In Europe)
Ericsson, Nokia, L’Oréal, Snecma (EADS),
Gemplus, Schlumberger, STMicroelectronics,
France Telecom, Michelin, Shell, Aérospatiale
(EADS), ABB, Bouygues, Danone, Thomsom
Multimedia, Airbus, Hoffman Laroche.
(In the US)
IBM, Boeing, Corning, AT and T, Motorola,
Xerox, General Electric, Rockwell, Marriott, Kraft, Figure 4 The Five Types of Intelligence Attitudes
General Mills.
(Asia): Sogo Shoshas, NEC, Mitsubishi, Toshiba, tured.
Canon. Corporate examples are:
2. Assault attitude (In Europe)
Also a pro-active field. Intelligence analyst are fre- Many large French firms and French SMEs.
(In the US)
quently ex-military intelligence specialists.
American SMEs.
Corporate examples are:
4. Reactive attitude
(In Europe)
The intelligence manager responds only when
Thomson CSF, Nestlé, Saint Gobain, Siemens,
competitors are overtly hostile.
Dassault Systems, Hutchinson, Cegetel, Alcatel,
Corporate examples are: French SMEs.
Air Liquide. 5. Sleepers
(In the US) The firm’s management team shows no interest in
Nutrasweet, Federal Express, Merck, 3M, General competitive intelligence or knowledge manage-
Electric, Eastman Kodak, Ford. ment and does not fear competition.
(Asia) The status of intelligence analysts tends from
Toyota, Nissan, Daewoo, Nomura. experts (warriors) to amateurs (sleepers) (Figure 4).
3. Active attitude
The intelligence analyst is always looking for stra- The following chart summarises the respective
tegic information through normal sources, but the approaches Competitive Intelligence analysts can
company’s information system is not really struc- adopt:

Analyst type State of mind Methods

1. WARRIOR War mentality Sophisticated tools (war room in

certain cases)
Ruthless fight against disinformation Variable methods (code of ethics)
Patent and counterfeit war Unlimited or significant resources
Offensive position Team of leaders

