Basic principles of Competitive Intelligence and Competitive Technical Intelligence

Henri Jean-Marie Dou

University of Aix-Marseilles III, CRRM, 133397 Marseilles Cedex 20, France e-mail douhenri@yahoo.fr http://www.ciworldwide.org

Henri Dou, Cours Intelligence Compétitive - 8 Janvier 2004

Abstract During the last 10 years, the globalization, the global competition between countries and companies in Technology, Commerce, Lobbying, etc… introduce a new paradigm: complexity. To understand complexity and to create from this understanding a corporate intelligence, new methods and tools are necessary. Most of the tools and methods are linked to formal and informal information, new technologies and cooperative work on a distance basis and to a clear vision of the company's future. The presentation will introduce the main concepts, methods and tools of Competitive Intelligence and Competitive Technical intelligence. From definitions and examples a set of rules and guidelines will be provided for Institutions as well as for SMEs and larger enterprises. 1 - Introduction Competitive Intelligence has been used many time in the past, from the Roman Catholic Church to the "doges" in Venice, but the size of the world, the speed of travel, the communications facilities and the size of the world were very different. Today, everything is going faster, all countries of the world participate to trade and commerce, but differences in salaries and level of life change the rules of Competition, rules established long time ago and more specifically in the industrial era where Capital, Labor Force, and Land were the ultimate demonstration of power.1 Today, to answer the simple questions which have lead the world during many centuries:

Where are we today ? Where do we want to be to morrow ?

How can we go there ? Is far more difficult than a few decade ago. In fact, the collapse of the Berlin wall and the disappearance of the cold war, accelerated the passage to a new paradigm. In the same time, new voices rose to underline the vulnerability of capitalism and the more or less ineluctable passage from the forecast to the foresight2.

1 Jean-Marie Dou Jr, Mylène Leizeltman , Henri Dou, De l'Information a l'Intelligence - Les procédés de création d'Intelligence Compétitive pour action dans les PME et PMI, Colloque A3F, Sophia Antipolis, Octobre 2000 2 Jin Zhouying, Henri Dou, Passer de la représentation du présent à la vision prospective du futur."Technology Foresight", Humanisme et Entreprise, n°54, p.24-46, 2002

In this presentation, I am going to emphasize some of the main steps of these changes as well as some methods and tools which will enable companies, institutions, even municipalities and local governments to introduce new mental models3, to anticipate and create the condition of a sustainable development. 2 - Where are we today - The state of the present If we want to anticipate, if we want to benchmark a competitor, if we want to set up the main steps of our development, create new products, set up new activities, win larger market shares, it is obvious that we must have a clear vision of our actual position. This is the first step to move to Competitive Intelligence. What do we mean by state of the present ? The state of the present can be seen in many ways, but globally we may say that a company, an institution, even an individual do not stand alone4. They are part of a universe build up from competitors, customers, providers, political constraints, standards, lobbying, international menaces, local and international labor forces, research, technological development, health conditions, etc…. To begging to move and to think differently, it is necessary to understand not only all the parts of our environment, but more widely all the interactions of these different parts with ourselves but also between themselves. Co-opetition5, with the development of value maps to understand the environment and the different rules which govern the relationships of all the "players of the game" is a good example to begin with. To understand the rules which govern the "game", will necessitate: • a good strategy to collect the right information

• as well formal (written information) • than informal (human information)

• the best possible way to manage it • the understanding of the information, which is a mixture of serendipity and expert's work • the mastering of cooperative work (platforms to create knowledge) • a system to disseminate the expert's conclusions, most of the time in terms of menaces and

opportunities, • the post assessment of our position often through a SWOT analysis (Strengths,

Weaknesses, Opportunities, Threats) It is not in the scope of this presentation to develop all these former points, but we will present two of them which in my opinion are the among the most important. (For the other, the lector will refer to the references in footnotes). A - The typology of information The information6 is roughly made of two parts, 3 Gryskiewicz S.S. (1999). Positive Turbulence. Center for creative Leadership. San Francisco; Jossey-Bass Publishers 4 D’Aveni Richard A, 1994. Hypercompetition, Managing the Dynamic of Strategic Maneuvering, The Free Press, NY 5 Barry Nalebuff and Adam Brandeburger Co-opetition, ed Currency Double day, 1996

• one is the formal information, some people call it written information. This information is rather close from documentation and is made of reviews, scientific papers, patents, reports, all written documents (some of them have to be validated of course).

