The New Rules of Competitive Intelligence

Copyright © 2014 by Maria Ioia.

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the copyright owner.

Rev. date: 02/17/2014

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Contents

Acknowledgement

Background: Who am I?

How this book is set out

My vision for Competitive Intelligence

1: A Short History of Competitive Intelligence in Australia

2: What is Competitive Intelligence?

3: What Competitive Intelligence is not

4: Key Characteristics

5: Why, Do Competitive Intelligence?

6: So why don’t we do it?

7: What is the process?

8: Setting Appropriate Key Intelligence Questions

9: Information Gathering

10: Database Set-up; Knowledge Management

11: Methods to Analysing Competitive Intelligence

12: Reports and Beyond

13: Ethical Boundaries with Competitive Intelligence

14: Cultural Change and Competitive Intelligence

15: Proactive Competitive Intelligence

16: What a successful Competitive Intelligence department does

APPENDIX 1—What is an Insight?

APPENDIX 2—Questions to ask when analysing competitors?

APPENDIX 3—Players in the Competitive Intelligence market

APPENDIX 4—Issue Tree

APPENDIX 5—KIT Request Brief Form

APPENDIX 6—Methods of Data Collection

APPENDIX 7—Completeness and Accuracy Guidelines for Information

APPENDIX 8—Centralised CI Function Adding Value

APPENDIX 9—Trend Watching Sites

APPENDIX 10—Half-yearly/yearly announcement summaries

I dedicate this book to my loving husband,

Deyvis Moreta and to my father Antonio.

Acknowledgement

I would like to thank the people in my life that encouraged me, pushed me, challenged me and supported me throughout the process of becoming an author. Without the role that each of you played I would not have completed the mammoth task of this undertaking.

There are many others around me who have been a constant support to me throughout all that life has thrown my way. You know who you are and I am grateful every day that you are all part of my life.

Background: Who am I?

I began my journey into Competitive Intelligence after working in Market Research for most of my career, both client and agency side. I was introduced to someone in Competitive Intelligence and was blown away. I thought to myself, I need to know more about that. I had never intended on actually working in the field let alone later establishing and heading up a Competitive Insights department for a very large organisation.

On a personal level I remember thinking that I always wanted a career that gave me the time to enjoy a good coffee in the morning and read my newspapers. Not that this is all that Competitive Intelligence is about, but it gave me the opportunity to read up on the global economy, government initiatives, markets, competitors and consumer behaviour—all being integral to what I had set out to do.

During this time, I was completing my Executive MBA and through my studies became even more interested in strategic Competitive Intelligence and optimising executive decision making. When the opportunity to set-up a Competitive Intelligence division came up, I remember grabbing it with both hands. I didn’t give a second thought about the fact that I would no longer have weekends away from work and study. Nor that I would need to ‘burn the candle at both ends’ to make this work. I soon realised to work hard, to influence not only senior stakeholders (and there were many) but also to influence and engage thousands of sales representatives and their managers in seeing the value in this emerging team and to support and even contribute to the team’s success and therefore their own success.

What I discovered on this journey (and others since then) is that bringing Competitive Intelligence into an organisation is not about bringing in a new support function such as finance, HR even Market Research. It meant educating staff of its benefits, constantly justifying why it should exist and gaining acceptance within the organisational structure. In short, it was a cultural change management experience as well. Something that can take years to become ingrained in an organisation, yet, I had less than a year to establish its worth.

How this book is set out

This book is unique yet complementary to others in the field of Competitive Intelligence or Insights. Given that it is a relatively new discipline in the business world (it has been in Australia just over 20 years). Few best practice books are written on this topic and there are few authors on this subject in Australia.

The difference you will find with this book is that, firstly, it relates to the Australian market. This means that examples used and the way people engage with Competitive Intelligence represents the cultural nuances that are displayed by Australian employees and managers. In addition, techniques and methods outlined are more appropriate and successful in the Australian market where much of the sought after information may not be as freely available as it would be for instance in the U.S.A.

Secondly, the book is written by someone who has had hands on experience in building and implementing Competitive Intelligence into corporate Australia. Not just consulting in it. This book provides a step-by-step way of setting up and running an effective Competitive Intelligence function in your business. It provides valuable insight into issues and key learning’s you are likely to encounter along the way and how to overcome them.

And lastly, this book provides a working solution on how Competitive Intelligence can be implemented and used within any organisation. It will allow your business to understand the dynamics in which you operate and allow your organisation to establish and solidify your Competitive Advantage in the market. Once Competitive Intelligence is embedded in your organisation, it ensures that even in the toughest economic market, your organisation stands the best chance of; retaining customers and market share, attracting and acquiring new customers and then deepening the share of wallet.

This book will provide you with a viable competitive edge!

My vision for Competitive Intelligence

My vision is to have more organisations in Australia that are aware of the micro and macro market in which they operate, understand their positioning within that market and how to better identify and take up the opportunities that exist. With considerable change on the horizon in the digital age, organisations need to step-up and find ways to stay one step ahead of market movements and source the opportunities before other organisations squeeze them out of the market. Time is crucial given the speed at which change is emerging. Given the technology era, constant fast-paced change will be the way of the future.

Competitive (or Market Intelligence) systems, will enable organisations to stay on top of the changes and pre-empt the next move in the market, among competitors and with customers more quickly than ever before. If all Australian organisations make decisions based on facts, utilising their resources to their best competitive advantage and deliver to customer needs then Australia will have a long and prosperous future on a global scale.

1

A Short History of Competitive

Intelligence in Australia

The foundations of Competitive intelligence originated in the military. The military leads the world in the gathering, analysis and use of intelligence. The military is thought to have the longest running and most successful intelligence systems in history.

