competitive intelligence (ci): overview, trends & developments jerry p. miller director...

Competitive Intelligence (CI):Overview, Trends & Developments

Jerry P. Miller

Director

Competitive Intelligence Center

Simmons College

Boston, MA+1-617-521-2809

+1-671-521-3141 (fax)

jmiller@simmons.edu

cic.simmons.edu

Conduct Intelligence to:

Gain a Competitive Advantage

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The Intelligence Function:

• The process of ethically collecting, analyzing, and disseminating accurate, relevant, specific, timely, foresighted and actionable intelligence regarding the implications of the business environment, competitors, and the organization itself.

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The Intelligence Function:

• Gather information from primary & secondary sources

• Upgrade information to intelligence incorporating analyst’s perspective

• Generate insights and suggestions• Disseminate to decision makers who take

action that can gain a competitive advantage for the firm

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The Intelligence Process is NOT:

• Industrial/Economic Espionage

• Corporate Spying

• Routing news clippings

• Searching the Web

Why Intelligence?:“…to be defeated is excusable,

but to be surprised is unforgettable.”D. Rouach, 1996

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Why Intelligence?

• Managers need to increase the quality of:1) products or services

2) strategic planning and3) market knowledge

• That results in higher business performance

How Do I Know if I Need an Intelligence Function?

How critical are the questions that keep you awake at night?

How Many Resources Are Enough?

How many key managers are currently obtaining and using

adequate intelligence effectively for decision making?

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Strategic Intelligence:

• Emphasizes the relationship between the intelligence function and strategic decision-making

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Business Intelligence:

• Incorporates the monitoring of a wide array of developments across an organization’s external environment, which includes customers, competitors, suppliers, economic issues as well as technical and regulatory changes

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Technical Intelligence:

• Monitors research and development issues • Reduces risky decision making• Broadens awareness of competitive situation• Identifies business alternatives• Increases warning time from 31 to 37 months in

chemical/pharmaceuticals industry and from 17 to 33 months in other industries

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Counterintelligence:

• Protects intelligence collection activities and protects plans, programs, and projects from adversaries

• Hire security specialists

• Train employees not to give away sensitive information

• Computer usage heightens importance

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Who’s Doing Competitive Intelligence?

• 90% of Fortune 500 firms in the U.S.• 9% of U.S. firms with formal processes• Chemical and telecommunications firms• Firms with high R&D expenditures• Firms that own many patents• 2-3% of German firms in various industries• U.S. & U.K. firms: leading intelligence producers

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How Do Leading Firms Conduct Intelligence?

• Broadcast intelligence to users• Increase number of intelligence users• View intelligence as decision critical• Intelligence is part of managers’ duties• Institutionalize the intelligence function• Manage corporate knowledge assets• Maintain and rely on during a recession

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Primary Information Sources:

• Interviews with internal experts, customers, and suppliers

• Industry analysts

• Business editors

• Associations

• Observations

• Unpublished documents

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Secondary Information Sources:

• Internal and external databases• Industry and government reports• Directories• Statistical sources• Newspapers and magazines• Trade publications

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Criteria Not to be Overlooked:

• Balance strategic & operational needs

• Adjust the function as the market changes

• Determine locus of decision making

• Company’s structure

• Corporate culture

• Market environment

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Common Problems:

• Managers don’t value intelligence

• Managers consider intelligence a luxury

• Inability to incorporate it into strategy

• Managers believe “I know my industry!”

• Unskilled people try to perform intelligence

• Managers hoard information

• The function doesn’t meet decision makers’ needs

• No metrics developed to measure impact on bottom line

• Intelligence is seldom used by decision makers

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Creating the Intelligent Firm:

• Adjust decision-making process & culture

• Open communication lines

• Sensitize firm to marketplace changes

• Align intelligence to decision-making

• Support the process with technology

• Develop an evaluative mechanism

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Excellent Intelligence Service:

• Clearly define intelligence needs

• Use creative sources

• Understand the complexity of the issues

• Upgrade information to intelligence

• Offer recommendations, suggestions, and alternatives

• Obtain feedback from decision makers

Motivator:

What’s in It for Me?

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Motivational Issues

• What are the benefits to the firm?

• What are the benefits to decision makers?

• What are the benefits for intelligence professionals?