556 European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001

2. ASSAULT Former Secret Service agents
Sharp processing of data
Hunt for strategic information
3. ACTIVE Observatory of competition
4. REACTIVE Opportunists
5. SLEEPERS No particular action
Two Examples
Nutrasweet (US) faced problems in 1982 when its
patent on the artificial sweetener, aspartame, was
due to expire. Competitors planned moves on the
market. Under the erstwhile chairman, Robert
Flynn, the company began examining competitors’
prices, customer relations, market plans and adver-
tising campaigns. This information — competitive
intelligence — was used to cut costs, improve ser-
vice, and protect 80 per cent of the sweetener mar-
ket. Flynn estimated that his competitive intelli-
gence process was worth $50 million to his
company.
Nestlé (Switzerland) is deeply wedded to the com-
petitive intelligence process. Over 130 years it grew
from a two-product company focused on infant
nutrition to a multinational food company. It
launches many new products each year, driven by
research and development. R and D itself is charac-
terised by a high degree of multidisciplinarity: it
requires the combination of many fields and skills
such as food science, processing, nutrition and
bioscience. Nestlé built its success on technical
innovation.
Its R&D lies at the core of a vast exchange of infor-
mation where external researchers bring in new
ideas and concepts, and data collection and market
analysis help to establish the R&D agenda. Nestec
is an important driver of R&D in Nestlé, acting as
a separate body in charge of basic research. In
particular, Nestec uses external researchers in disci-
plines outside the core competence of Nestlé, e.g.,
in fine chemicals, pharmaceuticals or the aircraft
industry.
Setting Up a Competitive Intelligence
Unit
Developing a Competitive Intelligence culture and
process within an organisation can be done using
many different models which have been progress-
ively tested by all companies and experts men-
tioned in the article. Based on the analysis of these
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001
FIVE INTELLIGENCE ATTITUDES
Significant resources
Professionalism and ethics
A lead lookout
Value put on human intelligence
Limited resources
Beginning of operational CTI network
Reacts to attack
Very limited budget
Blind, passive
NIH syndrome
experiences, the authors propose its own process,
which can be summarised in Figure 5:
Phase 1: Incubation
This phase aims to evaluate the necessity to set up
a proper Competitive Intelligence structure
through the analysis of the company’s efficiency in
the treatment of information. In particular, it is
necessary during this phase to identify the gaps
which exist between the perception by the com-
pany of its external environment and the reality,
between the knowledge base and its effective
exploitation within the company, or between the
company’s practice and that of competitors. Thre-
ats and emergency level must be determine as pre-
cisely as possible.
This phase should provide a clear visibility on
what attitude to adopt and on the objectives to be
followed all along the process.
Phase 2: Conception
This phase is particularly crucial, as it deals with
the definition of the whole process components:
What sources to use? Which users? What structure,
Which tools? Which involvement from managers
and top management? What financial investment?
What priorities? It must therefore result directly
from the first identification phase, and should lead
to concrete orientations as regards the method-
ology and means to implement.
Phase 3: Implementation
The third phase consists in the launching of the
process, notably in developing the services and
tools linked to the unit, in specifying key topics to
be worked on, and in initiating the sensibilisation
process. It deals with the positioning of the Com-
petitive Intelligence culture within the company
and must take into consideration ethical and legal
issues in order to ensure the integrity of the com-
pany’s actions.
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FIVE INTELLIGENCE ATTITUDES
Figure 5 Development of a Successful Competitive Intelligence Unit
Phase 4: Structuration
This phase mainly concerns the selection of the
experts to be recruited for the development and
management of the unit. Both internal and external
contributions must be considered, and a precise
analysis of the network opportunities should be
done.
Phase 5: Evaluation
A deep evaluation must be made of the system,
placing emphasis on the level of acceptance and
participation of people within the company. The
efficiency of the tools (software and hardware) and
of the team must be assessed in order to adapt and
improve the unit, thereby re-initiating a cycle
through which the unit is continuously re-orientat-
ing according to the necessities expressed by the
company and by its external environment.
Postcript
Interest in competitive intelligence is strong and it
is still true that it takes its strongest form in Japan:
the Japanese spend a high proportion of revenue
on patents, and buy four times as many as they
sell: nonetheless, Japan registers 15 times as many
patents annually than France. Japanese expertise in
the competitive intelligence process is still a major
competitive asset for Japanese companies.
There is a deficiency in management education
which does not seem able to cope with the impact
of new technology and know-how. Since data and
knowledge are increasing so rapidly, in new forms,
558
there is a need for management education to shift
to self-directed learning, using new documentation
sources, multimedia and computer simulation
which are close to reality.
The advantages of competitive intelligence can
hardly be over-rated. It identifies relevant infor-
mation quickly and helps the make more successful
technological choices. It increases the chances of
patent approval. It audits a company’s scientific
and technical assets and compares them with its
competitors. It detects market threats and opport-
unities and identifies winning strategies in
unknown areas.
Note
1. GTI Lab’s website is located at http://research.
eap.net/gtilab/ The Lab specialises in the management
of innovation, technology transfer and competitive intel-
ligence.
References
Achard, P. and Bernat, J.-P. (1998) L’Intelligence Economique;
Mode d’Emploi. ADBS Editions,
Ashton, W.B. and Stacey, G.S. (1995) Technical intelligence
in business: understanding technology threats and
opportunity International Journal of Technology Manage-
ment 10(1), 79–104.
Deschamps, J.-P. and Ranganath Nayak, P. (1995) Product-
Juggernauts. HBS Press,
Drucker, P. (1998) The Coming of the New Organization (in)
Harvard Business Review on Knowledge Management.
HBS Press,
Fuld, L.M. (1995) The New Competitor Intelligence. John
Wiley, Chichester.
Gates, B. (1999) Business at the Speed of Thought. Penguin
Books, London.
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001

Kahaner, L. (1996) Competitive Intelligence. Simon and Schus-
ter, New York.
DANIEL ROUACH,
ESCP-EAP European
School of Management, 79,
Avenue de la République,
75543 Paris, Cedex, France.
Dr Daniel Rouach is Pro-
fessor at ESCP-EAP Euro-
pean School of Management,
Paris. His fields of research
are technology transfer,
innovation and competitive
intelligence management. He also leads the GTI Labora-
tory, a research unit dedicated to these areas.
European Management Journal Vol. 19, No. 5, pp. 552–559, October 2001
FIVE INTELLIGENCE ATTITUDES
Porter, M. and Millar, V. (1991) How information gives you
competitive advantage. Harvard Business Review.
PATRICE SANTI, ESCP-
EAP European School of
Management, 79, Avenue de
la République, 75543 Paris,
Cedex, France.
Patrice Santi is Research
Assistant at ESCP-EAP
specialising in market and
competitive studies. His
work focuses on high-tech-
nologies, competitive intelli-
gence, IT (notably smart cards and semiconductor
fields), and technology transfer.
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