• The second is the informal information, some people call it human information. This information is linked to networks and more generally human network. This information is very different from the formal one and the strategies to develop to collect it is very different. We will see that one of the main part of the Competitive intelligence Unit in a company is to develop the right strategies to access to the informal information.

The typology of information is presented in the following figure:

Another segmentation of the information

Open information generally written

Hidden informationGenerally oral

Information intermediateFairs, salons,

Target companies

Data bases, InternetReports, notes, revuesJournals, books, standards,etc….

NetworksDocumentation

Information management system(s)

Figure 1 : Typology of information

There is also in between an information which is sometimes formal and sometimes informal. This is often the case for the Internet. Accessing to a patent database will give formal information, but consulting a brochure from a competitor will need and evaluation of the information quality. Same thing if you consult various forums, etc… In all this collection of information formal as well as informal, do not forget that there are many useful information into our company, experts are obvious, but tacit information must also be dig up out from people. This is often why people speak of the interface of KM (Knowledge Management) and Competitive Intelligence. B - The environment of a company The number of entities which inter-react with the company is more or less wide depending the size, activities, geographical locations, etc. If the first step to spot these entities is more of less easy, the second to point out the various interactions between the company and the entities and between the different entities is far more complicated, and to understand the meaning of the interaction is generally difficult.

6 Information is there taken in the broad sense of the term, the word that most of the people used. But, strictly speaking, information is made from data, facts, which are grouped together according their meaning, a question, a concepts, common parts (e.g. key-words for instance), and which constitute an information.

COMPANY

The environment of a company

Customers Competitors

Potential partnersResearch and Development

Social environment

Internal Competences

Partners

Standard

Providerss

Politique

Epidemic

TechnologyScience

Géopolitic

Wars

Formation

Figure 2: The environment of a company

If you imagine that the second step will be to anticipate and to foresee these interactions it shows that the mechanism of Competitive Intelligence is complex. C - The Competitive Intelligence Cycle It can be apply to all the three main steps (where are we, where do we want to go, how can we go there) which are the core of Competitive intelligence. The cycle may be represented as follow:

Competitive Intelligence cycle

1 - Collection

2 - Management3 - Analysis

4 - Understanding

Strategic InformationProducts

Système d ’information

Formal Informal

Databases,Intranets.. Automatically or

manually

Experts

Vision - Strategy - Questions

Figure 3: The Competitive Intelligence Cycle

Vision, strategy, rise questions which generally come from the decision makers of the company. From these questions strategies to collect the right information are developed. When the information flow up into the company or the Competitive Intelligence Unit it is necessary to manage it. Sometimes, large amount of information (for instance patent

analysis7) must be analyzed to help the expert to have a condensed view of the information network (interaction between information). This analysis can be made automatically (bibliometry8, datamining) or manually. To understand the meaning of the information and the result on the plans and projects of the company, it is necessary to understand the information. This is generally made within the collaboration of expert's groups. The last step is to formulate the results of the work of the experts for the decision makers emphasizing threats and opportunities. 3 - Where do we want to be to morrow ? This the domain of the vision. To develop a clear vision of the next future of the company, institution … is a critical step because it involves the decision makers of the company, its spirit and a lot of culture and tacit knowledge. This is also a frame of mind, practicing to future thinking9 is a good step in Competitive Intelligence. But, if there are many methods to develop a vision for a company, the methodologies are not the ultimate answer because to achieve a vision it is necessary to create various consensus within the company members, partners, etc. In this chapter, we will present a few methods and tools which will enable a group of people, a company, to draw the basic lines of their own future. Most of these methods are well described in the work published by the United Nation University10, this is a reference work which will be very useful for the reader. Most of these methods are also related to area of research such as brain storming, mind mapping, idea mapping, etc. Some methods such as the participatory methodologies11 will enable to get a large consensus. Other are more precise such as the Delphi method focused on expert's advice (expert's consensus). In other case people recommend to use a combination of presential discussion associated with an information push via e-mail12, etc. A - Pertinence tree When people think to the future, rise new ideas, want to develop new products, etc… it is possible to write down all these ideas, but they are most of the time not presented in a relational way. The pertinence tree help people to represent the connections between ideas