What makes their system so successful relies on three key factors. Firstly, the intelligence system is inbuilt into the culture of the military¹. There are intelligence professionals at each level of the military. Secondly, they run formal training programs throughout the military to provide everyone with key intelligence tools and frameworks. Thirdly, they have a structure that allows key intelligence officers to stay very close to the policy-maker or war-fighter. This way the key decision makers have access to the latest intelligence which facilitates effective decisions being made quickly.

The key intelligence officers are identified by their characteristics, such as having the trait of asking relevant questions to ensure that the intelligence program is on track and their ability to anticipate the leaders’ needs. These individuals are also able to package the intelligence so that the users can easily get up to speed on the facts, without overwhelming them in the detail. Whilst the key intelligence officers do not make the key decisions overall, their ability to understand how decisions are made and what is required to facilitate the process is what makes any intelligence agent valuable.

In the corporate environment, Competitive Intelligence is thought to have originated in the U.S. in the 1970s². In the 1980’s business and marketing strategist, Michael Porter, advanced the field, attributed by his work on his published study Competitive-Strategy: Techniques for Analysing Industries and Competitors which is widely viewed as the foundation of modern competitive intelligence. Since then, others have extended on his work including Craig Fleisher and Babette Bensoussan³. Competitive Intelligence, however, was thought to have become an institution in its own right in America in 1988. This is when a formalised organisational model was introduced on how the Competitive Intelligence function would work effectively in an organisation⁴. The first professional certified program (Strategic & Competitive Intelligence Professionals or SCIP) was later created in 1996.

Babette Bensoussan, among others, has been a pioneer and dedicated advocate of Competitive Intelligence in Australia since the 1990’s. Like Canada, Australia has seen significant adoption of Competitive Intelligence and the industry is still growing, although not without its fair share of challenges. Organisations throughout Australia, grapple with how to best make Competitive Intelligence work in modern corporations and stay on curriculum in tertiary education systems. The Australian industry association (SCIP Australia) was established in 1991 by Vernon Prior, Chris Hall, Bob Cain and Babette Bensoussan. Part of the role of SCIP Australia is to promote and support Competitive Intelligence professionals in leading successful Competitive Intelligence teams and projects across Australia.

In Australia, Competitive Intelligence is prevalent in varying degrees across industry sectors such as telecommunications, banking, finance and insurance, and energy sectors. The intelligence is often used to safeguard against market threats and changes and to identify viable opportunities and trends. This in turn allows for profitable and sustained growth.

Where is Competitive Intelligence headed in Australia?

According to a global forecast to 2015⁵, conducted by the Global Intelligence Alliance in 2010, Australia along with China were highlighted as having business environments that will undergo the most significant change. This means that changes impacting these geographical regions would require quality Competitive Intelligence to stay ahead. Customers and end users followed closely by competitors were highlighted as the areas driving marketplace changes. Fewer changes were attributed to suppliers and distributors. These forces combined with the emerging digital disruption which will impact many industries and organisations on a global scale, makes Market and Competitive Intelligence a vital part of any organisations future success.

"Executives are so enchanted by the internal data the

computer generates, that they have neither the mind

nor the time for the outside. Yet all great change comes

from outside the firm, not inside."—Peter Drucker

2

What is Competitive Intelligence?

A number of definitions exist on Competitive Intelligence. SCIP Australia defines Competitive Intelligence as: a systematic and ongoing process for gathering information to derive actionable insights about competitors, the competitive environment and trends in order to further the organisations’ business goals.

The definition, which I prefer (adapted from an amalgamation of many) is:

"Competitive intelligence is the capability that captures and analyses consumer, market and competitive information in a continuous process, with the focus on generating insights to help the business make decisions regarding future events. These decisions deliver a sustainable competitive advantage to the organisation."

The key difference in the latter definition which is an important distinction to make, is that it is a continuous process and that it focuses on market and consumer as well as competitors for the purpose of identifying opportunities to uncover and exploit a Competitive Advantage.

Key areas of focus from the above information that will be explored further in this book are;

• it is a continuous and systematic process

• information is captured, analysed and packaged in a way that is actionable

• the insights from analysis are communicated to the right stakeholders, at the right time, in the right way

• it delivers a sustainable competitive advantage for the organisation. That is that it doesn’t just describe what competitors and the market are doing, but what they are about to do and how they may react to certain events.

The purpose of knowing what the competitors offer, how they operate and their strategy, provides the ability to identify what your organisation does differently. Herein lies the beginning of insights. By looking at the way your organisation is different to others in the market, you can begin assessing whether your organisation has a competitive advantage or disadvantage.

Competitive Intelligence;

• seeks out information to make better decisions

• keeps the business at the cutting edge

• helps with intelligent risk management.

Having a compelling Competitive Advantage in the market is a crucial element to any great business strategy.

To understand differences and obtain a competitive advantage, Competitive Intelligence (CI) can include insights that assist in decisions relating to:

• current competitor activities

• mergers and acquisitions

• strategic probabilities of future events

• customer sales and service

• long-term market prospects

• ways of minimising impending threats

• marketing activities

• knowledge management

• operations benchmarking

• measuring change

• new market entry strategies

• technology assessment.

All to assist in decision support and strategic direction of an organisation.

How is Competitive Intelligence different to Competitor Intelligence?

In its’ strictest sense, Competitor Intelligence is solely about the micro competition and profiling them. Competitive Intelligence however is considerably broader in scope. Benssoussan⁶ refers to Competitive Intelligence as the Competitive intensity in the environment… as a result of technological developments, globalisation, product availability and variety, distribution improvements, the internet, and consumer sophistication. So it is clear that Competitive Intelligence is much broader and encompassing in it’s definition.

How is Competitive Intelligence different to Market Intelligence?

Market Intelligence is the acquisition of market trends and