Competitive Intelligence: Role of a Leader
The first time I heard the term Competitive Intelligence (CI), I thought it was some kind of secret government agency that spy on people or handle criminals until Dr. Jay Gillette formally introduced the topic at the leadership seminar last spring. When and why was the term coined? What does the term mean? What does competitive intelligence consist of? While I was doing my research on this topic, I realized that the term has been used in market research for more than a decade now. Why then does the topic feel strange? I will give you a brief history behind the term Competitive Intelligence. I will also define the term with reference to expert’s definitions, expatiate on what competitive intelligence entails and discuss the role of competitive intelligence in the professional world today.
What is Competitive Intelligence?
According to Whit Andrews, Competitive Intelligence (CI) was introduced in the mid-1970s when techniques used in political intelligence began to be used for commercial purposes (Andrews W, 2008). In more recent years, Competitive Intelligence has become a viable commodity that is accessible by many and important for an enterprise to have in order to protect its organizations information and reputation. CI came into existence due to the high demand for information. What then is Competitive Intelligence?
Mr. Andrews defined Competitive Intelligence (CI) as,
“the proper use of ethically gathered information in the course of business.” This is the ability to properly analyze information that is publicly available. Gartner defined CI as, “the analysis of an enterprise’s market to help the enterprise understand what is happening what will happen and what it means. CI includes every aspect of an enterprise's environment and subsumes business intelligence, knowledge management, technical intelligence and competitors' information, analyzing anything that affects an enterprise's viability (Andrews. W., 2008).”
The business dictionary defines Competitive Intelligence as,
“the continuous process of monitoring a firm’s industry or market to identify (1) current and future competitors, (2) their current and announced activities, (3) how their actions will affect the firm, and (4) how to respond. It differs from industrial espionage in that it uses legal and ethical means to gather and sift the publicly available information.”
From both definitions above, you can gather that ethics plays a big role in CI. Ethics is the premise of CI’s existence. Why is ethics so important in Competitive Intelligence? To answer that question, I will first define ethics. What is ethics? Merriam-Webster dictionary defined ethics as,
“(1) the discipline dealing with what is good and bad and with moral duty and obligation (2) a set of moral principles: a theory or system of moral values (3) the principles of conduct governing an individual or a group (4) a set of moral issues or aspects as rightness” (Merriam-Webster, 2009). Gathering from the above definition, ethics are the morals, philosophy, disciplines, and principles that govern a person or a group. Ethics are those moral or behavioral standards or traits that guide an individual or a group. How then does ethic fit into Competitive Intelligence? To explain the relevance of ethics in Competitive Intelligence, I will use a real life example that occurred in 2001.
The Chairman of Procter and Gamble in 2001, John Pepper, discovered some employees from the Procter and Gamble’s competitive analysis department were spying on Unilever (their competitors). The spying operation recovered three years worth of information and planned strategies that Unilever had for their U.S. hair care business (Finkelstein S. et.al, 2005). You would think a quite reputable and powerful company like Unilever will have an impenetrable system because the value of their information will be priceless. In this case, information was leaked by one of their vendors that handled a part of Unilever’s operations at that time (Finkelstein S. et.al, 2005).
The spies partook in “dumpster diving” or what others will call “rubbish archeology.” What does dumpster diving mean? This involves rummaging through the dumpster to find information that will be useful. How did that happen? One of Unilever’s vendors at that time operated out of Cincinnati which happens to be Procter and Gamble’s headquarters. In 2001, dumpster diving wasn’t seen as a norm or practice in corporate America because a reputable company like Procter and Gamble is not expected to partake in such a questionable act like dumpster diving (Finkelstein, S. et.al, 2005). Since dumpster diving was not an offence or violation at that time, how do you judge such a behaviors? That’s where competitive intelligence comes in.