7 Henri Dou, Sri Manullang, The use of scientific indicators within the framework of the development of Indonesian Provinces, ISDM n°7, avril 2003, article n° 65 8 Hervé Rostaing La bibliométrie et ses techniques, Sciences de la Société, Collection "Outils et Méthodes", 1996 9 Mogel Robert, May-June 2002. Future Thinking, Competitive Intelligence Magazine, vol 5, n°3 10 Millenium (2000) - The United Nations University, The millenium project, version 1.0 ISBN 0-9657362-2-9 CD-ROM Future Projects, Future Research Methodology .American Council for the United Nations University, 4421 Garrison Street, NW, Washington, D.C. 20016-4055 USA - http://millennium-project.org -Voice & Fax 202-686-5179 11 CD-ROM Future Projects, Future Research Methodology American Council for the United Nations University 4421 Garrison Street, NW Washington, D.C. 20016-4055 USA See the article of Jerôme C Glenn, How to do participatory methodology, p. 11 in the above mentionned CD 12 Ronald N Kostoff, Database tomography for technical intelligence. Competitive Intelligence Review 4, 1., 1993

and facts into a pertinent order. Pertinence trees can be draw for almost everything. We are representing here an example from the United Nation University:

Figure 4: Example of a pertinence tree

We have here an example dealing with the Entertainment Consumer, where all the ideas and facts may be broken in age segments, lifestyle constraints, etc… But you must be aware that to make a final choice in the vision of the future, it will be necessary to do several more things: • For each boxes, you must associate the right information related to the company itself, but

also to all the environment of the company. This show of complex is the task and also why information is so important.

B - Zwicky matrices This method (Zwicky develop it in the year 1965, but some author said that this method may have its roots to the XVth century), consists to develop matrices between facts which are correlated one with the other, and to put in the boxes of the matrix all the information available on the subject. From this method unexpected correlation may rise. This is why some people present it as an idea or innovation stimulating system. We represent here, always in the entertainment area part of a Zwicky matrix:

Figure 5: Example of a Zwicky matrix

Zwicky use this method to seek innovation in jet engine industry, but we applied it with success in more simple system such as making jams or beverages13 from various fruits in Indonesia. Some times, the Zwicky matrices are called morphological boxes. C - Morphological methods They are often used in technology. They are also related to value analysis. For instance here, we present an example related to the bulb industry:

13Sri Manullang, Henri Dou, Transformation des organisations en Indonésie sous l’impulsion de l’autonomie. L’Intelligence Compétitive comme catalyseur de transformation des modèles mentaux. Submitted to Technology Management & Sustainable Development

Vacuum or gas

wires

socket

plots

glass

fixation

All the elements which bring to the company an advantage or a desadvantage are individualized

Morphological methodsHere, example link to value analysis

Figure 6 : Morphological methods

When this analysis is made, the elements are compared one with the other in the following way:

CRITICAL FACTORSComparison method

A B C D Ethread

socket

glass

bulb

designcost

colorpackaging

Figure 7: Critical factors, comparison method

In these methods, where the comparison is very close from the benchmarking, the most difficult is to obtained the data from the competitors. If this is easy when we deal with products by applying the reverse engineering methodology, this is more difficult when good practices, guidelines, or know-how have to be compared. D - The mind mapping Mind mapping is a technique which is supported by various software which will help the users to rearranged their ideas in a logical way (a little as they will make in their brain). We will present here an example from our work in North Sulawesi (Indonesia) related to regional development. We used for this representation a software called "the brain". After setting up

the main "seed" the initial action, here the local development, associated to the political wills, the industry and tourism, we will associate to these three concepts different actions. Figures 8 and 9 show the correlation. It is possible to give son or father to the various concepts or actions. The quality of the software is that information of all kinds (web site, Microsoft data, pictures, comments (in the right part of the screen) can be associated with the graph. It is the possible to have on the same screen all the ideas and related information which will facilitate the whereabouts of the problem. This will facilitate the work of the experts, the presentation of the projects, etc. Many "screens" may be set up, for supplier, customers, competitors, etc… The ultimate step will be to make the best choice and to set up an agenda for the action. Moreover, this software is compatible with a larger version which may be used in a company for knowledge management.

