A Beginner’s Guide to Competitive Intelligence
Welcome to my new series of articles exploring the world of Competitive Intelligence (CI), aimed at newcomers with no prior knowledge of the subject. If you are looking for a role within CI, or are just interested in the topic, these articles will give you a solid understanding of the basics and hopefully stimulate your interest to understand more.
This first article starts with the basic concepts and provides an overview of the topic. Later articles will explore each area in more depth.
What is Competitive Intelligence?
A naive view of CI is that it is just about understanding your current competitors. Indeed I have heard folks speak of ‘Competitor Analysis’. In reality, Competitive Intelligence is a very broad subject and there are many definitions of CI out there. One organization focussed on the topic – Strategic and Competitive Intelligence Professionals (SCIP) – uses the following definition:
“a discipline that enables organizations to reduce strategic risk and increase revenue opportunities by having a deep understanding of their operating environment. It’s using intelligence to increase competitiveness, not simply monitoring competitors.”
Two key points stand out in this definition:
- CI is about delivering significant business benefits – ‘reduce strategic risk’, ‘increase revenue opportunities’.
- CI is much more than watching your competitors and should involve the broader operating environment – market trends, customers, vendors, etc.
But this definition is still rather high level. What exactly is involved in ‘doing’ Competitive Intelligence? It can be viewed as a process involving four main steps:
- Collecting data about the market in which you operate
- Evaluating that raw data to turn it into actionable information
- Disseminating the information to relevant stakeholders
- Taking Action on the information
The final step is critical. Without Action, there is no value from Competitive Intelligence.
We will look at each of these steps in detail in future articles.
Although the above definition makes clear that CI is about more than Competitors, that is where most CI programs start, and so it is worth considering who are your competitors in the broadest sense.
Most companies will have obvious direct competitors – those businesses that provide the same type of product or service to the same customers – think Coke and Pepsi, or McDonalds and Burger King. Then there are companies that are selling other products to the same customers and in doing so are competing for a share of the same funds. It is often the case that those indirect competitors can fairly easily extend their product line to compete directly with you. But often the most dangerous competitors are those firms that will compete in the future (but do not currently) as a result of a significant change in the market – often as a result of new technology. Blockbuster did not see Netflix coming.
Where Should You Focus?
With the potential of so many competitors – current and future – even the largest Competitive Intelligence department cannot expect to study them all to an equal depth. Therefore the targets must be prioritized, and in order to do that, you must be clear on the objective of your CI program. For example, if your primary goal is to assist the sales team then you should be looking at the competitors that appear most often in deals and to whom you are frequently losing. But if the goal is to provide information to senior executives for strategic purposes you might want to look at the up-and-coming new entrants who are not showing up in deals yet as well as scanning the market for evolving trends.
For a CI function to deliver value, it must be clear who its stakeholders are and what they are looking for. This should be agreed upon when establishing a CI function and reviewed on a regular basis as conditions change and the CI capability at your company matures. Typical stakeholders include:
Sales Teams are the folks that are facing the competition every day and need information at their fingertips to counter objections placed by competitors as well as plant land mines for them. The precise needs of individual salespeople will vary depending on their role – for example, business development reps, new business account executives, and installed base account managers. The most common form of communicating CI to sales teams is through Battlecards – easily digested, to-the-point summaries of the key information needed by reps in the field.
Product Managers will be interested in the competitors’ products. Detailed feature / function comparisons are difficult to achieve and even more difficult to keep current and are therefore probably not a good use of CI resources. Much better to invest effort into understanding the strategic product direction of your competitor’s offerings.
Marketing will want to know about your competitors’ positioning and the campaigns that they are running in order to differentiate their own messaging
Executives will be looking for much more strategic output from CI in order to inform activities such as mergers and acquisitions and will likely want to know about the broader industry trends.
In this first article, we have defined what we mean by Competitive Intelligence, described the types of competitors that you might have, and reviewed some of the stakeholders.
Next time we will start to look at the four key processes of CI – Collect, Evaluate, Disseminate, Action
If you have enjoyed this article, or have any questions, please leave a comment.