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Predict & Measure the Impact of the Intelligence Function

• Determine where & how impacts will occur

• Determine your competitive advantage

• Assess appropriateness of costs (cf. CFO)

• Measure impacts in terms of:– Time- or cost-saving– Cost avoidance– Revenue enhancement

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Various Roles in the Intelligence Process

• Core Roles:– primary researchers

– secondary researchers

– analysts

– integrators

• Supporting Roles:– system builders

– data builders

– knowledge builders

– protectors

– decision makers

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Intelligence Skills Come From:

• Personal traits

• Formal education

• Mentoring

• Work experience

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Competitive Intelligence:

It’s Current Status

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Analytical Tools Used:

• Competitor profiles: 88.9%• Financial analysis: 72.1%• SWOT analysis: 55.2%• Scenario development: 53.8%• WIN/loss analysis: 27.3%• War gaming: 27.5%• Cojoint analysis: 25.5%• Simulation/modeling: 25%

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The Status of CI after 9/11

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118 Competitive Intelligence professionals have participated.

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Industries Represented:

• Consulting 35• Info technology 12• Telecom 9• Chemicals 6• Financial services 5• Pharmaceuticals 5• Consumer package

goods 4

• Manufacturing 3• Retail 3• Media 3• Government 2• Health care 2• Publishing 2• Engineering 2• Power generation

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Industries Represented:

• Security 2• Information retrieval 2• Legal• Accounting • Environmental

services• Real estate • Services

• Business research• Direct mail• Automotive

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Countries Represented:

• U.S. 106

• Spain 3

• Canada 3

• Germany 2

• Australia 2

• Switzerland 1

• Sweden 1

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Since 9/11, 32% have found it more difficult to gather

information from government Web-sites.

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Since 9/11, 53% have found it more difficult to gather

information from corporate Web-sites.

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Since 9/11, 49% have experienced differences in

the willingness of people to talk with them when they conduct

primary research.

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Since 9/11, 66% reported that the heightened awareness about security affected the way theirresponsibilities were defined .

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Since 9/11, 72% reported thatresearch targets and topics, methodologies and budgets

have changed .

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Since 9/11, 45% have changed how they collect information .

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Since 9/11, 58% have changed how they protect their

proprietary information .

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Since 9/11, 41% have altered their use of third-party

researchers .

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Since 9/11, 68% have heightened their security efforts.

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Since 9/11, 49% have re-examined the legal and ethical

aspects of their CI function .

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Since 9/11, of the 70 respondents who have re-examined these

issues, 48% have placed additional parameters on how

they collect information .

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Since 9/11, 54% think practitioners are working more in the gray area now than they had

in the past.

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Since 9/11, 48% have counterintelligence and security programs incorporated into their

CI efforts .

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Comments:

• More are going over the gray line since it’s difficult to get people to talk.

• A broader array of issues are now perceived as competitive.

• Most said their security program was separate from CI, but increased inter-relationship.

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More Comments:

• A major U.S. Biotech firm and a major German-based pharmaceuticals firm reported little, if any, changes since 9/11.

• 9/11 has had less impact in Europe where security had already been an important function, especially in Germany.

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More Comments:

• Former government intelligence officers are selling their previously “unacceptable” skills to corporations.

• Responsibilities have increased as the business landscape has broadened considerably.

• Gary areas expanded due to the heightened value of information

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More Comments:

• Anthrax scare impacted direct mail function in the financial services & consumer package goods industry.

• Corporate America has increased its use of CI for counterintelligence and security topics.

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Current Trends & Issues:

• CI will not be as big in the future because we are moving to a world of cooperation rather than adversarial business practice

• Hostile entities could approach firms for information under the guise of buying a product

• Analysis is still an art, but some people think the technology can replace the art

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More Trends & Issues:

• Search engine technologies are in their infancy in terms of being customer driven

• In many firms, the CI staff have failed to develop metrics to measure the impact of CI and to develop wide-ranging support across the firm to support CI.

• CI’s role in protecting information has greatly increased.

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More Trends & Issues:

• Most practitioners can’t find the time to analyze; they are too busy handling information.

• CI staff may have to use basic research techniques to establish early warning systems

• After 9/11, attorneys began to review primary research projects

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More Trends & Issues:

• CI staff struggles with the paranoia of proving their value to management, who think in the short-term

• Novices often have bosses who are clueless as to what skills they need; so, many people don’t stay in the practice too long

• Still no good business intelligence or knowledge management software available

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More Trends & Issues:

• CI staff haven’t communicated well with end users, so we lack credibility and are often not viewed as well as those in the finance department

• Best data comes from people, but corporations don’t support these efforts as they lack the patience it takes to gather input from people.

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More Trends & Issues:

• Military intelligence techniques relax ethics so CI had to pull away to maintain credibility

• CI and security staff must work closely together

• Clients have unrealistic expectations on what’s on the Web, so CI folks have to constantly stress the importance of conducting primary research