Judging from Procter and Gamble’s behavior, you can deduce that P&G was trying to boost their place in the hair care business sector by committing illegal information gathering (also called espionage). With the growing number of international competitors, companies are under a lot of pressure to expose the strategies of others in the industry (Finkelstein, S. et.al, 2005). With the way information is been handled in this booming knowledge economy, it is almost impossible to control or monitor what is published on the internet. In 1999, Fortune 100 companies lost up to $45 billion to thefts of proprietary information while U.S companies spent only $1 billion a year on competitive intelligence (Finkelstein, S. et.al, 2005). If precautionary measures are not taken, the number will increase and pose more danger for companies in the future.
Role of a Leader in Competitive Intelligence
Preparing your employees against those outsiders that are looking for ways to pry into a company’s private information or strategy is important for success. Those in leadership positions should be aware of the dangers when choosing who to partner with. We are in a booming knowledge economy that makes information easily accessible than it was decades ago. It doesn’t take a genius person to pull or find information nowadays. According to the CEO and CIO perspectives
“Competitive Intelligence (CI), also known as business intelligence, is both a process and a product. As a process, CI is the set of legal and ethical methods a company uses to harness information that helps it achieve success in a global environment. As a product, CI is information about competitors’ activities from public and private sources, and its scope is the present and future behavior of competitors, suppliers, customers, technologies, acquisitions, markets, products and services, and the general business environment” (Cappel J. et.al, 1999).
The major role of leaders in CI is decision making which is the process aspect of CI. Understanding the process involves understanding new developments in the industry, the behaviors, capabilities of competitors, and those characteristics necessary to gain competitive advantage over competitors (Cappel J. et.al, 1999). Another way a leader can handle CI is to constantly scan the environment for threats and opportunities (Cappel J. et.al, 1999). CI is not a bad thing if managers can use it to gain a competitive edge. Scanning the environment for external threats and opportunities can help a company build a strategic edge and prevent outsiders from prying. CI is therefore the tool that can either build or destroy you. It is therefore important to properly assess your business environment for threats and opportunities and still ensuring your company’s information is protected.
Competitive Intelligence Summed-up
The access to tremendous information on the internet has changed our perspective and understanding of the world. From Gartner’s definition, CI affects different aspect of an enterprise especially in managing frequent business changes that occurs. Since change is inevitable, CI becomes the valuable commodity for an enterprise to possess. With the way information is been managed and easily assessable nowadays, competitive intelligence is becoming important and necessary for an enterprise. It is therefore important for a company that wants to survive in this knowledge economic era, to incorporate competitive intelligence into its everyday activity.
References
Andrews, W. (2008, June 6). Introduction to Four Elements of Competitive Intelligence Technologies. Retrieved March 20, 2009 from Gartner database.
BusinessDictionary. (2009). Competitive Intelligence. Retrieved March 20, 2009 from, http://businessdictionary.com/definition/competitive-intelligence.html
Cappel, J., Guynes C.S., Vanecek, M.T., & Vedder, G.G. (1999, August). CEO and CIO Perspectives on Competitive Intelligence. Communications of the ACM, Vol. 42: p. 108-116. Retrieved March 21, 2009 from, http://portal.acm.org/citation.cfm?doid=310930.310982
Competitive Intelligence Handbook. (2008). The International Background of CI. Retrieved March 20, 2009 from, http://www.combsinc.com/chapt4.htm
Finkelstein. S. & Jordan, J. (2005). The Ethics of Competitive Intelligence. Tuck School of Business at Dartmouth. Retrieved March 20, 2009 from, http://mba.tuck.dartmouth.edu/pdf/2005-1-0095.pdf
Levey,R. (2009, March). Just the Basics. Direct, 21(3), 7-7. Retrieved March 19, 2009, from Business Source Premier database.
Pinkerton, R. (1994, Winter94). Competitive Intelligence Revisited: A History and Assessment of Its Use in Marketing. Competitive Intelligence Review, 5(4), 23. Retrieved March 19, 2009, from Business Source Premier database.
Supplementary:
Ethic. (2009). In Merriam-Webster Online Dictionary. Retrieved March 20, 2009, from http://www.merriam-webster.com/dictionary/ethic
Feel free to drop comments. It is always good to have different perspective.