A more formal definition comes from the Society of Competitive Information Professionals

Paul Gray is Professor Emeritus of Information

Science at Claremont Graduate university and the author of Manager’s Guide to Making Decisions About Information Systems (John Wiley & Sons, 2005). 

paul.gray@cgu.edu

CoMPETITIvE InTELLIGEnCE

Competitive Intelligence

Paul Gray

Abstract

Competitive intelligence (CI) is the gathering and use of knowledge about the external environment in which firms operate. This article explains what CI is, the CI process, how to obtain the needed data, the available techniques, and how CI is used. After describing the generic CI cycle, we elaborate on what is actually done.

Competitive intelligence is a process that increases marketplace competitiveness by analyzing the capabilities and potential actions of individual competitors as well as the overall competitive situation of the firm in its industry and in the economy. This article considers the need for counterintelligence to reduce a firm’s vulnerabilities, as well as the ethical context in which competitive intelligence work is done.

Introduction

Strategy, marketing, finance—in fact, any aspect of planning and decision-making—involves considering the competition. What are they doing? What are they likely to do? How do the economy, laws, and government actions affect them—and us? Most business intelligence focuses on fact-based decision making that is based principally on understanding and using internal factors. Competitive intelligence is concerned with the external factors that affect the company—in other words, what goes on outside the company’s walls.

Some firms use simplistic external inputs such as executive gut feel, reading trade journals, or gossip from sales people. In sophisticated firms, competitive intelligence (CI) is the responsibility of a separate staff.

We will present an overview of CI, explain what CI is, the CI process, how to obtain the needed data, the available techniques, how CI is used, where it fits in the organization, and its ethics. We will begin by describing the CI cycle and then elaborate on what is actually done.

Figure 1. The competitive intelligence process

overview

Competitive intelligence is a process that enhances marketplace competitiveness by understanding individual competitors as well as the overall competitive situation of the firm in its industry. This is not “spy versus spy.” You can use whatever you find in the public domain:

^■■ Government information

^■■ Web pages and advertisements

^■■ Online databases

^■■ Journals and newspapers

^■■ Interviews and surveys

^■■ Financial reports

^■■ Trade shows

^■■ Executive speeches

^■■ Competitors, suppliers, distributors, and customers

What you can’t do is take your binoculars and look into your competitor’s plant in the middle of the night, or pay a competitor’s employee to funnel internal documents or specifications to you.

It turns out that the problem is not that information is lacking, but that there is too much information. Companies (including your own) use Web pages, press releases, and whatever other means of publicity they can afford to make their products visible and to inflate their stock prices. In other words, they brag and they blab, often when they shouldn’t. Sometimes they lie. In CI, the task is to gather all of this information and assemble it into a coherent whole so that senior managers in your firm can understand what competitors are doing and planning. Remember that CI is a two-sided game; you can be sure that your competitors are gathering and analyzing data about your firm, too.

A more formal definition comes from the Society of Competitive Information Professionals (www.scip.org):

CI is a systematic and ethical program for gathering, analyzing, and managing external information that can affect your company’s plans, decisions, and operations.

How Competitive Intelligence is Used The role of CI analysts is to distill, analyze, and present the information gathered so it is in an actionable form for management. CI supplies the inputs that tell managers what they need to know about current and future competition, including their own organization’s strengths and weaknesses, financials, major clients, what detailed inspection reveals about existing products in the marketplace, what new technologies (particularly disruptive technologies) are on the horizon, how competitors responded to your previous initiatives, competitor strengths and weaknesses, and more. The objective is to obtain an edge on your competitors and to defend your firm against their efforts. The operating principle is “be forewarned so you are forearmed.”