Figure 8: The starting concepts

Figure 9: Development of various concepts

More than 32.000 concepts (called thoughts) may be developed and linked with information. When all the associations and ideas have been made (it is always possible to add new ideas and new links), all the words used to described or names any type of entities are indexed. When you choose the option Search in the right part of the screen, you access the database

and clicking on one item leads you on the appropriate screen. (The database is made from all the words used to described thoughts, information, etc.)

Figure 10: example of research from the database

The figure 10 shows an example of search (Asia tourism, diversity comparison) associated with various data on pdf (Adobe) format. 4 - How can we go there ? This the heart of the Competitive Intelligence because we are going to deal with strategy, and in Competitive Intelligence we have not always to think of what we are going to do, but also how all our environment will react to our move, and more specially our competitors. This is also the step where a Company Knowledge will be created. In fact, one point is critical14:

Knowledge is not found Knowledge must be created

This is why in my opinion, the critical step in Competitive Intelligence is the Knowledge creation. In fact, this is not necessary to develop an important effort to collect information if you are not able to understand and use it. The process to build up knowledge as been presented in figure 3. All the steps: the vision, the information collection, the information management, the information analysis find their ultimate step in the information understanding. All the processes to create knowledge are critical in Competitive Intelligence. This is why, in my opinion, it is possible to distinguish two ways to deal with what people call Competitive Intelligence, one way is to push information to the right people, but in this case global knowledge may be created but is not shared, the other way who for me is the best is to create knowledge globally by a cooperative work, and to give as a feed back to the decision makers threats and opportunities. Then, for a company, creating knowledge for action (actionable knowledge) is critical. This aspect rise the question to know where knowledge is created: many people believed that there

14 Brooke Aker (1998) http://www.cipher-sys.com

are many other places than universities15 where knowledge is created. It is admitted to day that the steps to create knowledge go through the following steps: • From the vision of the future • Decision makers will ask critical questions • From the question strategies to collect information will be develop • Information will be managed and analyzed • The experts will work on the information and understand the where abouts, the

threats and opportunities • The results of the expert works will be transmitted to the decision makers for action. To day, there are many methods to facilitate the work of the experts, this is an aspect of Competitive Intelligence, but beyond these methods and because the experts are not always in the same place (globalization), it is necessary to develop tools to facilitate the cooperative work. This is what is currently called platforms to create knowledge16. A - Platform to create knowledge With in mind the above considerations, we have designed a platform17 to facilitate the creation of knowledge. It works on a NT server, using SQL as database system. The platform is linked permanently to Internet via a provider of fast access on the base of a monthly rent. The platform may be remotely operated by the facilitator (which introduces the names of users, their e-mail, login and password, as well as the primary information which will be used to start the work of the expert group), remote operation is made via the software PC-anywhere. This is important, since we are working on a virtual base, the facilitator may be delocalized, as well as the users. They will only need an Internet access the platform (such as Internet Explorer from Microsoft), and an e-mail if they which to communicate face to face with other people. The platform may have different designs, but basically, the left part of the screen contains the resources, and the right par of the screen all the activity indicators which will help the person in charge of the group (for instance the KMO (Knowledge Manager Officer)) to see all exchanges, comments, new information, answers, … of the users. The platform works in 3 languages (French, English, Portuguese) and Indonesian which will be available soon . That is to offer a friendly interface to users if they are not from the same countries, but nevertheless belong to the same group of users. They will access the same contain and information, but the interface will be in their own natural language. Figure 11 provides a view of the main screen of the platform, that you reach after keying your login and password (one for each users).

