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Introduction: Hand in Hand with Knowledge Management

Knowledge management is the movement and use of information, or information networking. Competitive Intelligence is using information strategically to gain an advantage in a certain marketplace. Competitive Intelligence could not happen without knowledge management. Information is a valuable commodity in today’s global, information economy. Companies want to add value to those services and products they produce so their customers receive as much information as possible. This requires a wealth of data on their market to make sure they have the perfect product for their customers.

What is Competitive Intelligence?

John J. McGonagle and Carolyn M. Vella define Competitive Intelligence as “the use of public sources to locate and develop data that is then transformed into information, generally about competitors and/or the competition.” (McGonagle, 1998, pg. 3) That is, data must be disseminated into intelligence. This intelligence will then be used in a strategic way to gain a leg up on the competition. “Competitive intelligence is a process that involves collecting, analyzing, and acting on information about competitors and the competitive environment.” (Dutka, 1999, pg. 4)

Ethical Procurement & Use of Information
As with any competitive environment, the drive to cheat is very high. Obtaining data and information by unethical means can seriously damage the data’s credibility. “It is imperative that CI professionals understand the laws, customs, and ethical standards of the countries in which they are conducting CI.” (Prescott, 2001, pg. 7) There is no reason to resort to unethical means to gain an advantage. Alan Dutka claims in his book, “Competitive Intelligence for the Competitive Edge,” that “90 percent of the information required by an organization is available from public sources. (Dutka, 1999, pg. 6) He also sites a company’s own website as an excellent source of data for a competing company. There are many more publicly available sources of data, and then there are those that are private to a company. “Open Source Solutions (OSS)… has repeatedly demonstrated that publicly available information, when properly analyzed, provides significant intelligence.” (Prescott, 2001, pg. 8)

The Society of Competitive Intelligence Professionals has developed their own code of ethics for obtaining data for strategic business uses. It “requires members ‘to accurately disclose all relevant information, including the identity of the professional and his or her organization, prior to all interviews.’” (Dutka, 1999, pg. 16) However, relevant information can be a bit vague and subject to the interviewer’s interpretation.

“Over the past two decades, CI has grown from a small area of interest to its cadre of founders into a discipline which is now recognized and practiced around the world.” (McGonagle, 1998, pg. 4) There are many forces that can be attributed to this growth.

• “U.S. Antitrust Laws bar competitors from exchanging data in order to fix prices or divide markets.” (McGonagle, 1998, pg. 4) This requires companies to actually go out and do market research to decide what is best for the consumer. Antitrust laws are put in place to stop monopolies from developing and hence foster competition.

• “Competition in the United States from non-U.S.-based firms has grown substantially, and continues to grow.” (McGonagle, 1998, pg. 5) The global economy is all there is today. Every thing is connected and trade is essential. U.S. based companies must do business with non-U.S.-based firms and each wants to have an advantage over the other. Intelligence would be a way to do this.

• “Strategic Planning in companies became more sophisticated in the 1980s and 1990s. As part of that growing sophistication, most companies now recognize that they have to know more and more about their competitors to develop a corporate business plan that will work.” (McGonagle, 1998, pg. 5) This is the information economy. Sometimes even strategic planning cannot save you. As David Crabtree, the vice president of marketing at American Electric Power, says about competitors, “The ones I worry most about are those I can’t identify yet.” (Dutka, 1999, pg. 2)

• The Internet “is becoming a further, and invaluable, source of raw data, ranging from SEC documents to on-line catalogs and from press preleases to personal home pages about specific companies and business practices.” Consequently, On-Line Databases…”now enable more people to have prompt access to more raw data than ever before.” (McGonagle, 1998, pg. 5) The Internet ups the ante on the importance of strategic planning. Competitors are all of the sudden able to see all the same data. The Internet has really leveled the playing field, but at a very high level.

Producers v. Users
Another potential hazard of competitive intelligence is building trust between the CI producer and the CI user. The CI producers find that CI users want certain things that can pose problems.

• No Clear Objectives: “Users often won’t share with the CI group exactly what type of decision they want to make with the information they’ll be getting. “ (Breeding, 2001, pg. 47) This makes it really difficult for the producers to accurately gather the right information for the users.

• Lack of Feedback: “Often, when work is performed and a report is given to a user, that’s the last the CI group hears about the work it has delivered.” (Breeding, 2001, pg. 48) This does not help the producer or the user at all. For the CI producer to effectively do their job, the user needs to give feedback on the quality of the data they have received.

• Not enough time to satisfy all the users: “When a CI function adds real value, it soon becomes very popular with its constituency. Users then send a deluge of requests, and they ultimately become too much for the CI department to handle.” (Breeding, 2001, pg. 47-48) Not surprisingly, the users cite “Timeliness” as a problem factor for them. They want the information NOW, not tomorrow. This conflict of interest, and availability of hours in a day, can damage the relationship between the users and the producers.

