Purpose – The purpose of the paper is to point out how little competitors matter for companies' long-term success, how little support executives receive with intelligence that does matter, and to offer a different solution. Design/methodology/approach – The paper uses numerous examples of competitive failures and success that point out the limits of competitors' impact on a company's performance. It covers the theory of strategic positioning and industry change drivers and provides a practical definition of strategic intelligence. Findings – Competitors do not matter to executives; “competitive intelligence” has been misinterpreted as competitor-watching and has therefore had no real value to executives, and companies leave their executives vulnerable to disastrous blindsiding. Practical implications – Companies should and could markedly improve their intelligence support of top executives, but need to rethink their whole approach to competitive intelligence. Companies can also significantly improve the way they monitor the competitive environment by redirecting their efforts. Originality/value – Executives are short changed by their organizations' own processes of closely watching competitors. For the first time, this paper exposes the myth that competitive intelligence – as practised by more than 90 percent of the Fortune 500 – has value for executives and offers a unique approach to improving companies' strategic intelligence capability.
Viewpoint
Competitive strategy; Competitive analysis; Competitors; Senior management; Business performance.
Business Strategy Series
12
1
2011
4-11
Emerald Group Publishing Limited
1751-5637
Competitive intelligence (CI) began to make inroads at a few leading-edge US companies such as Motorola and Kellogg back in the mid-1980s. Since then, companies have been investing in personnel, software, and consultants' services to systematically monitor their competitors. At one point in time, (old) ATT had over 30 people in its business services division's CI department, and pharmaceutical firms were not far behind. Today, 90+ percent of all Fortune 500 companies have some form of formal CI activities. Yet, ask top executives to recall one occasion of how CI affected their strategy, and they go blank. Ask them who their intelligence analyst is, and they have no idea. At an age when “rising global competitive pressure” is on every executive's lips, why has CI failed to leave real impact on companies' C-suites?
The answer is deceptively simple: companies never built real competitive intelligence capabilities. Instead they created elaborate and detailed practices for closely monitoring competitors' every little move. How important is bird-watching to an airline pilot flying at 39,000 feet? Competitors just do not matter that much to executives, and rightly so.
That is the good news. The bad news: they never built real intelligence capabilities. Executives short-change themselves like a ship captain navigating in thick fog without radar. Worse, while around him the horns are blaring, he listens only to his iPod.
According to The Economist, in 1956-1981 an average of 24 firms disappeared annually from the Fortune 500 list. That number rises to 40 during the period 1982-2006 and probably much higher if we include 2007-2010 in the statistics. How important were competitors in the elimination of companies from the Fortune list? Firms run into difficulties for a variety of reasons, some internal (e.g. BP), others criminal (e.g. Enron). Studies attribute between 35 percent and 55 percent of all business failures to strategic blunders. In assessing the role of competitors, these failures are more relevant.
As the deep recession lingers in the USA, two industries stand out prominently as bona fide testimony to large-scale strategy failures:
1. the US automobile industry; and
2. the US financial industry.
How important were competitors in the decline at General Motors, Chrysler and Ford?
At one point in time, GM had close to 50 percent of the global market. Today it stands at 11 percent. Its former CEO, Rick Wagoneer, was an embodiment of clueless management, as he made optimistic forecasts as late as 2008. In one interview he said he never loses sleep over GM's situation, because a tired executive is not effective. Chrysler went from proud engineering leader to a shadow of its former self under the leadership of Nardelli. But the demise of the US auto makers has not been the result of these executives' failure to deal with Toyota or Honda. It was not even the direct result of labor cost differentials. Sure, buying industrial peace with high wages and benefits, and carrying legacy liabilities competitors did not have (like health care) did not help. But the root cause of Detroit's dethroning started much earlier and was much more basic: the decline started when consumers' preferences shifted from performance to reliability. US auto makers excelled at serving the consumers of power – large, flashy cars, powerful drive trains, and loud revving were Detroit's hallmarks. Male drivers, especially the young, loved American cars the world over. But as more and more women started driving, and longer and slower commutes became the norm on clogged routes to work, raw power was usurped by demand for long lasting cars, more fuel efficiency (regardless of the cost of fuel), shorter chassis for easier parking in urban areas, and less time spent in the shop for repairs. The boring, smaller but reliable Japanese cars filled that need. Competitors did not kill Detroit, ignoring changing buyers' needs did. The fact that competitors were able to fill the changing needs with cheaper and higher quality cars due to better manufacturing techniques was just the cherry on the cake. Now think about it: did the US executives lack information on the Japanese cars or the Japanese quality control methods (taught by Deming, an American scholar)? No. Would having more detailed information about the Corolla's interior space or Datsun's engine displacement or future styling decisions for the Civic had changed anything fundamental for GM's CEOs over the past three decades? No! Competitors' products and strategies were there for everyone to see (and drive). What management needed was a better strategy based on early reading of changing industry dynamics, but is that far different than detailed and regularly updated competitor product minutia?
Уважаемый посетитель!
Чтобы распечатать файл, скачайте его (в формате Word).
Ссылка на скачивание - внизу страницы.