15 H. Etzkowitz and al. The future of the university and the university of the future: evolution of ivory tower to entrepreneurial paradigm., Research Policy, 29, 313-330, 2000 16 Jean-Marie Dou Jr, Virtual places: creating knowledge in the 21th century, CODATA 2000, Baveno, Italy, 16-19 October 2000 17 There are many other platforms available on Internet, and some of them, like Mayetic are free (http://www.mayeticvillage.fr ). But, the principle of these platforms is that all data, forum, comments, are store on the server which host the platform. Then, the confidentiality is not evident, and depending what you are doing, you canot related on such system. Even, with the datamining tools available to day, a global view of all the activities which are going on on such a platform could be draw up.

Figure 11: Main screen of the platform Note the following features: • The users needs only the Internet explorer to work. They do not need any other resident

program on their machine. This means that from any machines, and from anywhere, you may work with the platform.

• The calendar: all users may enter information for one day event. You click on the day, a window appears, you enter the information (meeting, forum, …) and close it. The date of day has is then of a different color indicating that they are one or more events this day.

• The members (the experts). They are the people which access the platform (one platform may allow the work of several groups of persons). You may search the user's name. This leads you to a window which contains the name and the e-mail. Clicking on the name leads you to the competency of this person. The competency(ies), may be entered by the user himself (only by himself because there is a checking of his password and login), or by the facilitator. It depends only of the way to described competencies (dynamic: the users do it, or static: somebody describe the people's competencies and give them to the facilitator to enter them into the system).

• The K-base: this base contains all the information that the expert group needs to work. At the first beginning the facilitator enters the basic strategic information (formal or informal), to seed the process. The members may comment the information, or add new information to the database. You may retrieve only the information that you provide, except if one of the person from the group gets upper rights.

• The Forum, is made to exchange various comments, shorts information, to ask for some advice's, to formulate answers, etc.. This asynchronous way to work is better than e-mail because it is well organized and more convivial since nobody is isolated (this is not the case when e-mail are used).

• The gateway to the Internet, where all the people may put the best URL according their subject and concern.

• On the right upper part of the screen the "tableau de bord" (general indicators), contains the center for e-mail encryption as well as the number of messages exchanged on the forum and the question(s) waiting for an answer.

• Going down, there is the indication of the number of new documents entered into the K-base, as well as the number of document which have been commented. The period (here 15 days) may be shorten within the interval from 1 to 15 days.

Figure 12: last par of the resources and example of the addition of a document at the Knowledge base.

The Figure 12 shows how people may add new documents to the K-base. To facilitate the indexing and the search of the documents (besides the indexing in full text of the message, tittle, … we use a set of descriptors (specially created by the facilitator according the task to perform) which are used as well as for the indexing that for the retrieval. Archives may be attached to the message (the same way that in the e-mail process), but the archives are not indexed. The K base is searchable as well with boolean operators than in full text (title of the documents, or text entered directly from the keyboard). Note: figures 11 and 12 show one of the design of the platform. Other designs are available, for more information consult http://www.imcsline.com C - The uses of a platform The platform has been and is used by different post-graduate students (at the DESS level in France), in the field of the management of the organizations in the field of Technology Watch and in the field of Information Technology uses. Other users are civil servants (managers), which learn through the platform how to use new technologies to promote the management of people networks and to develop a knowledge in their organizations. The last group is made by several SMEs, which use the platform as a link between various employees working outside the company and also to manage and comment permanently the information which may have a strategic character for the firm.

From these different users, we learn: • In distance learning the platform may have a classical use, but it may also be used to

prepare meetings or gatherings which are occurring from time to time depending the structure of the formation and the will of the students, etc.

• For the professors the collaborative work between students avoid them to stay into the e-mail front line ! They really intervene when the students do not find the right solution or when they are engaged in a false interpretation of one information or question.

• The users (students or company's employees) need to be familiar not really with the system, but with the methodology or the work, that is to say, working in group, using comments, helping each others, etc. To give an incentive to the users, questions are asked by the professors or managers, and "teams" of students or employee's work on various parts of one problem to provide at the end the global solution.

• At the beginning, most users read and comment the information, but when they add one, information they have a tendency to use attached files with a size far too important. Most of the time, they do not indicate briefly what the archive is talking about, and why they put it into the K-base. These practices called for an ethic use. If you participate this is not by putting constantly new data into the K-base, but by commenting, analysis, and talking with the actors by means of the forum.