• Different needs of multiple users: “Some users want more in-depth information (deep divers), and some want high-level information (skimmers).” (Breeding, 2001, pg. 48) This makes it very difficult for the CI producer to efficiently compile information. The same report may be going to both kinds of users, so how does the producer decide if the report is going to be very in-depth or just a simple outline of the most important points? Consequently, the CI users tend to report that the information they receive is too shallow. “The information doesn’t have much depth and mostly contains the public relations viewpoint as reported by the media or by the competitor.” (Breeding, 2001, pg. 47)

Global CI Issues

Today’s economy is a global one. The Competitive Intelligence Professional has to be aware of what he or she needs to assess in the competitive global environment. As a good, effective leader and CI professional, we must take care to be aware of key intelligence topics or KITs. The following are the KITs that David L. Blenkenhorn and Craig S. Fleisher identify in their book, “Competitive Intelligence and Global Business.”

• Global Competitive Trends: Who are the trendsetters in the market? Good CI investigation includes looking at current and possible future trends or patterns to accurately assess what will happen.

• Customer or End-User Preferences and Trends: Are there shifts in what the customer is wanting? Just like competitive trends, a company has to be aware of what the customer wants. If the customers’ desires change, but the company does not, the company is no longer a competitor in the market.

• Technological Trends: Is technology going to be affecting your field? Are you on the cutting edge of technology? It is critical for a company to have the latest technology available in their field. This will ensure a competitive advantage.

• Diversification Opportunities: “What are the opportunities for global diversification?” (Blenkenhorn, 2005, pg. 9) Can your company grow in other areas of the world? Are there other markets related to your field that your firm could branch into and benefit from?

• Internal Capabilities: “Does your firm possess the necessary resources (human, financial, relationships, etc.) to be successful in the global marketplace?” (Blenkenhorn, 2005, pg. 9) Is your company unified enough to withstand the temptations of a global marketplace?

• Joint Ventures, Strategic Alliances, and Other Partnering Opportunities: Are your partnerships in your best interest in your globalization efforts? Networking is the keyword of the business world, but are these partnerships helping or hindering your growth as a company in the global marketplace?

• General Nation-state and Regional Economic and Business Conditions: What can your company do to gain accurate intelligence on the political economy of a country? In a global economy, it is vital that a CI professional know what the political climate of the country where they want to do business is like.

• Regulatory Issues: “What are the laws and regulations in your global area of focus?” (Blenkenhorn, 2005, pg. 9) A company must be aware of the policies in place to protect competition.

• Supplier Trends: “What is the nature of the supplier base in your focused global area?” (Blenkenhorn, 2005, pg. 9) Is there a shift? Will it change? How will it affect your business?

• Understanding Reasons for Past International Successes and Failures: Who is successful globally? Why? What can you do to gain a competitive edge? Really knowing why a company succeeded or failed is essential to understanding market trends to better assess the future of the business.

• Performance: “Is there a global shift of power in your industry?” (Blenkenhorn, 2005, pg. 9) Is there another company in another part of the world that is growing rapidly? Why is it shifting?

Why does this matter to us?

As future and current leaders, it is important to understand the significance of competitive intelligence. We will be joining an ever-growing, super-competitive, global technological economy. We need to be prepared for whatever the competition has and be able to take charge of our own business, successfully.
The CI function needs to be at the core of your company. It is what allows you to succeed and be ready for the future. “Centralization of the competitive intelligence function tends to foster greater interaction with top management in strategic planning activities, while decentralization usually results in an emphasis on tactical decisions.” (Dutka, 1999, pg. 13)
Leaders are responsible for using the information that competitive intelligence gives them. The data collected is essential to business decisions. According to Richard Beckhard and Wendy Pritchard, in their essay Choosing a Fundamental Change Strategy:

Leaders must focus on taking the organization into the future. This means developing a vision of the desired future state of the enterprise, creating management structures and systems to achieve thus state, and providing personal leadership in directing the process of managing the dynamics of both the organization and its interfaces with its environment. (Beckhard, 1995, pg. 396)

Leading a company into the future with a vision requires a strategy. Competitive Intelligence is a good start, but if a leader does not know what to do with the information given to them, it is totally worthless. The most important step of CI is how a leader strategically uses the intelligence they are given. “Competitive supremacy will be a function not only of increased profits and performance, but of the organization’s capacity to innovate, learn, respond quickly, and design the appropriate infrastructure to meet demands and to have maximum control over its own destiny.” (Beckhard, 1995, pg. 396)

“Typically, market penetration strategy requires more tactical CI on existing competitors, whereas market expansion or growth strategy focused on new segments and geographic areas require strategic CI.” (Blenkenhorn, 2005, pg. 28) A leader is responsible for determining the strategy that is right for their company. They may even need to call on experts in certain areas to help him make a decision. In the essay, “Power, Influence, and Influence Tactics,” Richard L. Hughes, Robert C. Ginnett, and Gordon J. Curphy, discuss different forms of power. One form of power is that of the expert. A leader may call on the expert to fill in his information gap. “A longtime employee may be influential because his “corporate memory” provides a useful historical perspective to newer personnel.” (Hughes, 1995, pg. 340) This historical perspective may be an excellent source of CI because it shows trends and patterns in the marketplace which would give invaluable intelligence to newcomers.

Conclusion: The Future with CI

Competitive Intelligence is using information strategically to gain an advantage in a certain marketplace. “The world in which we live and will live and the environment in which organizations will operate are without precedent.” (Hughes, 1995, pg. 395) This age is one in which new innovations in technology happen multiple times every day and information moves faster than you can bat your eye. Companies have to stay up on competitive intelligence just to stay afloat in the business world. Effective leadership is critical to effective competitive intelligence.