• For the use in small companies, the incentive came when the manager ask a question, and indicates what is the where about and the implication. This is very often on the form of: I (manager) got several information (x, y, z that he put into the K-base), what do you think? Is there any opportunities or menaces in them ?

• The small companies, also use the system as a mean of communication to disseminate information in a better way than with e-mail, since they put them into the database and get the thinking of the other people about it, in a better way and within a small management system. We asked why they like this use of the platform, the answer was that they do not have such a system open permanently on the Internet because of the cost of a permanent line and the necessity to manage from the inside such a system.

• The problem of data transmission (mainly speed) was not rise up. This is because the platform is located in a provider of high efficiency. The only problem rise when people use archives which are too large in size.

• The final problem rose by companies, was the security. They like the possibility to use encrypted e-mail, and they considered the IMCS company as a TTP (Tierce Third Party).

• For consultants: they use the system to be sure, that after their intervention into the company, people would keep working and will stay organized. This is important, because often, after one day of consulting, nothing happens after the departure of the consultant. This behavior is specially true in small companies.

• It seems also, that to work with such a system help people to sharpen their mind and to "squeeze up" the information as far as possible.

• At the end, we saw an appropriation of the system, part of it being used for other things that distance learning or analyzing information for a small company. People use it to set up the Saturday tennis team, or to organized chest plays. This show at evidence, that this type of system is useful. In a post-graduate group, the students asked for the opening of a platform which will be only devoted to this use.

5 - Conclusion Competitive Intelligence18 seems to be one of the best answer to understand the complexity in which we are moving19. For Companies, Competitive intelligence will provide the best way to anticipate, to understand the value map surrounding the enterprises. With the to day facilities to get information, to access fast communication networks, to develop distance learning and working, even small companies may used Competitive Intelligence with success. But, the secret of the succeed is hidden behind the everybody brain: wed have to move from the industrial age to the knowledge age20, and then enter in the new paradigm. The classical values of the industrial age: capital, labor force, and land will be associated with another, without no doubt more important: the knowledge. Do not forget that if during decades the richest man in the world were associated with petroleum, to day he is associated with knowledge. Knowledge, is to be taken not only as knowledge from equation, formulas, rules, but it is associated with culture. In the time of globalization, when companies are delocalizing their production, when many area of the world will struggle for a better development, the role of culture of tacit knowledge21 will become more and more important. Then Competitive Intelligence may be seen as a global system enabling companies, institutions even countries to understand the new rules and interactions in the to day world to become more competitive. I shall also say that beyond the global competition, Intelligence will be used necessarily because we are moving in this direction to foresight technologies, activities for the best development not only of companies and states, but also for people.

18 Competitive Intelligence Systematic program to treat, analyze, understand, disseminate information upon the activities of the competitors, the technologies and the general tendencies of the company’s activities, in view to achieve the best strategic goal of the company Competitive Technical Intelligence Systems of Competitive Intelligence with strong components in the fields of technologies and R&D. 19 Larry Kahanner Competitive Intelligence : How to Gather, Analyze, and Use Information to Move Your Business to the Top, Touchstone Book, 1997 Leonard Fuld, The New Competitor Intelligence: The Complete Resource for Finding, Analyzing, and Using Information about Your Competitors 1997 Jan Herring Measuring the Effectiveness of Competitive Intelligence: Assessing & Communicating CI's Value to Your Organization , Editor SCIP (1999) Benjamin Gilad Business Blindspots : Replacing Your Company's Entrenched and Outdated Myths, Beliefs and Assumptions With the Realities of Today's Markets (1999) Kirk, The Complete Guide to Competitive Intelligence (March 1998) Henri Dou, Veille Technologique et Compétitivité des Entreprises, Dunod Editor, Paris 1996 François Jakobiak L'intelligence économique en pratique, Dunod, 1998 20 Anita Rubin and Hannu Linturi, Transition in the making. The images of the future in education and decision-making, Futures, 33, 267-305, 2001 Gibbons et al. The new production of knowledge, editor Sage, London, 1994 21 Johannessen J. A. & Olaisen J. & Olsen B. (2001). Mismanagement of Tacit Knowledge the importance of tacit knowledge, the danger of information technology and what to do about it. International Journal of Information Management 21, 20-32